What is PPC (pay-per-click) marketing? Pay-per-click marketing is a way of using search engine advertising to generate clicks to your website, rather than “earning” those clicks organically. You know those sponsored ads you often see at the top of Google’s search results page, marked with a yellow label? That’s pay-per-click advertising (specifically Google AdWords PPC , which we’ll talk about below).
Here’s how it works: Every time your ad is clicked, sending a visitor to your website, you pay the search engine a small fee. (That’s why it’s called “pay per click.”) When your PPC  campaign is well-designed and running smoothly, that fee will be trivial, because the visit is worth more to your business than what you pay for it. For example, if you pay $10 for a click, but the click results in a $300 sale, then using PPC is a no-brainer.
Ultimately, pay-per-click marketing is good for everyone:
- It’s good for searchers – Research indicates that searchers click on paid search  ads more often than any other form of digital advertising. This means that people really don’t mind being advertised to, provided that the products and services advertised actually fit the searcher’s needs. And because we use search engines when we’re looking for products and services, the results, including the ads, are generally highly relevant to what we’re looking for. Plus, Google has developed an excellent formula for ensuring that PPC ads meet the user’s needs.
- It’s good for advertisers - Advertisers are offered a unique means of putting their message in front of an audience who is actively and specifically seeking out their product. Because searchers reveal their intent  through their search query, advertisers are able to measure the quality of traffic that results from search engine clicks.
- It’s good for search engines – PPC enables search engines to cater to searchers and advertisers simultaneously. The searchers comprise their user-base, while the advertisers provide them with their revenue stream. The engines want to provide relevant results, first and foremost, while offering a highly targeted, revenue-driving advertising channel.
The unique advantage of PPC marketing is that Google (and other ad networks) don’t just reward the highest bidders for that ad space, they reward the highest-quality ads (meaning the ads that are most popular with users). Essentially, Google rewards good performance. The better your ads, the greater your click-through rates and the lower your costs.
Google AdWords for Pay-Per-Click Marketing
Google AdWords – by far the most popular PPC platform – operates on a pay-per-click model, in which users bid on keywords and pay for each click on their advertisements. Every time a search is initiated, Google digs into the pool of bidding AdWords advertisers and chooses a set of winners to appear in the ad space on its search results page. The “winners” are chosen based on a combination of factors, including the quality and relevance of their keywords  and ad text , as well as the size of their keyword bids. For example, if WordStream bid on the keyword “PPC software,” our ad might show up in the very top spot on the Google results page.
More specifically, who gets to appear on the page and where is based on an advertiser’s Ad Rank, a metric calculated by multiplying two key factors – CPC Bid (the highest amount an advertiser is willing to spend) and Quality Score  (a value that takes into account your click-through rate, relevance, and landing page quality, among other factors). This system allows winning advertisers to reach potential customers at a cost that fits their budget.
The good news for advertisers is that in giving the search engines what they want (relevant pay-per-click ads ) you're also delivering targeted advertisements to people who are literally seeking out your product. It’s a win-win.
Is Pay-Per-Click Marketing Right for You?
As we’ve established, PPC advertising offers a unique opportunity to:
- Grow Your Customer Base - Connect with searchers actively looking for products and services like yours, and respond to that need by providing them with an offer relevant to their search query.
- Generate Leads at Low Costs - Because pay-per-click marketing allows you to reach leads and prospects when they’re researching and looking to buy, it’s a highly effective way to bring interested visitors to your site. Plus, you can enjoy an algorithmically generated discount from the search engines in exchange for making their users happy.
The truth is, pay-per-click marketing can work for almost any kind of business, whether you’re looking to sell products through an e-commerce website, generate leads for a service-based or software business, build brand awareness, or even drive foot traffic and phone calls  to your local store.
The difficulty is in the execution. In order to get the most out of your pay-per-click marketing campaign, you need to follow a few best practices.
Keyword Research for Pay-Per-Click Marketing
Keyword research  for PPC can be time-consuming, but it is also incredibly important. Your entire PPC campaign is built around keywords, and the most successful AdWords advertisers continuously grow and refine their PPC keyword list. If you only do keyword research once, when you create your first campaign, you are probably missing out on hundreds of thousands of valuable, long-tail, low-cost and highly relevant keywords that could be driving traffic to your site.
An effective PPC keyword list should be:
- Relevant – Of course, you don't want to be paying for Web traffic  that has nothing to do with your business. You want to find targeted keywords that will lead to a high PPC click-through rate , a low cost per click , and increased profits. That means the keywords you bid on should be closely related to the offerings you sell.
- Exhaustive – Your keyword research should include not only the most popular and frequently searched terms in your niche, but also extend to the long tail of search . Long-tail keywords are more specific and less common, but they add up to account for the majority of search-driven traffic. In addition, they are less competitive, and therefore less expensive.
- Expansive – PPC is iterative. You want to constantly refine and expand your campaigns, and create an environment in which your keyword list is constantly growing and adapting.
Your pay-per-click keyword strategy should also include regular negative keyword discovery  – negative keywords prevent your ads from showing up for searches that are not relevant to your business and are unlikely to convert.
Managing Your Pay-Per-Click Campaigns
Once you've created your new campaigns, you’ll need to manage them regularly to make sure they continue to be effective. In fact, regular account activity is one of the best predictors of account success. You should be continuously analyzing the performance of your account – even just 20 minutes a week  can make a big difference – and making the following adjustments to optimize your campaigns:
- Add PPC Keywords: Expand the reach of your pay-per-click campaigns by adding keywords that are relevant to your business.
- Add Negative Keywords: Add non-converting terms as negative keywords to improve campaign relevancy and reduce wasted spend.
- Split Ad Groups: Improve click-through rate (CTR) and Quality Score by splitting up your ad groups into smaller, more relevant ad groups, which help you create more targeted ad text  and landing pages .
- Review Costly PPC Keywords: Review expensive, under-performing keywords and shut them off if necessary.
- Refine Landing Pages: Modify the content and calls-to-action (CTAs) of your landing pages to align with individual search queries in order to boost conversion rates . Don’t send all your traffic to the same page.
By continuously optimizing your pay-per-click campaigns, you’ll be able to grow your customer base and increase ROI.
Use The AdWords Performance Grader to See How Your PPC Campaign Measures Up
Once you’ve established your AdWords campaign , you can use WordStream’s AdWords Performance Grader  to check your progress. The Performance Grader is a comprehensive free tool that helps you evaluate how your AdWords pay-per-click campaigns are performing in key areas such as:
- Quality Score
- Text Ad Optimization
- Impression Share
- Click-Through Rate
- Use of Negative Keywords
The AdWords Performance Grader’s expert analysis shows you where and how to make improvements to your AdWords campaign that will improve your performance and save you money. Following PPC best practices have never been easier – it’s fast, secure, and free. Get your free performance report now .