The pay-per-click marketing campaign also know as PPC marketing is a method of marketing in which brands and advertisers pay a price(fee) each time someone clicks on their ads.
Pay per click marketing campaign allows advertisers to buy website visits instead of taking the longer approach of ranking for keywords and driving organic traffic.
Google Ads and Microsoft Bing Ads(Microsoft Advertising) are two major search engine advertising platforms that allow advertisers to bid for ad placement.
How do pay-per-click marketing ads work?
The Pay-Per-Click marketing ad is triggered when someone searches for a relevant keyword.
For e.g. If advertiser A is bidding on the keyword “SEO Tools”, an ad is triggered from advertiser A when someone searches for that keyword and it might show up in either of the top 3 positions on the Google results page.
Pay-Per-Click Advertising Management
PPC ad campaign management is the process of regularly checking the campaign performance, tweaking keywords, bids, audiences, and making sure that campaign performance is cost-effective.
PPC ad management can either be outsourced or can be done in-house. The goal is to continuously verify the performance of an ad account and optimize campaign performance.
How to Optimize Your PPC Ad Campaign?
- Negative Keywords: Build a negative keyword list that can be shared account or campaign-wide. Go through the search terms report and add wasteful keywords as negative keywords.
- Bidding: By changing the bids you are able to control the costs and drive down the cost per action. Check the keywords that are expensive and either pause or exclude them.
- Landing Page Optimization: Make sure to provide relevant content based on the keywords that trigger your ad. Create a separate landing page for a different audience and ad groups.
- Ad Groups: Combine similar keywords into one single ad group. Split ad groups to improve click-through rate and keyword quality score.
- Ad Copy Optimization: Use responsive text ads so that you can add up to three headlines and two descriptions. Add relevant keywords in the headline and description to create targeted ad text.
Pay-Per-Click Ad Auction
The way Google ads or Bing ads determine which ad needs to be triggered is based on the ad auction process.
Advertisers will first add in all the keywords they want to bid on the advertising platform of their choice.
They will all provide the maximum amount they can spend on each of those keywords.
When a user searches something on Google, keywords from all the advertisers that are most relevant enter into the auction along with the maximum bid each of those advertisers are willing to spend.
Google will then calculate Ad Rank. Ad rank is calculated by considering the best cost-per-click bid from an advertiser along with the quality score of the keyword.
Ad Rank = CPC Bid X Quality Score
The quality score of a keyword is calculated based on expected click-through rate, ad relevance, and landing page experience
Quality Score = CTR X Ad Relevance X Landing Page Experience.
Advertiser with the highest ad rank will win the auction and will be chosen to be displayed in the Google search results page.
Pay-Per-Click Marketing Campaign Cost Calculator
The cost per click you will pay = (Ad rank of the advertiser below you / your quality score) + $0.01
The higher your quality score, the less you pay for the PPC campaign.
When calculating the overall budget of your Google ads campaign, you have to set a maximum cost per click that you are willing to pay for the keyword that you are bidding.
So, how do you calculate the maximum CPC for your campaign?
You can use this formula to calculate Maximum CPC.
Max CPC = (Profit per customer) * (1 – profit margin) * (Conversion Rate)
If you don’t know how to calculate conversion, then check out my online conversion rate calculator.
Assuming your profit from an average customer is $200, the conversion rate is 3%, and your profit margin is 20%, your Max CPC will be:
Max CPC = $200 * (1-0.20) * 3% = $4.8
Try to target keywords with a Max CPC less than $4.8 so that you are profitable.
Pay-Per-Click-Marketing Campaign Process
Start your PPC campaign by conducting research online about your competitors, industry benchmarks, ad creatives, and keywords.
You can use a competitor keyword research tool like SpyFu. SpyFu will provide ad information, keywords, and organic rank of your competitors.
A took like SEMrush will help you find the right keywords for your business that are relevant for your customers.
Google Ads Keyword Planner is a great free tool to validate the keywords that you have shortlisted.
The Keyword Planner tool will provide search volume data, trends, cost per click and competitive data.
Don’t just select all the keywords and add it to your campaign. Shortlist high volume, low competition keywords, and any other variations that are suitable for your business.
Pay-Per-Click Marketing Campaign Structure
Organize your Google ads account to include campaigns, ad groups, and ads. Combine keywords that are similar and related to a particular category into an ad group and place them under the appropriate campaign.
Important Pay-Per-Click Cost Metrics
This is the most fundamental metrics that any brands should measure. Clicks and impressions are critical metrics that indicate how well your ad is performing.
A higher number of clicks on your ad indicates that the ad has resonated well with the searcher and will naturally increase the click-through rate.
Impressions are the number of times your ad was served or displayed when a relevant query was searched on the search engine.
Cost Per Click – CPC
This is the average amount you pay for a single click on your ad. Cost Per Click will vary from keyword to keyword and is based on how many advertisers are bidding on that same keyword, industry, and auction.
You can use SEMRush, SpyFu, UberSuggest or Google Keyword Planner tools to get an estimate on CPC for your keywords.
Click-Through Rate – CTR
Click-through rate is the number of times an ad is clicked divided by the total number of times the ad was shown.
Click-Through Rate(CTR) = Clicks / Impressions
Google will calculate the quality score based on expected CTR on your ads, landing page experience and relevancy of your keywords.
This score is anywhere between 0 to 10, the higher the score the better your campaign will perform, lower cost per action and increase conversion rate.
Cost Per Conversion – Cost Per Action
Cost per conversion is the amount spent to successfully complete the desired action by your visitor. The desired action can be filling a form, subscribing to a newsletter, becoming a lead or buying a product(Sale).
Let’s say the total amount you spent on your PPC ad campaign was $50, which resulted in 10 leads on your website. The cost per conversion will be $50 / 10 = $5
Cost Per Conversion = Total Amount Spent / Number of Desired Action
Return on Ad Spend – ROAS
ROAS determines the ROI of a pay per click marketing campaign. ROAS will calculate how much revenue was generated for every dollar spent.
Return of Ad Spend = Profit from Ad Campaign / Cost of Ad Campaign
Every year Google, Bing, and other major platforms(Amazon is the next big monster when it comes to advertising platform) Update the interface, add new features, targeting options, and advanced tracking/automation.
Make the most out of these platforms by running targeted campaigns, draw valuable traffic to your product or services, and increase revenue.