Under pay per click (PPC) marketing programs, you bid competitively on specific keywords, setting the maximum amount you’re willing to pay every time a viewer clicks through to your site. In the past, the ad provided by the highest bidder usually appeared at the top of the list of sponsored searches, with other ads appearing in descending order by bid amount.
Now, however, the major search engines consider the quality of the ad and the landing page on the website when assigning appearance.
Premium sponsored positions appear above the natural search results. You can’t pay to have ads appear there on Google; the order of appearance rotates and is derived from ad quality. Yahoo! offers these ads through a separate advertising program at relatively expensive monthly rates. The ads are bought primarily by large companies running broad-based branding campaigns.
PPC ads are displayed the same way on other search engines, such as AOL or Alta Vista, that receive their feeds from Google or Yahoo! (See Search Engine Relationship Chart to understand which search engines generate or receive results from another.) However, some, such as AOL Search, display only the top few PPC ads in the feed.
Although the number of people who prefer organic search results may be higher than the number who prefer PPC, visitors from PPC ads bring in more money! In a two-year study, Engine Ready found that conversions from paid traffic were 20 percent higher than those from organic search results and that the average order value was 18 percent higher.
These numbers make sense: People who click ads are more likely, by definition, to be buyers than those using organic results to research topics.
As with natural search engine results, your ad usually needs to appear above the fold (on the portion of the page the user sees without scrolling), in the top five listings, to have a reasonable chance of being viewed and receiving a click-through.
The top position in the right column of PPC ads may attract more views. You may have more clicks on that ad, but you may receive more conversions from an ad in positions 2 through 5 (above the fold).
Some advertisers stretch their budgets by selecting inexpensive, less frequently used keywords and relying on the long-tail effect to produce click-throughs to their sites. (In the long-tail effect, the cumulative value of many low-volume terms may equal or exceed that of a few, high-volume terms.) Your best bet is to experiment.
Requesting a specific position is now more difficult on Google. In a recent round of advertiser interface changes, it removed position preference as an option. Advertisers must now establish a specific rule to raise bids to the level of positions 1 through 5. Google has added the capability of estimating the cost to achieve that prominence.
The limited onscreen real estate on popular search terms puts small businesses with small pocketbooks at a disadvantage on the most popular terms. Scarcity leads to higher prices: The cost of bidding on certain popular search terms has become prohibitive for some and unprofitable for others.
In this case, avoid single words such as gifts, as keywords. Instead, try using phrases (for example, children’s birthday gifts) or one of the more narrowly defined keyword options, such as an exact match.
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Source:http://www.dummies.com/how-to/content/devising-a-pay-per-click-ppc-marketing-strategy.html
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