1. business and industrial
2. advertising and marketing
3. advertising

Pay-per-click Advertising
PPC Terminology
• PPC: Pay Per Click
• CTR: Click Through Rate
– Percentage of clicks to impressions
• CPC: Cost Per Click
– Price an advertiser pays for each click on his/her ad
• Daily Budget
– Amount advertiser is willing to spend, each day, on
PPC ads
How PPC Works
Advertiser
User enters
query
Engine runs auction and
displays winning ads
User
Surfer clicks on
an ad
Advertiser’s
Website/Landing Page
Search Engine
Server
Millions of auctions executed every day
Once the daily budget is reached, the ad will no longer be
shown.
The PPC Auction Model
• Basic model
– Highest bidder gets highest slot
– Winner pays winning bid
– Not ideal! Why?
• Vickrey-Clarke-Groves (VCG) auction
–
–
–
–
Second price auction
Optimal for single slot
Reveals true willingness to pay, no need to be strategic
Winner for slot i pays maximum bid of bidder that get
i+1 slot
• Still not the best for Google, Yahoo, MSN etc.
– Why?
Ad Quality Score + Landing Page Quality
• Search engine needs repeat customers
• Needs to improve user experience for long term
• Bid transformation:
– (Bid $ amount) x (Ad Quality Score)
~ (Bid $ amount) x (CTR rate + relevance)
In other words, rank by expected revenue for Google
• High quality ads → Lower bid amount
(incentive compatibility)
Main difference
between Yahoo
and Google until
2007
Details for quality score: https://adwords.google.com/support/bin/answer.py?answer=10215
PPC Quality Score
• Quality Score is the relationship between:
– Keyword Phrases
– Text Ads
– Landing Pages
• Goals:
– Provide a Better Search Experience for Users
– Maximize ROI for Advertisers
– Maximize Earnings for Publishers
• Determines:
– Ad ranking on search results page
– The minimum bid required to run on a given keyword
– The actual price you pay for each click
Quality Score Example
PPC Components
• Keyword Phrases are CRITICAL. Proper selection will
ensure that we’re only paying for the right visitors
• Negative Keyword Phrases filter out unqualified, and costly
visitors
• Text Ads Entice people to click and establish a “market to
message” match that leads to a high Quality Score
• Landing Pages Reduce FUD, establish Quality Score, and
guide visitors thru the conversion path
• Bids Help to determine your ad ranking and ROI
• Geo-targeting Lets us Segment the Market
What Is PPC Advertising?
Pay Per Click Advertising is a form of paid search marketing.
As the name suggests, PPC is an advertising model in which
advertisers pay for click-thrus to their website. Advertisers bid
on particular keyword phrases and search terms, and vie for
positioning on a SERP (search engine results page) in a
manipulated keyword auction.
Benefits of PPC Advertising
• PPC works because it allows advertisers to bring qualified, targeted traffic
to a website. By bidding on a combination of broad, general keywords (i.e.
“luxury car”, “SUV”, “sports car”) and specific keywords (i.e. “Acura TL”,
“Dodge Duranxo SXT”, “Porsche 911 Carrera S Cabriolet w/ Tiptronic”),
advertisers are able to match the consumer behavior in the different
stages of the buying cycle (Awareness, Interest, Desire, Action,
Satisfaction).
• Allows you to avoid showing your ads to users who aren’t likely to
purchase from you
• Reach approximately 87% of Internet users
• Affordable- No minimum spending limit, and you can set a maximum daily
budget that the PPC engines won’t exceed
• Flexible- You can change your advertising message within minutes
Why is PPC so important?
• Over 850 million searches are performed each and
every day on search engines, and 87% of consumers
do research for products and services online
• Approximately 35% of Internet users actively seek
and click PPC ads
• PPC can help with branding efforts
• PPC can enhance your Internet marketing efforts,
working in conjunction with a Natural Search Engine
Optimization campaign
Paid and Organic Listing
PPC Engines - Google
•
•
•
•
•
Google AdWords
Easy-to-use Interface
Excellent bulk-editing tool (AdWords editor)
Integrated client center for easy access to all accounts
Can geotarget by latitude, longitude, zip code, state, metro
area
• Works on CPC basis on search network, and CPM basis on sitetargeting (more later)
• Cost determine by bid and quality score (more later)
• Allows text ads, mobile ads, image ads, video ads
Yahoo! Search Marketing
• Modeled after Google AdWords
• Set budget at the account-level, and works on a
declining pre-pay balance
• Allows bulk import of Google spreadsheets
• Cost determined by bid and quality index
• Can geotarget by metro area (relatively imprecise)
• Inability to block certain content sites
• Ads must undergo lengthy editorial review
MSN Bing AdCenter
•
•
•
•
•
•
Relatively clunky interface
Account-level budget
Allows incremental bidding for certain demographics
Relatively advanced research tools via adlabs
Tends to monetize traffic poorly
Lacks inventory
Demographics of Users of the Major PPC
Engines
• Google- Business-oriented, Methodical,
Information Seekers
• Yahoo!- Content-oriented, Values
Entertainment, Youthful
• MSN- Older, not tech-saavy, values ease of use
PPC Account Structure
• There are several unique layers to a PPC
account:
• Account- Unique email address, password,
billing information
• Campaigns: Daily budget, target languages
and locations, start/end dates, distribution
preferences
• Ad Groups: Ads, keywords, bids
Account Structure
• TrufflesPremium ChocolatesChocolate
StoreGourmet trufflesGourmet
ChocolatesOnline Chocolate StoreNut
trufflesDesigner chocolatesDiscount Chocolate
StoreDiscount trufflesExotic chocolatesLocal
Chocolate Store
PPC Chocolate Campaign
Landing Pages
• 1. Have a clear and Direct Headline
• Your landing pages should designed so the headline
is first thing a user sees upon landing. First
impressions on landing pages are as important as the
offline world. Make sure the headline is a direct and
simple statement of what the user is trying to
accomplish. The goal of the headline is to bridge the
moment of recognition so the user knows they rest
of the page is aligned with completing their goal.
Case Study
• Audible.com
• http://www.optimizeandprophesize.com/jona
than_mendezs_blog/2006/11/measuring_and
_o.html
• Google Adwords tutorial:
• http://services.google.com/awp/en_us/breeze
/2682655/index.html