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Neil Patel

An Introduction to Pay-Per-Click Search Marketing

Neil Patel

Everyone is spending money on PPC… so where do you start?

This blog post is organized into a three-part strategy series that will outline what it takes to spend marketing dollars intelligently on your Pay Per Click (PPC) channel. In preparing for this series, I sought out the business acumen of successful entrepreneurs (both real and fictional) and chose to follow Tony Montana’s infamous and proven three-step approach:

Step 1. First you get the money – Tony Montana spent his way to building the right network and to finding his target audience. The same rule applies to PPC marketing: spend, learn, refine.

Step 2. Then you get the power – Be empowered by the data acquired in Step 1 and scale your online marketing strategy.

Step 3. Then you get the… customers – Customer acquisition is the name of the game. Here’s how to stay ahead of your competitors to ensure you keep attracting new customers.

Before we start, let’s go over a short glossary of commonly used terms in online marketing:

PPC – Pay-per-click marketing, also known as “paid search” marketing – an advertising channel on search engines where businesses/individuals may bid on keywords used in searches

SEM – Search Engine Marketing, commonly used to describe both PPC and SEO but also often used synonymously with PPC marketing

SEO – Search Engine Optimization – the practice of “optimizing” website pages

1. First You Get The Money

Customer acquisition costs money. Whether you write a check for a billboard, pay for a radio spot or invest in online marketing, advertising costs money. The good news is, PPC marketing is one of THE most accountable and measurable forms of marketing. So start spending. Create a budget you’re comfortable with, spend money to buy test traffic and take copious notes on what works and what doesn’t for your business.

Tip: Don’t count on immediate financial success from your initial PPC test. Consider your test buy as a necessary education cost and remember that early learnings will pay dividends in the future.

Acquiring a customer on a major search engine (Google, Bing, Yahoo) typically follows these steps:

  1. Consumer searches on Google/Bing/Yahoo and sees search results with ads
  2. Consumer clicks on ad
  3. Consumer sees your site. Consumer decides in seconds (or less) if the click was worthwhile and if he/she should stick around

Let’s break this down further.

A. Consumer searches on Google/Bing/Yahoo and sees search results with ads

How? Cast a net of keywords and phrases, aka “keyword research”. The size of the net is entirely up to you.

We’ll use two fictional golf equipment businesses to illustrate points A through C.

The first golf business specializes in men’s left handed golf clubs. As the owner of this business, you wouldn’t want to cast too wide of a net and attract unqualified customers looking for other types of golf equipment. If this is you, start with a small list of keywords and phrases that only attract your customer.

Sample keywords may include:

Conversely, if you are Mr. Pro Golf Shop with an online golf shop that sells everything from kid’s golf socks to senior flex wedges, you’ll need to be more strategic about generating a broader list of keywords and phrases.

Should you generate keywords based on every piece of equipment you sell?

Absolutely not! Start with top-selling and high-margin items. Top sellers won’t have trouble generating search traffic volume and should provide results quickly. High margin items will allow you to run longer tests while enabling you to recoup your advertising dollars once sales are made.

Sample keywords may include:

Goal: In either scenario, your primary objective is to find keywords that will drive qualified traffic with the highest potential to generate conversions (sales, sign ups, etc) to your site.

B. Consumer clicks on ad

How? Hook consumers in with your ad copy, aka “ad testing and optimization”. How attractive you make your ad is (again) entirely up to you.

Using the same golf example as above, if your goal is to mainly attract consumers looking for men’s left handed golf clubs, make your ad very specific and unclickable to everyone but your target consumer.

For example:

Tip: Always start with more than one version of your ad. The risk of running only one ad is that the success or failure of your entire Paid Search test rests on one single ad.

If you are Mr. Golf Pro Shop, you want ads that appeal to the masses and your ads may look like the following:

A common mistake made by many new PPC marketers is to disregard the keyword-ad relationship. If your list of keywords is specific and thematic, make sure that is also communicated in your ad copy.

Goal: Always be qualifying. The objective is to spend money intelligently, and given that you’re paying for each ad click, make sure your ads attract users most likely to convert on your site.

C. Consumer sees your site. Consumer decides in seconds (or less) if the click was worthwhile and if he/she should stick around.

You invited the potential customer to click on your ad and visit your online store. Do you have control over what happens next? Yes, but not until the consumer has left your site. What matters most is what happened between the time he/she clicked on your ad to the time his/her exit took place.

Let’s go over three varying examples of landing page user experiences:

Bad: consumer immediately hits the back button or closes the window/tab. This is what search engines consider a “bounce”. The signal here is that the content on the page which the consumer first saw (also called the “landing page”) was not relevant to what they initially searched for on the search engine.
The landing page from the #1 ad is shown below. I expected to see left handed golf clubs, but instead, I am given options of categories that do not include any left handed golf clubs. BOUNCE.

Good: consumer stays on your site and browses around with a relatively good “pageviews per visit” or “time on site”. The signal here is that the content on the landing page was relevant enough to keep the consumer interested for a few more clicks and/or a few more seconds/minutes of browsing.

The landing page from ad #2 is shown below. Again, I expected to see left handed golf clubs, and yet again, I was shown a page full of content not directly relevant to my search term. The only reason I would let this slide as a “good” experience is because it presents three major brands (along with a deal) on the landing page, which may convince me to invest a few more clicks to find what I’m looking for.

Great: consumer completes a desired transaction (purchase, sign up, download, etc.), which is called a “conversion”. The signal here is that you provided the consumer with exactly what he/she was expecting to see when he/she clicked on your ad.

The landing page from ad #3 is shown below. Finally, a page that with content relevant to my original search!

Goal: Provide a high-quality and relevant user experience on your landing page. Don’t expect the user to navigate through ANY additional pages to find what they’re looking for. It is far too easy to hit the back button.

Get the money, spend the money

Paid per click marketing is not about blindly paying Google to drive clicks to your site. It is about knowing how much to pay for each click and understanding which type of consumer you ought to be paying to attract. It is also about listening to signals provided by clicks that result in both bounces AND your desired conversion goals to make the necessary changes to your keyword lists, ads and landing pages.

Everyone might be doing paid search, but very few do it well. The average Adwords click through rate is 1.91%, meaning that about only two clicks occur for every one hundred ad impressions. Don’t expect immediate success from your test but expect to walk away with education. The single most important goal in this first step is to find the formula of keywords, ads and user experience that works for your business.

  1. Test – Invest time into generating a list of keywords and ad variations
  2. Learn – Test, stop, measure signals from your consumers
  3. Refine – Modify what doesn’t work, repeat steps 1 & 2

Let’s cover step 2 “get the power”.

On to Step 2: Then you get the power

Be empowered by the data acquired in Step 1 and scale your online marketing strategy. In Part 2, we will delve into testing concepts from Part 1 to further develop and expand your PPC strategy.

Our friend, Tony Montana, didn’t start out as a powerful man, but leveraged his resourceful and scrappy ways to elevate himself to a position of power. Tony’s knowledge of his product, customers and competitors helped him stay in power.

This section will be the most helpful after you’ve spent some time and money on a PPC test buy and will assume you have data readily available for analysis.
We will start at the top of the conversion funnel and work our way down: Impressions -> Clicks -> Conversion

I hope you are ready to roll up your sleeves and spend a little time analyzing results from your PPC test, specifically looking at KPI’s (key performance indicator) from your campaign.

Tip #1: Try to avoid “Analysis Paralysis” by over analyzing every single metric. Create a story that can be explained using your KPIs instead.

A. Impressions vs. Impression Share (IS):

Impression: when an ad is shown to a user.

Basic question: How many impressions did my campaign generate?

Looking at the count of Impressions will provide you the total number of instances where keywords triggered ads to be shown on a search engine results page (SERP). When a search is performed in Google for the phrase “Hawaiian vacation with kids”, the following advertisers (1-3) each increased their impression count by one (+1) because of the search.

While the gross number of impressions your campaign receives may seem important, it is much more useful when you have additional data points that provide context.

Impression Share: the percentage of times your ads were shown (i.e. your total impressions) out of the total number of page impressions (i.e. pages where your ad appeared or could have appeared) in the market you were targeting.

Advanced question: Did my campaign get enough impressions?

This question looks beyond the raw number of impressions and addresses the more important goal of making each impression matter.

Generally speaking, “ad position” is influenced by the amount you are willing to pay (max CPC bid) and the relevancy of the ad to the keywords in your ad group (Quality Score). Quality Score is a numeric representation of the relevancy of your ads and keywords assigned independently by both Google and Bing. It is important to note that only Google’s Quality Score impacts ad position currently. Bing’s Quality Score serves only as a guideline to improve your ad/keyword relevancy. We will discuss Quality Score in further detail in Part B.

To answer the second question, turn your attention to the Impression Share (IS) metric in the Adwords interface.

Tip #2: Impression Share stats can only be generated at the Campaign level (in Adwords) and is not available yet in AdCenter (as of May 8, 2011). Keep this in mind as you structure your Campaigns and Ad Groups. Impression Share metrics will be less useful in Campaigns consisting of Ad Groups with little to no relevance to one another.

Tip #3: To enable Impression Share metrics in your Adwords interface, 1) Select a Campaign, 2) Click on the Dimensions tab, and 3) Check all boxes.

In plain English, the above can be translated as:

  1. Impression Share: My ads showed up 84.41% of the time they were qualified to show on Google
  2. Exact match IS: If all of my keywords were set to “Exact Match”, my ads would have shown up 9 out of 10 searches (89.95%) for keywords in my campaign
  3. Lost IS (budget): My ads did not stop serving during this time due to my budget maxing out
  4. Lost IS (rank): Ad Rank = CPC bid x Quality Score. My ads did not serve 15.59% of the time because either my CPC bids or Quality Scores were low

As illustrated in the example above:

Impression share + Lost IS (budget) + Lost IS (rank) should always = 100%.

If you want to reach your potential customers at all times, your goal should be to have an Impression Share number close to 100% and the two “Lost IS” numbers close to 0%.

If your Impression Share is far from 100%, here are some tips to help you recover your “lost” impressions:

How does this Impression data help empower you?

Now you know the difference between impressions and Impression Share (IS). Regularly monitor your Impression Share metrics and quickly fix issues as they arise. Low Impression Share hurts your chances at success by allowing your competitors to gain greater market share. Chances are, your competitors are already closely monitoring their IS and actively optimizing to 100% Impression Share. PPC is a dynamic platform – always look for opportunities to make gains over your competitors.

B. Clicks: CTR and QS (Quality Score)

Clickthrough Rate: number of clicks your ad receives divided by the number of impressions.

Basic Question: What is my average Click-Through Rate (CTR)?

At a high level, Clickthrough Rate gauges how convincing your ad is to your target audience. Many marketers often focus only on writing convincing ads. An equally important aspect to CTR is to target the ads to the right audience.

Steps to build a PPC campaign include:

  1. Creating Ad Groups
  2. Selecting and grouping keywords into Ad Groups
  3. Creating Ads for Ad Groups.

As discussed in Part 1 of this series, every Ad Group should consist of closely related keywords and a minimum of two ad variations. And as suggested in Tip #2 , every campaign should be comprised of closely themed Ad Groups.

This all seems pretty elementary… what’s my point?

Tight keyword groups (target your audience) + relevant ads (be convincing) = higher CTR

Don’t just build – build your campaigns and ad groups intelligently.

Take a look at the following sample Ad Group:

Given that the “theme” of this Ad Group is “Hawaii Vacation”, the keywords in this Ad Group seem pretty relevant to each other and the two Ad variations also appear to be pertinent to the keywords. Is this a targeted Ad Group?

Now look at Example #2:

If you are searching for the term “flights to Hawaii”, which Keyword-Ad combination is most likely to win your click? If you chose Ad Group 2, you are correct for the following reasons:

Assuming keyword bids are all equal, why is Ad Group 2 most likely to outperform Ad Group 1?

**Note: the following is a simplification of the relationship between CTR and Google’s Quality Score and should only be used as a high-level reference. Please refer to Google’s Quality Score documentation for additional detail.

Advanced Question: Why does CTR matter?

We discussed earlier that Clickthrough Rate is a measure of how convincing your ad is to your target audience. Google calls this “relevancy” and assigns a numeric value called the “Quality Score”.

Per Google, Quality Score is made up of the following the core components:

It is no accident that CTR is mentioned in three of the seven core components listed above.

CTR matters because it is a metric that can be controlled by marketers. However, while Google’s emphasis on CTR should be noted, it is also important that marketers don’t get tunnel vision with improving CTR. It is not an uncommon mistake for marketers to focus primarily on improving CTR… to their detriment. Creating highly attractive ads for the sole purpose of increasing CTR could be a costly error that ultimately impact your account history, especially if the ads are misleading and result in high bounce rates.

Note: Bing has their version of Quality Score. At this time, it appears that only ad with a “Below Average” Quality Score may have problems serving. Ads with “Average” and “Above Average” scores are eligible to serve.

The main takeaway is to define your audience with you selection of keywords and show ads that are relevant and compelling to that audience.

Get the Power, Use the Power

To some marketers, Impressions and Clicks are just simple one-dimensional metrics. You are not that marketer. Like Tony Montana, you know how to target your customers and are cognizant of your performance vs. competitors (Impressions Share).

At this point, you should be familiar with the following PPC tactics:

I challenge you to apply these learnings to your campaigns and try to find the setup best suited for your conversion goals.

  1. Test – Test your campaign & ad group structures; test your ad copy variations
  2. Learn – Familiarize yourself with Impression Share, Quality Score and Ad Rank; use these metrics as a feedback mechanism to improve your key metrics
  3. Optimize/Refine – Modify what doesn’t work, test new ideas; repeat steps 1 through 3

A Brief Recap

In keeping with Tony Montana’s inspirational mantra, this final installment will discuss a few key strategies to continually acquire customers. To paraphrase Mr. Montana…

“In this online marketing space, you gotta spend the money first. Then when you get your learnings, you get the power. Then when you get the power, then you get the CUSTOMERS.”

In Step 1 we:

  1. Looked at effective keyword / ad copy / landing page relationships
  2. Picked through the good, bad and the ugly ad copy experiences
  3. Talked about the typical consumer clicking behavior

In Step 2 we:

  1. Analyzed the importance of click-through-rate (CTR)
  2. Learned that impression share (IS) is where you may be losing market share

Step 3: Customer Acquisition

At this juncture, are you able to see the forest through the trees? We’ve covered a lot of material in the first two steps (CTR, Quality Score, Impression Share, Ad copy, Landing Page relevancy, etc.) and it is important that you see the end goal through it all:

Success = Customer Acquisition

We’re going to take a slightly different approach with this final segment by stepping through a list of things not to do if you want to succeed in PPC marketing as a means of customer acquisition.

The ABC’s of failing at successful customer acquisition:

  1. Assuming you know it all
  2. Blocking and tackling only gets you so far
  3. Calling it quits

A. Assuming You Know It All

Assumption is an enemy of PPC marketing and is a sin committed by even the most experienced marketers. An astute PPC marketer may unexpectedly find him/herself surrounded by stagnant keywords lists, dated ad copy and uninspiring landing pages and without a clue as to how he or she got there.

Where did we go wrong?

The PPC marketplace is a living, breathing ecosystem that demands constant (and I mean constant) attention.

Relevance is a moving target and you need to make sure your customers find it in your campaigns. Always, always be checking (another ABC acronym to remember!)

1. Check “see search terms” to see which terms triggered your ads. Using this tool provides a high probability of discovering new keywords to add to your existing campaigns.

2. Check your ads (and your competitor’s ads). Do you know about Google’s preference for longer headlines and adding sitelinks?

Longer Headlines

The advantage of “longer headlines” is to (Google said it best) “display more information where it’s most likely to be noticed–in the headline”.

Ads 1 and 3 in the real-life example above are NOT taking advantage of longer headlines.

Sitelinks

Per Google, advertisers have seen upwards of a 30% lift in CTR through the use of Sitelinks.

1-800-Flowers’ use of sitelinks takes up twice the real-estate as the FTD ad.

3. Have a discerning eye: learn from every landing page you visit. This applies to your casual surfing, online shopping, research and competitive analysis. After you’ve clicked on a paid ad, take a few extra seconds to observe the landing page and try to pick it apart. What works well on the landing page? What doesn’t? Take these observations and try to apply it to your site. It just might give you an edge over your competitors!

The bottom line is, between a steady influx of beta tests from Google/Bing and innovations of PPC ads and landing pages from other search marketers, you simply don’t and can’t know everything. Never assume you’ve figured it out. You will get left behind.

B. Blocking And Tackling Only Gets You So Far

This section can be summed up in two words: GO BIG. “Blocking and Tackling” is a phrase that emphasizes the need to excel at fundamentals. We covered many PPC marketing fundamentals in the first two segments and it is important to note that you should always strive to block and tackle your way to success. However, don’t let the routine of blocking and tackling impede your creative and innovative side. Constantly remind yourself that end goal is customer acquisition (and your ongoing challenge) is to constantly build a better mousetrap.

Let us be clear that GOING BIG does not mean be reckless. It means think outside the box and take calculated risks. How? Collect data and create a test plan.

Collecting Data
Tim Ash, founder of SiteTuners and a world renown optimization expert, often asks the question “Who should be in charge of designing landing pages?”

C-level executives (CEO/COO/CTO/CMO)? Nope.

Engineers and Developers? Negative.

Marketers and designers? Keep going.

Creative Agencies? Not quite.

Who’s left? Your Customers!

Run an online survey, ask friends and family about what matters to them (as it relates to your online business) and try to think from your customer’s perspective. Don’t try to think for the customer. Be the customer.

Create a Test Plan (and Test!)
Be intentional and routine about allocating a small test budget and force yourself to test new ideas. If finding ideas to test is challenging, it simply means you need to do more research and ask more questions.

Once you have a list of items to test, find the simplest way to set up and run tests. Leverage free tools already available through Adwords like Campaign Experiments to perform A/B split tests. Whatever your methodology, think of the simplest, cheapest way to test that requires minimal engineering resources.

My parting thought on this topic is this: tests results are useless if reporting and analytics are not reliable. Whether your reporting is homegrown, off the shelf or a bit of both, it must be reliable and trustworthy. If it isn’t, fix it.

C. Calling it Quits

Let’s not sugar coat it – PPC marketing can sometimes be frustrating and often unsuccessful. When should you call it quits?

This is not an easy question to address but I will answer it with additional questions:

How much have you spent to date?

If your answer is “a few hundred bucks”, you may not have given yourself a fair chance at success. Did your “few hundred bucks” yield enough clicks? Were you able to collect sufficient campaign data to make the right decision?

If you answered “a few thousand dollars” or “tens of thousands of dollars”, it might behoove you to have a PPC professional audit your campaigns before you spend more money. Having a professional help optimize your marketing spend may make the difference between bleeding money and turning a profit.

Are your direct competitors continuing to bid on the same keywords?

If you answered “no”, it may be an indicator that 1) you’ve stumbled onto a new and untapped market (somewhat unlikely), 2) competitors have optimized out of those keywords due to low conversions or 3) you’re simply targeting the wrong keywords.

If you answered “yes”, you will want to spend some time analyzing your competitor’s ads and landing pages to find the exactly how they’re able to afford to run their campaigns.

Have you sought professional help?

There is no shame in asking for help in PPC marketing (or online marketing in general). Most business owners wouldn’t write and produce their own radio or TV commercials or design their own print/billboard ads… so why assume that the failure of a self designed/managed online campaign was the medium and not the marketer?

If you’re ready to throw in the towel, please take time to answer these questions.

Conclusion: Get Your Customers

Get your customers, as in, go acquire customers. You already know how to Test, Learn, Refine and Repeat. Continually look for signals in your analytics and data for opportunities to optimize for volume and conversions.

At the same time, get your customers, as in, understand their mindset, comprehend their goals and be prepared to test new ideas that try to convince your potential customers to use your site over your competitors.

This concludes our three part introductory series on PPC marketing. We covered a lot of material, “best practices”, strategies and tips, yet this is just the tip of the iceberg.

Relative to other marketing mediums, pay-per-click marketing is still in its infancy with a very long, promising future. As you establish your own history with online marketing and expand your knowledgebase, remind yourself to be like Tony Montana (only the positive, inspirational qualities… ignore the rest). Be hungry, scrappy, and aggressive and work harder and smarter than your competitors. As Tony said “The World is Yours!”

About The Author: Jacob Shin is the Director of Online Marketing & Customer Acquisition at Savings.com where he focuses on high volume paid search strategy and conversion optimization for US and UK based traffic. Connect with Jacob.

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