What is Pay-Per-Click Advertising?


By Mark Shumaker

Pay-per-click advertising is a form of online search marketing (the discipline of communicating with individuals who are using online search tools to find specific products or services). A pay-per-click advertising model is used to direct traffic to websites in which advertisers pay the publisher (typically a search engine) when the ad is clicked. The results are displayed when a keyword query matches and advertiser’s keyword list, or when a content site displays relevant content.

How do I identify a pay-per-click advertisement?
Pay-per-click advertising results are shown in the colored boxes at the top and along the right column of search results pages. These results can be unbelievably targeted by using a host of descriptors, including region, product or service description and cost. When using pay-per-click advertising, it is important for the advertiser to be very detailed. The more granular the listing, the better the results will be returned, and research has shown that the more specific the search, the further down the purchase stage the consumer is.

For example, if you search Google for “optometrist Taylor Michigan,” your search will return eye care, Invisaline® and optometrists in the Taylor, Dearborn and Ann Arbor areas.

Do these ads work?
You might ask whether anyone actually clicks on pay-per-click advertising listings. The simple answer is yes – when making a purchase. Statistics reported in a social media blog wordstream.com reported clicks on paid search listings beat out organic search clicks by a 2:1 margin when a purchase is involved. The same report stated that more than 60% of people click on Google Ads when they are looking to buy an item online. Organic searches get more clicks by far, but when customers are ready to make a purchase, it appears that they click on pay-per-click advertising results.

Google generated $38 billion in revenue in 2012, and its only form of income was pay-per-click advertising.

How do you pay for pay-per-click advertising?
Pay-per-click advertising can be very budget-friendly. Sellers determine how much money they want to invest in the campaign, and when the number of clicks reaches the amount of the investment, the ads no longer appear. Signing up for pay-per-click advertising involves creating an account and adding a verified source of payment.

Is this technology trackable?
Pay-per-click advertising is completely trackable, whether through clicks, leads or sales. Each search engine has user-friendly tracking tools, and advertising consultants love to track this information. Many search advertising activities can be measured, including cost per thousand viewers, cost per action and cost per click.

Who are the players?
“Google AdWords” is Google’s search (pay-per-click) advertising platform and has been the leading search technology for many years. Google AdWords also drives many smaller engines such as AOL, ASK and Jeeves. Yahoo and BING have combined efforts against Google AdWords and created the platform called “BingAds,” which drives Microsoft’s Bing and Yahoo! Search. Google continues leading the search technology.

If you have further questions or are interested in using pay-per-click advertising, you should consult an online marketing professional.

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This advice is not intended or written to be used for, and it cannot be used for, the purpose of avoiding any federal tax penalties that may be imposed, or for promoting, marketing or recommending to another person, any tax related matter.

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