Most online advertising is sold using variations on a cost-per-thousand basis: You pay a flat rate for every thousand impressions, clicks, conversions, etc. Pay-per-click is one of the most lucrative for the seller, and is the basis for Google AdWords as well as Yahoo’s advertising platform, formerly known as Overture.
With pay-per-click, you only pay for search advertising when someone responds to your ad by clicking on it. With proper research and careful bidding strategy, search ads can provide a high return on investment.
Search ads are sold and managed in an online marketplace. Instead You are bidding in an automated system, in competition with everyone else. You have to budget based on demand for that keyword and its value to you.
You’re bidding for the right to have your ad displayed on the search results page that comes up when someone types a particular keyword or search term into the search engine. If you sell children‘s shoes, you want your ad to pop up when somebody searches for the phrase “children’s shoes.” If you bid on that keyword phrase, whether your ad is displayed depends on where your bid falls amongst the competition.
Top placement doesn’t always go to the highest bidder, however. The search engines take note of how many times people click on an ad. If an ad gets a only minute amount of clicks in comparison to others, it can be dropped down the page or completely out of rotation. Search engines want their subscribers to get what they want, and they want clicks so they can get paid!
Winning bids for some keywords may be as low as 5 cents. Certain high demand ones, however, can be quite expensive. Certain legal terms and medical terms that make up the meat of class-action lawsuits can cost as much as $150 per click. Bidding on keywords can be an eye opening experience, as you will get a lot of information about which keywords are popular with searchers and which are most in demand by buyers. This is not always the same thing!
A good tactic to lower your cost for desirable keywords is to change your focus slightly. For example, if “children‘s shoes” is too expensive, try “boys‘ footwear” and “girls’ footwear .” Your ad won’t show up when people type in “children‘s shoes,” but you may still get plenty of response. If you can get two decent keywords for the cost of one, and they convert well, you will not have wasted money trying to compete for one top shelf phrase.
You can also target your demographic by limiting the times of day or geographic area in which your ads appear. Target kids and moms during the day, business men and women in the evening and on the weekend.
You can bid anything over the minimum; just remember that you have to be competitive to have a ghost of a prayer, and a little research can save you money rather than going with the obvious. Also make sure your Quality score is up – it counts as well in the final decision and can help or hurt you more than you may realize!