How PPC Advertising Works


PPC advertising is simply advertising your website through the

use of the pay-per-click search engines. To grasp an

understanding of ppc advertising, you need to understand what a

pay-per-click search engine is if you don’t know already. A pay-

per-click search engine is basically a search engine that takes

the guesswork out of getting top-ranking in a search engine and

in effect, enables you to buy your rank so to speak.

When using a ppc search engine you bid on keywords or keyword

phrases that your targeted prospects may use to find whatever

your website offers. When you outbid competitors that have bid on

the same keyword or keyword phrase, your website will be ranked

over theirs. Because you “pay-per-click”, you only get charged

your bid amount for actual visits to your site that result from

your ppc advertising rather than being charged a flat fee for

placing an ad.

Some pay-per-click search engine services, like Yahoo! Search

Marketing for instance, only consider the bid amount in ranking a

site. Others, like Google Adwords, may also consider the
good thing because it enables those with relevant products or

services to achieve a decent ranking even if they don’t have an

enormous ppc advertising budget. It is also good for those using

the search engines to find information because relevant, popular

ppc advertisements will appear in their search results.

The most popular ppc advertising options include Google AdWords

and Yahoo! Search Marketing (formerly known as Overture). Google

because it is the most widely used search engine and Yahoo!

Search Marketing because it provides listings in several search

engines including Yahoo!, MSN, Alta Vista, and Netscape as well

as others.

The first step to designing an effective and profitable ppc

advertising campaign is to determine your budget. Budgeting for

ppc advertising involves not only determining how much money you

can spend on your ppc advertising campaign, but basing that on

the monetary value of a click to your website since you are

paying per click. Throughout your ppc advertising campaign you

must monitor it to be sure that you are getting a good return on

your investment.

Your conversion rate, the number of unique visitors divided by

the number of sales, plays an important role in determining the

value of a click to your site for ppc advertising budgeting

purposes as does the average net profit per sale. By dividing

your net profit per sale by your conversion rate, you can

accurately determine the value per click to your website. The

price per click that you pay for your ppc advertising should not

exceed this value. If it does, you will be spending too much on

your ppc advertising and you won’t get any return on your


Of course, it is ideal to pay less than the value per click so that your ppc advertising will generate profit rather than eating up your revenues. To boost conversion rates it is vital that you

use relevant keywords that will put your site in front of those

most interested in what you are offering. However, if the bids on

a choice keyword are too high, a little brainstorming combined

with a keyword analysis through Wordtracker will give you

additional ideas for keywords for your ppc advertising that have

lower bids on them and may be just as effective. You may also get

some ideas for keywords by looking at your competitors’ source

code to see what they are using.

Reports from your ppc advertising provider will help you to

monitor your ppc advertising. Also, the information provided

through web logs will tell you where your traffic is coming from

so you can determine which ppc advertising bids are performing

the best. If you approach ppc advertising logically and monitor

it regularly making adjustments as needed, ppc advertising is a

powerful tool for profitably driving traffic your website.