Brad Geddes / PPC Geek
Official AdWords Seminar Leader.
Author of Advanced Google AdWords.
Co-Founder, Adalysis.
(312) 884-9017

Blog.

PPC Bidding – Estimating Your First Keyword Bid

The amount of your first bids will vary depending on what your website’s goals are. If you are trying to brand your website, then your bids will be related to visibility over profitability. However, even in this instance, you should understand the max profitable bid.
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What is PPC (Pay Per Click)?

What is pay per click?
PPC (pay per click) advertising is one of the newest web phenomenas, and currently the most effective internet advertising method.

  • A study conducted by NDP Group concludes that search engine advertising outscores banner and tile advertisements by 2 to 1.
  • 57% of all internet users search the web every day, Statistical Research, Inc.
  • According to IMT Strategies, search engines create more visibility for web sites than all other advertising combined.

Keyword bidding is accomplished in an auction style environment.

Consumers who are looking for products generally use search engines.  Pay per click ads are displayed when someone does a web search.  Therefore, your traffic is prequalified as the searcher is looking for the terms for which you are bidding.

  • According to Nielsen/Net Ratings, one out of every three Americans uses a search engine. (Approximately 114 million people)
  • 81% of online consumers find websites through the use of a search engine, Forrester Research, Inc.
  • 57% of all internet users search the web every day, Statistical Research, Inc.

Websites are often built with good intentions, however, without visitors, you cannot make sales, have people sign up for newsletters, or reach the goals of your site.

See Pay Per Click For Yourself

How Pay Per Click Works
Pay per click advertising is relatively simple. You choose what keywords you would like you site to be listed under, and then you bid how much you will pay each time someone clicks on your link and then visits your site.

A Pay Per Click Example
For example, if your site is about travel. You are willing to spend $0.30 for each person who visits your site from the pay per click advertiser; if no one
bids more than you do, then your site is listed first in the search results. If someone bids more than you do, then your site moves down in the search results.

To see pay per click in action, click here (a new window will open for you to view while you read). The "sponsor matches" are websites who have the top bids at Overture for the keyword
travel.  If you do not see the word ‘sponsored matches’ at the top of the page, refresh the page (F5), as sometimes Yahoo or Overture will be making adjustments to the system and matches will not appear.

Generally, the top 2-4 bids at most pay per click companies are prominently placed on another search results page. Now, take another look at the Yahoo page. The top bidders, known as ‘sponsor matches’ are prominently featured at the top of the page.  There are some more ads on the right hand side of the page, these are from Overture, even through they have a Google AdWords type appearance. You will see there are also more sponsor matches at the bottom of the page, which are not prominently featured.

While these other bids are not prominently featured, they do generate visitors and revenue.  Because they are not the top bidders, they often have much lower bids than the top few placements, which can generate a higher pay per click ROI (return on investment).

If you click on the ‘next’ results at the bottom of the page, you will see more advertisements on the second page. Often, being featured on the top of the second page generates more exposure compared to the listings the bottom of the first page. We keep abreast of how many ads are displayed on a page, and maximize your exposure by moving your ads to where it receives the highest visibility and click through compared to how much you wish to spend per click.  (If you wish, you can close the Yahoo page now.)

Pay Per Click Management

The benefit of pay per click advertising is that you only pay when someone visits your website. If a visitor bookmarks your website after visiting from a pay per click search engine, you do not pay for those returning visitors. The visitor bookmarks your address, not the sponsor address so you will only pay for the first visit.

Monitor Your Pay Per Click Account
There are many benefits to pay per click advertising. However, your account and your bids need to be monitored daily, and often even more than that. In general, the more competitive the landscape, the more often your bids need to be tweaked.

The Money Aspect – Prepay
The majority of pay per click search engines require you to deposit money into your account before they will activate your account (these deposits range from $5 to $50). Then as your website is visited by those coming from a pay per click link, the amount is deducted from your account. The minimum spend for most pay per click accounts is $20-35 a month, and if you do not meet those minimums, they will deduct the difference from your account. There is no maximum amount that you can spend a month, it is only limited by how much you deposit into an account.

This is a very good practice of prepaying. You set the maximum limit you want to spend a month by how much you deposit. If your account reaches $0, your bids are set to $0.00 (which means the ads are not shown) and therefore you cannot end up owing a large sum of money.

The Pay Per Click Advantage

Increased Visibility
Most searchers do not go past the first page of web results.  If your page does not come up high in the natural search engine listings, it is difficult for people to find your website.  Pay Per Click advertising features websites on each page of search results, which allows potential customers to find your website.

Even websites that appear in the top listings for certain keywords advertise using the pay per click model.  This increased visibility on the first search results page leads to them getting more overall visitors.

Search engines are constantly changing their search algorithm to determine site rank.  With pay per click advertising, your website will be seen by visitors no matter how the search engines change their ranking system.

Increased Branding
With pay per click advertising, your website will be seen more often.  Even if a visitor does not click on your ad and visit your website, they will see your website name. 

Over time, your website will be more well known.  This often leads to people going directly to your website instead of clicking on ads.  These are visitors that you do no pay for, yet your advertising dollars helped bring these visitors to your site.

Increased Visitor Confidence
Store based websites are created everyday.  By the same token, many go out of business every day.  By advertising, potential customers realize you are currently in business and have more confidence sending you personal information and spending money on your site.  Confident customers are less likely to abandon shopping carts and give you their credit card information.

New Website Visibility
When a website is first created, search engines do not know it exists.  It can take weeks or months for a search engine to fully index your website.  Pay per click advertising gives you immediate placement in the search engines through paid listings.  This allows a brand new website to immediately attract visitors and product sales.

Lifetime Visitors
The most overlooked aspect of tracking pay per click conversions is the value of a lifetime visitor.

Satisfied customers are more likely to return to a website for new purchases. If the first time someone visits your site was through a pay per click search engine and bought a product, your pay per click advertising will have converted one sale. 

If that satisfied customer returns directly to your website again and purchases a product, it will not be counted as a sale due to your pay per click advertising.  However, without the initial investment in pay per click advertising, that repeat sale would not have occurred.