Pay-Per-Click Advertising: What Every Small Business Should Know

Data shows – people who click on ads are twice as likely to make an online purchase over organic searches. If your business depends on attracting visitors to your website for leads or if you sell directly online, you should consider the power of pay-per-click marketing, or ad marketing, as one of your marketing goals for 2022.

In this article, we’ll explain what ad marketing is, organic vs. paid search, what pay-per-click (PPC) is and how it works, and some compelling reasons to include these powerful tools in your marketing quiver.

What is Pay-Per-Click Advertising?

There are two primary models used in ad marketing – PPC and social media (SM) advertising. When you look for something using a search engine like Google (the big player), Yahoo, or Bing, you’ll most likely see ads at the top of the results page reflective of the term you searched.

These front-and-center digital ads are part of a company’s “pay to play” efforts that encourage – or entice – consumers to “click-through” (CT), view, and purchase their products. Over 45% of CTs go to the top three paid ad positions, creating fierce competition for those spots.

You may notice the product you searched for yesterday is suddenly appearing in ads on every page you visit or in your social media feeds. No, it’s not magic, it’s just a very smart algorithm.

As in any other type of advertising, to be successful at PPC  you’ll still need to understand and identify your audience, define your objectives, decide on where to place your digital ads, and how much to budget for the campaign — and what to do to make it actionable.

What is an Organic Search vs. Paid Search Result?

To understand how paid advertising differs, you’ll need to understand what an organic search result is and a paid result. In short, any search engine result that excludes paid ads is organic.

Paid advertising usually appears at the very top of the page – sometimes more than one should different businesses “bid” on the same search term. Big businesses, like cycling behemoth Specialized, spend lots to ensure their ads appear consistently at the top of the results for their search term matches. Remember that “twice as likely” statistic?

To clarify, in the sample below, the search term “cycling shoes” resulted in the top three results “awarded” to paid advertisers, clearly identified as “advertising.” But, why? The advertiser at the top of the results list won the bid on this term, which made their ad show up in your search. This is true of the two subsequent advertisers as well. The giveaway is the “Ad” next to the URL.

Last on this list is the organic result, as is everything following it. When you’re not paying to place this high on the search engine results page (SERP), a well-performing organic search result, e.g., just beneath the ads, is a solid feat of search engine optimization (SEO), which will play a major role in your ad marketing strategy if you want to succeed.

How Does Pay-Per-Click Advertising Work?

The PPC advertising model charges advertisers a fee each time one of their ads gets clicked on. An advertiser is “buying” your eyeballs instead of “earning” them organically. There are two types of PPC models, flat-rate and bid-based.

• Flat-rate. An advertiser pays the publisher, e.g. Google, Bing, Facebook, etc. a fixed fee for each click. These publishers are sometimes willing to negotiate a lower flat-rate fee for a longer-term commitment or high-value contracts.
• Bid-based. In the bid-based model, each advertiser puts a cap on the maximum amount they’re willing to pay for their ad to appear in a search. If accepted, the bid heads to an automated auction of sorts, whenever a visitor enters a term, which triggers the ad to appear. The winner of this auction is determined by "rank," not by the amount bid.

Higher ranking ads are determined by several factors, including the overall quality of content offered on the advertiser's website. Again, this is where SEO is crucial in your overall PPC advertising strategy. The relevance of your content is as important as the bid amount.

PPC also requires an understanding of selecting the right keywords, organizing them into coordinated campaigns, creating landing pages with clearly defined objectives, e.g. getting your product into a shopping cart, capturing a lead, or a legitimate inquiry into your business services.

What are the Pros and Cons of Pay-Per-Click Advertising?

The data shows PPC advertising works – but you have to pay to play. PPC advertising can be very effective at generating leads, and directing prospective buyers to your website, but it can also be very expensive depending on the search terms you want to rank and return on.  

Here are the pros and cons of PPC ad marketing on the web or your social media platforms:

How Much Does Pay-Per-Click Advertising Cost?

There’s no one answer to this question. Your costs are largely determined by a keyword’s popularity at the moment. This amorphous cost equation is why it’s imperative to create enticing ads that instigate CTs – then conversions, leads, or sales.

For example, one of the most common search terms in 2022 is still “Coronavirus” or variations such as "Coronavirus Update.” If you want your ad to appear on a first-page search result using these popular terms, be prepared to spend thousands of dollars – or get really creative with your search terms.

This is where savvy digital marketers and advertisers can learn how to put their good content, and SEO-optimized websites, to fruitful work. Cloud-based applications, like SEMRush and others, provide SEO tools that take the tedium out of search term research, and provide a snapshot of your business’s performance (e.g. rankings) against your competition — not just locally, but globally.

If you plan on upping your small business advertising efforts in 2022, be sure to include these PPC tools and strategies in your marketing quiver.

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