Understanding Google AdWords and Pay-Per-Click Advertising

Are you curious about pay-per-click (PPC) advertising and if it’s right for your business? PPC advertising is different from traditional advertising because you only pay for your ad when web searchers click on your ad, hence the name pay-per-click. It’s also different in that the cost is based on competitive bidding with other advertisers and it’s geo-targeted to incredibly specific geographical areas. 

PPC is possibly the most cost-effective advertising option for you if you start with a small campaign, measure the results and adjust your tactics if necessary. Starting on a small scale helps you effectively track and manage the progress of your campaign, and still successfully manage your business if you should get an overwhelming response to your advertising (which just might be the best problem a business could have!). Here are some tips to get you started:

1. Understand PPC Conversions
The proportion of customers who actually purchase your products/services from all those who initially click on your PPC ad is your conversion rate. Before you start your campaign, you need to do the math to determine how many conversions you need to make your PPC campaign cost-effective. It’s surprising how many advertisers spend significant amounts on PPC and don’t track conversions. This is the cornerstone of your campaign management. The goal is to have everyone who clicks on your ad become a customer or client, but that’s probably never going to happen. When your conversion rate gets higher, your cost per conversion gets lower. According to Hochman Consultants, in 2011 the average cost per click for advertisers was $1.04, the average conversion rate was 5.3%, making the average cost per conversion $19.74. But that’s just the average. 

2. Start Small
Select a small portion of your products/services, target markets or keyword terms for your initial campaign. Google AdWords will provide great data to understand what is working and what is not for getting web visitors to click on your ads. You can use this data to refine or expand your PPC campaign to improve its effectiveness in increasing your conversions.

3. Initiate Your Campaign
When you set up your first campaign, it may seem overwhelming. At this point, don’t worry about some of the more minute details. Stick to the basics and establish your first, small campaign just to get yourself familiar with running a PPC advertising campaign. Run this initial campaign repeatedly to give it some time to gather enough data for you to review. Analyze this data carefully, and then you can try to change your keyword terms, add different locations, promotions, or products/services.

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