Dallas Pay Per Click (PPC) Advertising Management

In the world of online advertising, nothing gets your website traffic faster than pay per click advertising. Management of a campaign on Google or Yahoo involves well-thought out strategy. Let's explore PPC and explain how it works.

First, we started with our Guide to Understanding local online advertising in Dallas.

Part 1: Pay Per Click Advertising in Dallas  
Part 2: Search Engine Optimization in Dallas

Part One: Online Advertising using Pay Per Click Advertising in Dallas or Anywhere

Just what is Pay Per Click (PPC) advertising? Well, let's take a look. In the snapshot below, a search was done for Dallas internet consulting. This page is known as a search engine ranking page, or SERP.

The reason I am breaking down local online advertising is based on the Yellow area (paid listings) and the Purple area (organic or natural rankings). The yellow, paid advertising area is the easiest, and fastest way to advertise locally online.

The purple area represents the natural, or organic search results (our website is ranking naturally on page one for Dallas internet consulting). The yellow areas at the top of the page and on the right represent Sponsored Links, or paid advertisements. This yellow area is where pay per click ads are shown. Let's dig into this a little deeper.

How Pay Per Click Advertising Works

Google, Yahoo and MSN make money by selling advertising online. Let's start with the basics, shall we?

Keywords and keyword phrases are what people search for on the various search properties like Google and Yahoo. If you are trying to sell lamps, you don't just use the keyword lamp in your ad. Why? A one word keyword is too broad and not specific enough. So let's say you sell desk lamps and floor lamps. Your keywords might include:

• desk lamp
• desk lamps
• floor lamp
• floor lamps
• executive desk lamp
• modern floor lamp
• dallas floor lamps

Notice the plurals? Google allows you to bid on singular, as well as plural forms of the keyword (Yahoo doesn't allow plurals, but your ad would show for plural searches).

Now, let's write ad copy to incorporate the keyword phrase:

Desk Lamps for Less
20% Off All Desk Lamps This Week!
Visit Our Dallas Store and Save.

Each time someone searches for Desk Lamps, your ad would appear in the Sponsored Listings (in the Yellow area above). This is called an Impression. Each time someone clicks the ad, your company gets charged a fee for the click. Hence the name, pay per click advertising.

If your ad was displayed 200 times (impressions), and was clicked on 13 times, you can calculate the Click Through Rate (CTR) of the ad by dividing 13 by 200, which is a 6.5% CTR. (Note: all pay per click advertising allows you to see the number of impressions, click through rate, average cost of the click, and the average position of the ad).

Geo-targeted ads and Negative Keywords

What if your store is only in Dallas, and not in Fort Worth? Ads can be targeted to countries, states, cities, or within coordinates of your store. Targeting your ads to display to small regions reduces the amount of possible impressions. If your ads are targeted to Dallas-Ft. Worth, the search engines only show your ad for searches from people within that market.

Negative keywords: In this scenario where your store is in Dallas, the pay per click advertising you are doing doesn't help users in Ft. Worth, nor do you want someone in Ft. Worth clicking your ad. What do you do? You use a negative keyword. A negative keyword will not show your ad for keywords that you are targeting. In this case, Fort Worth and Ft. Worth would be negative keywords.

• -fort worth
• -ft. worth
• -table
• -designer

Notice the negative sign before the negative keyword? That's how Google recognizes it is a negative keyword. Also, since you don't sell table lamps or designer lamps, we used those negative keywords in the list.

How much does pay per click advertising cost?

When you click on an ad, you are taken to that company's website. How much is that click? It depends on what you are willing to spend, the quality of your ad copy that inspires people to click it, and the position of the ad (on page one, position one is not always the best spot, by the way). At the time this article was written, an add with a $0.25 cost would get you on the first page of the search results in position ten for the keyword executive desk lamp.

Measuring the Effects of PPC Advertising

What other form of advertising do you know of that has immediate results, and is completely measurable? With PPC advertising, you can control your daily or monthly budget precisely. You spend what you want to spend. Twenty bucks a month? No problem. Google and Yahoo and MSN allow you to control your daily budget and the maximum cost per click (CPC) you are willing to spend.

The Landing Page

The page you land on the company's website after clicking the ad is typically called a landing page. The quality of this page is also a factor, as you want this page to be relevant to the keyword used in the ad and the ad copy. If you search for desk lamps, click on an ad for desk lamps, but land on a floor lamp page, then that page is not relevant to the click, and you just lost the cost of that click.

Tip: Most companies make the mistake of pointing all of their PPC advertising ads to the company's home page. The best practice is to point the advertisement to the most relevant page. If you are selling red widgets, send them to the red widgets page.

Conversion Rate - It's all about Conversions in Pay Per Click Advertising!

You have determined your keywords, written your ad, pointed the ad to a landing page relevant to the keyword. What happens next? Hopefully, a sale! When someone purchases the item you are advertising, this is calculated by dividing the number of orders by the number of clicks. In our prior example:

• 200 Impressions
• 13 Clicks on the ad, for a 6.5% click through rate (13 clicks divided by 200 impressions)
• 1 order, for a 7.6% conversion rate (1 order divided by 13 clicks)

Calculating Profitability

Now let's see if this was profitable. Say you were selling the lamp for $40, and your cost of the lamp was $21. Your gross margin is $19 dollars, or 47.5%. The cost of 13 clicks at $0.25 was $3.25.

• Selling price of $40 minus cost of $21 = $19.
• $19 Gross margin minus PPC advertising cost of $3.25 = $15.75, or 39% net margin
• Shipping costs in this case are the responsibility of the purchaser

Local advertisers that are new to this often perceive online advertising as complex, expensive and time-consuming. After all, you have a business to run, right? Let's begin by exploring these perceptions.

Myth buster: Pay per click, local online advertising is complex. No one knows your business better than you. Local online PPC advertising isn't complex, it is just something that may be new to you. Once informed, you will actually see how it works profitably.

Myth buster: Pay per click advertising is expensive. As we stated above, you have the ability to spend what you want to spend. We demonstrated profitability to show that online pay per click advertising can be profitable if managed correctly.

Myth buster: Pay per click advertising is time consuming. The main factor in managing a pay per click campaign depends on the size of the online campaign. The largest amount of time is spent on keyword research (including negative keywords), writing ad copy, and setting up the various accounts in Google, Yahoo, and MSN. Most companies start with just one search property, such as Google. Once set up, managing the account and online advertising can take an hour a week for a small, 50 keyword campaign, to an hour or two a day for larger campaigns advertising locally online (one of our clients has over 40,000 keywords, but that is not typical)!

Now, let's explore the organic search results, and how it works.
Go to part 2: Dallas Search Engine Optimization

Have a question about pay per click advertising in the Dallas area? Contact us in Dallas at 214-821-2251 or use our convenient Contact Form with your questions. We offer full service PPC advertising, keyword research, campaign setup, and management. Or, we'll help you set up your account, and train you how to manage it yourself!

Article by Cliff Koraska, © Copyright 2007