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The Scoop on Pay Per Click Engines

September 15, 2001 By Webposition SEO Team

Pay Per Click engines like Goto.com have been growing rapidly in popularity over the past couple years. This has spurred an onslaught of new Pay Per Click (PPC) engines such as Sprinks, FindWhat, Kanoodle, and others. In fact, at least 70 “me-too” PPC engines have sprung up across the Web, many in the past year. The question is, are PPC engines really the big marketing opportunity that some people make them out to be?

Before answering this question, let’s address “What is a PPC engine?” As with many emerging technologies, they are known by several different names and acronyms. Some people call them Pay Per Placement engines (PPP), others call them Bid for Placement engines, and the list goes on.

I believe the industry is now trying to standardize on “Pay Per Click” as the official terminology. The reasoning goes that you do not actually pay for placement on the majority of these engines. Technically, the positions or listings are free. You pay only for each click (i.e., visitor) that you receive from that search engine listing. The person placing the highest bid per click price for a keyword achieves the highest placement or ranking.

So why pay for top rankings when they can still be achieved for free on many major engines like Google, AltaVista, Lycos, and others? Applying tips from this newsletter, WebPosition’s Page Critic, and other resources will launch me to the top right? So why pay to be listed?

There are many reasons for considering PPC’s as part of your over-all marketing strategy. You can achieve a top ranking on many PPC engines the very same day versus waiting for weeks or months with the regular search engines. You will also receive a guaranteed placement on every keyword you choose without needing to tweak the content of your pages. You’ll then keep your ranking until someone outbids you. When this happens, your listing will be pushed down a notch. In essence, you bid on rankings in a real-time auction environment similar to the way eBay auctions products. You pay only as much as you choose for the visitors they send you.

The advantage of PPC’s over paying for banner ads is that you do not pay for impressions displayed, but instead for actual click-throughs. With banners, you could purchase 1,000 impressions for $40 and receive only 20 clicks, costing you a whopping $2 per visitor (this has happened to us a number of times). In general, there’s no guarantees how much you’ll pay per visitor acquired with most forms of advertising. TV, radio, magazines, and others normally force you to bear all the risk. YOU must create ads and pick advertising locations that will be cost-effective for your business.

With PPC’s, you still gamble that the visitors acquired will convert to enough sales to pay for all those clicks. The sales generated versus the cost paid to make that sale is often referred to as your Return on Investment, or ROI. With the slowdown in the US economy and the stock market decline, ROI has received renewed focus with the marketing departments at most companies.

Even though a PPC cannot guarantee you’ll make a profit, it does offer you significantly less risk than many other forms of advertising. It’s also commonly known that visitors from search engines (PPC or otherwise) are much more likely to make a purchase than visitors derived from traditional ads. Search engines provide you with highly targeted visitors. Each click in theory comes from someone who was actively looking for your products or services.

Not all PPC’s are created equal. Most receive relatively little traffic to their site. Therefore, you could gain dozens of top rankings yet receive little to no clicks during the month. That’s the big problem with the majority of the seventy or more “me-too” PPC’s out there. They aren’t worth your time or attention.

On the other hand, Goto.com boasts over a billion searches per month. It has risen to become a significant player by paying the major portals like AOL, MSN, AltaVista, Lycos, and others to carry Goto listings on their results pages. The top two to three Goto.com listings for each keyword will often be displayed under a “Featured” or “Sponsored” area near the top of the engine’s results page.

Are these “featured” listings clicked on as often as the regular search results? No. However, because you pay only for clicks, you don’t really care. If you know you are profitable paying 30 cents a click, then you want all the targeted clicks you can get.

Unfortunately, the greater volume of clicks from Goto comes at a price. The average bid price on Goto will be significantly higher that “second-tier” players like Sprinks, FindWhat, Kanoodle, and others. You could average 50 cents per click on Goto and pay only 15 cents per click on Sprinks for the same keywords. Goto also has a 5 cent minimum bid whereas many other PPC’s have 1 cent minimum bids.

So why use Goto? Because the second-tier PPC’s may generate one third to even one twentieth the amount of clicks that Goto generates, the extra volume that Goto offers can be worth it. It then comes down to the value of your time. You must set up and manage more bids on the less popular PPC’s to generate the same amount of traffic as Goto offers per month. However, you’ll get a lot more for your money with the second-tier PPC’s.

Paying as little as 1 cent per visitor is dirt-cheap. If you can’t make a profit paying 1 cent per visitor, then you may be hard pressed to find many advertising options that will work for you.

An exception might be to optimize for free rankings on the non-PPC search engines. You can’t beat free, targeted advertising. In addition, a top ranking on a major engine like Yahoo, MSN, or AOL will yield far more traffic than the same ranking on most PPC engines. However, you will have an investment in your time used to achieve those rankings. Once you come up to speed on search engine optimization and acquire a tool to assist you (like WebPosition), the investment will pay off many times over. However, most companies will want to diversify into more than one type of advertising, which is why PPC’s are worth a look.

PPC Tip #1: Focus your bids on keywords that closely apply to your Web site’s content. You’ll be tempted to purchase listings on the most popular keywords, which are often the most expensive and least targeted. However, you pay by the click, so you want to do everything you can to ensure that those who click on your ad are truly interested in what you offer.

PPC Tip #2: You’ll also want to make the listing description closely match your site’s content. Create persuasive and compelling descriptions. However, avoid descriptions that are so broad that they bring in too many unqualified prospects. Otherwise you may secure a reasonable per click price but discover that few of those visitors are converting to sales.

PPC Tip #3: You may also be tempted to bid only on keywords costing 1 cent. Why pay 30 cents when you can pay 1 cent right? Not necessarily. You can find bargains for sure, but quite often the cheapest keywords are also less popular, and thereby will bring less traffic. It doesn’t cost you any money to bid on terms that few people may be clicking on, but it does cost you some time. It’s generally worthwhile to use Goto’s free keyword analysis service and/or the WordTracker service to find applicable keywords that are also reasonably popular.

For more information on PPC’s see the advice in the webposition page critic.