Updated: 9th June 2021
Originally Posted: 7th July 2017
For many businesses, PPC can be a daunting form of marketing, but, if done correctly, the benefits are clear. In this guide to PPC, we’ll help you understand the basics of PPC, its strengths and weaknesses, and if it’s the right fit for your marketing toolkit.
What is PPC?
Pay-per-click advertising is a digital advertising model in which advertisers pay each time one of their adverts is clicked. When paying for clicks, the sole goal of that click is generally to get the user to convert into business.
Found across many platforms, PPC is the most popular form of search engine marketing. The most popular of those platforms, Google, offer PPC through its Google Ads software. Other platforms that offer a PPC structure for their advertising include:
PPC is an immediate form of advertising which allows you to buy visits to your site instead of waiting for them to be achieved organically. For a start-up, or a business looking to gain traction quickly (especially if they have a big budget) it can be the perfect place to start.
Pay-per-click can be seen as extremely profitable because it catches users at the end of the purchase funnel – right when they’re ready to convert. Unlike social media and SEO, which put a big focus on visibility and nurturing users to an end goal, PPC advertising is present when that user is searching for a service directly – giving them a higher intent of conversion. At the end of the day, who wants to pay for a click if there’s no chance of getting something in return?
Every time an advert is clicked, the user is sent to the advertiser’s website (and designated landing page) and then the advertiser pays a small fee. The marketing model is preferential to businesses for many reasons including:
- Cash-flow flexibility – you pay only when your advert is clicked and don’t need huge lump sums upfront
- The ability to turn it on-and-off, meaning there is no long-term commitment to PPC
- How quickly it can drive traffic to the site – when setting up a new account, you can expect to begin receiving impressions and clicks in under 24 hours!
- How easy it is to surface your business at the top of search engines. Of course, the top spot will cost you more than 2nd, 3rd etc. But being visible as high as possible and, ideally, above the fold, is almost imperative in achieving a strong CTR on your ads.
Previously in Google, adverts were clear and obvious. They were placed in a coloured box at the top of the search results page like the below:
But nowadays, this is much less clear. Adverts are marked with a small green ‘Ad’ icon but are otherwise similar in appearance aesthetically to organic search results – which is good news for advertisers.
Is PPC Right For My Business?
PPC provides a great opportunity to drive traffic to your site and convert users, but there are many times where it may not be the best activity for your marketing goal. These examples include:
- Lack of search volume – Although PPC can generate huge amounts of traffic for your website, and bring in users who are most likely to convert, this can only be done if people are actually searching for what you offer. I could be wrong, but if you’re offering a “conker collection service” – I’d take a punt on Google ads not being for you.
- Increasing online visibility in the long-term – If your sole purpose is to increase visits to a site, rather than driving consumers to a conversion, then an activity like SEO may be more effective. All PPC traffic is paid for, which can prove a costly way to drive visitors in the long term.
- If you don’t have a clear conversion – Any business, with the sole purpose of making money (and ideally a profit), requires a website with clear conversion actions. Do you sell products? You need an e-commerce website. Do you offer a service such as PPC? Then maybe a website with an enquiry form to fill in. If your website doesn’t have a clear route to “conversion” then there’s much less benefit in paying for your clicks.
At Fifteen, we’re always happy to advise. We appreciate that digital marketing is a minefield and that you may need some assistance navigating it. With that in mind, always feel free to reach out and ask us a question.
What Are the KPI’s?
KPI’s vary by your business and goals, but there are a few typical metrics you should be looking out for on each campaign. To make this section easier to digest, I’ve split these up into “partially important”, “very important” and then concluding with “Matt’s most important”:
- Click-through-rate – This shows the number of times your advert was clicked vs. the number of times it was shown to users in total. This is given as a percentage. In general, a higher CTR = better results.
- Bounce rate – This shows the percentage of users that visited the landing page of your website but then left without taking any other action. This can be a signal that the user didn’t find the information they were looking for or expecting to see when they clicked through. A high bounce rate can be affected by many factors, including website user experience and page loading time. It’s fair to say that we’ve perfected the art of building fantastic, high-converting landing pages.
- Search top IS – shown as a percentage, this is the number of times your advert was shown in the top (above organic results) of the SERPs. This stat then closely links with:
- Search abs. top IS – again shown as a percentage, this is the number of times your advert was shown in the very top spot of a Google search.
- Quality Score – a scoring system devised by Google, out of 10, to help advertisers understand if their advert, keyword and landing page all work well together. There are tons of factors involved in the calculation of this score, but it determines how much you will pay, per click, for your adverts. Generally, you should aim for a higher quality score (although this isn’t always the case).
- CPA – cost per acquisition is a very simple yet effective KPI to be working towards. your CPA is the cost of acquiring each “conversion” that your PPC campaigns are working towards. For an e-commerce business, this is likely to be the sale of a product. However, CPA is only “very important” for some businesses. Your CPA needs to work in tandem with the amount of profit that you make on a sale. If you only make £0.25 in profit per product sold, and your CPA is £3.50, you’ll be losing £3.25 per sale.. Not good!
- Conv. Value – This is the total value (in your local currency) that your PPC campaign has generated. A very useful metric to see, at a glance, if you’re making more than you’re spending.
- Con. Value / Cost OR ROAS – For almost every business, making money is the most important factor. Yes, you can absolutely love what you do, and your business may not earn a lot of money doing it, but if your bottom line isn’t a positive figure, you’re eventually going to run into trouble. As PPC specialists, our main KPI is to ensure that you’re making money either directly, or at the very least indirectly, from your ads. “Conv. Value / Cost” and “ROAS” are both very similar calculations (and are only different in the way that you calculate them) and offer an important understanding of how your adverts are performing.
- Conv. Value / Cost is calculated by dividing your conversion value, by your cost.
- ROAS is calculated in exactly the same way, but then is multiplied by 100 and given as a percentage. With this in mind, your ROAS and your Conv. Value/cost will reflect the same result (e.g. a Conv. Value/cost of 5.5 would be a ROAS of 550%).
When deciding on a new PPC agency, the most important factor is working with someone who has your businesses goals in mind. if your margins are 50% on your products then you require a minimum of 200% ROAS or a Conv. Value/Cost of 2, to ensure you’re at least breaking even on a per-product basis (this of course excludes other costs).
New to PPC? Want to build your understanding or get started today?
We hope our guide to PPC has made this mystical art a little easier to understand. Speak to our expert team, today to get started with your own Ads campaign. We can advise you on the best platform for your paid spend, and which campaigns will be most effective for your business goals. Get in touch with our team today.