It’s easy to get confused if your new to the industry. SEM (Search Engine Marketing) SEO (search engine optimisation), CPC (cost-per-click) CPM (cost-per-impression), PPC (Pay-Per-Click) are just some of the terms thrown around. Today we are going to talk about the term PPC. PPC is a type of advertising that allows businesses to advertise on search engines. When using search engine PPC the search engine uses a bid system which allows you to generate clicks to your website rather than earning those clicks organically. Let’s talk about Google AdWords and the advantages of using the program.
Target Keywords: AdWords allows you to choose keywords users will be searching for and
send them to a relevant page on your site. This means Google will only put your ad in front of the people who are most likely to be interested in what you have to offer. AdWords gives you the opportunity to get your brand and your message in front of people who otherwise may not even know your business exists.
Location: AdWords allows you to reach out to potential customers based on selected locations. This means you can find customers within a matter of miles from your business, if your target audience is local, or you can advertise to people in countries across the globe.
Search Engine Optimisation: SEO is a key part in any online marketing strategy, however, it’s not something that we only do once. SEO needs to be consistently updated and it can be time-consuming. Organic SEO can take a long time before you show up in search results which can cause businesses to become impatient.
Cost: It doesn’t actually cost anything to appear in the search results. When a user searches for Family Lawyer and you show up first you will not be charged unless the user clicks on your advertisement. So even if your ad isn’t clicked there is a chance your advertisement was seen and your brand/service will be remembered.
Now we know the key reasons why we should be using the PPC type of Google AdWords, Let’s look at how the program works. This is what the search engine displays when a user searches Google for “Family Lawyer”
As you can see in the screenshot the SERP (search engine results page) displays 4 listings. Each of those listings has the word Ad in a little green box next to the listing. These are paid for AdWords results.
So Who Paid More?
It seems like a fairly obvious question. If AdWords is a bidding system then the person in position number one must have paid more. This isn’t always correct. Google also uses something called a quality score which you want to ace!
What Is Quality Score?
In simple terms, it is a grading system used by Google to determine if your ad is quality enough to be shown in the sponsored space of the search engine results page.
What affects your quality score?
Ad Copy: Ad copy is a term that refers to the main text of a clickable advertisement. As you can imagine it is very important when writing ad copy that you include the keyword that you are targeting in the ad copy.
Landing Page: The landing page is the page which serves as the entry point for a website once a link is clicked. Your landing page is another key factor in determining your keyword quality score. Google will determine how useful the landing page is to users viewing the page based on a number of factors such as the relevance of your content on the page and the load time of the page.
CTR – Click Through Rate: CTR is the number of clicks that your ad receives divided by the number of times your ad is shown: clicks ÷ impressions = CTR. For example, if you had 50 clicks and 100 impressions, then your CTR would be 50%. The CTR of your ad plays a big part in the keyword quality score. A high CTR is a good indication that users find your ads helpful and relevant.
How Does Google Decide My Rank Position?
Google calculates the position of your ad rank by taking your maximum bid and multiplying it by your quality score. If You have a low bid and a good quality score you still have a chance to outrank someone willing to pay more than you. As you can see in the visual, Mr Green is willing to pay a maximum of $4 with a quality score of 3. Mr Blue is willing to pay a maximum of $3 and has a quality score of 5. If we multiply the bids by the quality scores we can see that Mr Blue, who are bidding less will outrank Mr Green who is the highest bidder.
How Much Will I Actually Pay?
The equation for working out the CPC goes, Actual ad rank of next highest bidder / your quality score + £0.01
What if there are multiple users bidding the same amount, They can’t all pay $4 and rank in position one. It is likely they will have a variety of quality scores so let’s look at the Equation for the actual CPC when 3 users bid the same amount. To work out how much Mr green pays we will need to take Mr Blue’s rank and divide it by the quality score of Mr Green. This gives us $3, We will then ad $0.01 giving a total of $3.01 CPC for position number 1. We will then follow the same equation for Mr Blue. Mr Yellow will pay the minimum bid which is determined by Google.
What if the quality scores were slightly different. Let us take a look at how the CPC would be affected. If we follow the same equation as above you will see that Mr Green would actually pay less then Mr Blue to appear in the first position. It will cost Mr Green $1.34 to rank at position 1 and Mr Blue will pay $2.67 to rank at position 2.
Google AdWords isn’t as simple as we would like it to be. Understanding how the system works can take some getting used to. One thing that we do know that is simple to understand, is that having a high-quality score is absolutely paramount if you want your budget to be well spent. As I have demonstrated above, having a high-quality score can mean you pay less than the person below to appear in a higher position but having a high quality is important to get the most out of your campaign.
So, remember your quality score combined with your maximum bid will determine where your ad is ranked on Google. Once you understand the fundamentals AdWords can work wonders for your business