Have you ever thought how advertisements are shown you and how advertiser pays for these advertisements that we see every time when we search something on Google or open our Facebook page. The pay per click is nothing but the mechanism of charging money for advertisements when they are floating on online websites. The next question that comes to mind is how much is charged from advertiser and on what basis?
Pay Per Click (PPC) is a money charging mechanism where the advertiser pays when any online advertisement is clicked. It is similar to Cash on Delivery mechanism in our day to day life where a customer pays on getting the product. If we imagine PPC mechanism as Cash on Delivery then the advertiser behaves as the customer and the website or social media which is showing the ad becomes a vendor. So this mechanism broadly involves three key stakeholders:
The success of pay per click depends on the interaction of these three stakeholders. In a country like India a less used website like Bing may not be able to generate as much clicks as Google can generate. So the right choice of Advertising channel and target audience can make a huge difference. Some famous Search Engines relevant for PPC mechanism are Google AdWords, Facebook Advertising, LinkedIn Ads and Yahoo! Search Marketing. The following flow diagram breaks the Pay Per Click mechanism into a four step process:-
The transaction is taking place in the fourth step as we can see from the diagram above. It is a direct measure of traffic on sites which will ultimately translate into sales. Nowadays the greatest number of clicks is generated from the sponsored ads on search engine sites. According to the info graphic from web stream the top 3 sponsored links of Google account for 41% of total clicks. The PPC click through rate depends on effective advertisement text and keyword formulation as well. This form of advertising ensures high return on investment (ROI) and minimizes risk of advertising campaign failure. It also provides us right insights into the data about the advertisement running online. Any business can answer some very fundamental questions with the data available from PPC
Who are these people who are showing interest in my online advertisements?
Which region they belong to?
What else can we sell to them?
What are the main keywords which are being searched for my advertisement?
Is there a need to change in my strategy or PPC will work fine?
These answers will be helpful for future advertising campaigns of similar nature as we will be already aware of popular keywords and channels. It does not require hefty amounts to start with. Anybody can opt for Pay Per Click mechanism nowadays with as low as 100 rupees in account through Google Ads. The average cost per click in India is very low as compared to other countries like Russia, Japan and USA where rates are around four to five times that in India.
The most significant advantage of Pay Per Click Mechanism is that the impact of advertising can be more quantified as we can track the total sales attached with the clicks redirected to our site. The mechanisms like E-mail Marketing and Cost per Impression are much more qualitative in nature. As an advertiser, you can not track whether they are reaching the right kind of people or not. Pay Per Click allows identifying the proper leads. This goes a long way in affecting your marketing strategy. PPC can be easily used to track and compare with competitors by using Return on Investment (ROI), Cost Per Acquisition (CPA) and Profit Margin pre and post campaign. The managers can make sense of the target audience, which is taking interest in their products.
Pay Per Click serves like a boon for smaller players or advertisers who cannot compete with major market players for costly Search Engine Optimization (SEO). There are innumerable times when you would have searched for some product and landed up on either Wikipedia page or giants like Amazon, ebay, Flipkart etc. rather than a smaller or comparatively new online retailer. This is the game of keywords and Search Engine Optimization. But it comes with a hefty cost. Pay Per Click allows you to set your own customized budget, which may vary every single day.
But everything comes with certain faults. Similar is the story with Pay Per Click Mechanism. In spite of all the advantages mentioned above Pay Per Click can be useless if a proper tracking is neglected. It may fail if the purchases are too low because the advertising cost should be absorbed by the profit margins of the organisation. Moreover, if the target audience is not looking for products offered by the organization online or on the attached search engine then also we have a danger of failed or low Conversion Rates.
PPC works best for online retailers, direct markets and brand advertisers who want to put their product into the customer’s brain. But the basic problems with Pay Per Click mechanism are
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