PPC (Pay Per Click) Advertising
PPC has grown in popularity hugely over the last few years, mainly because it is probably the most cost-effective way of acquiring customers. With PPC you only pay for people who click your ad.
Keyword bidding and click-through rates
Google uses a mix of keyword bidding and click-through rates (CTR). Here ads act to a certain extent like natural searches. In other words, ads that are more relevant to the person using Google will score higher than ads that are less so.
The basic equation is as follows:
CTR% x Bid Price = n (where n = your Position Value).
If you notice CTR, is more important than bid price:
- Company X gets a 2% CTR and bids £0.25p.
- Company Y gets a 1% CTR and bids £0.50p.
- Company X’s position value is 2 x 25 = 50.
- Company Y’s position value is 1 x 50 = 50.
Y is prepared to pay twice as much as X but, using the equation above, will get a lower ranking.
In actual fact, Y will only be charged 26p because of the bid management tool making its position value 26.
So you can bid half as much as your competitor and still out position them if your click-through-rate is higher.
I know the next question – ‘So how do I get a better click-through-rate?’ Well that’s our little secret! But if you really want to know, give us a ring so we can discuss your needs.