Website Ads: Should You Pay For Clicks?

When you use any major search engine, like Google or Yahoo!, paid advertisements are returned along with the natural results. Typically they appear along the top and/or side of your browser window and are labeled "Sponsored Links" or something similar.

These advertisements are a primary way the search engines make their money. But they do it a little differently than traditional advertising: they only charge advertisers when someone clicks on an ad to go to the advertiser's website. Hence the name, Pay Per Click, often abbreviated PPC.

Getting Started with Pay Per Click

The two biggest vendors of Pay Per Click ads are Google and Yahoo!. (You can also buy ads on a number of less-expensive alternatives, with a corresponding reduction in the number of visitors who will see your ads.) The programs of either vendor will walk you through the steps for establishing your account and getting your ads running.

Search Phrases

One of the main setup tasks is deciding which search phrases should trigger your ad to appear. For example, let's say you have purchased a condominium in South Carolina near some famous golf courses that you would like to rent out during the vacation season. You would start by listing phrases that people will use to find a place like yours: "vacation condo south carolina," "golf getaway S.C.," and "golf vacation share condo" might be on your list.

For each phrase you choose, the program will have you enter a price that you are willing to pay for someone to click on your ad. Minimum prices are surprisingly low: 5 or 10 cents per click. However, if you want to be one of the top ads displayed, you have to bid higher than most of the others who are bidding on the same phrase. Top prices can be surprisingly high: 5 to 10 dollars for a click, or even more. To keep your payouts low, stay away from common, high-priced phrases and develop a creative list of niche phrases that aren't as in demand.

Ad Copy

Another major consideration is exactly what your ad should say when someone searches on one of your phrases. You will have space for only a few words, so every one counts. Your goal is to pull people to your website, so think enticement. A few ways to create an enticing offer include giving something away, connecting with a big benefit, or evoking curiosity. For example:

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Daily Budget

One of the best features of these programs is that you set your budget. Let's say you can spend up to $20/day on your ads and your phrases average $1 per click. Your ads could show 20, 200, 500, or even more times during a day, but as soon as 20 people click through to your website, you're ads will turn off for the rest of the day and resume tomorrow. This means that you control exactly how much targeted traffic you are wiling to pay for. You can also affordably try out a program and determine after your test run whether or not it makes sense to continue, as well as tweak your phrases, ad copy, bids, or budget.

What's Not To Like

There are businesses that make nice profits from pay-per-click advertising. There are also businesses that lose their shirts. If you are paying $1 per click and 2% of those people purchase an item, that means you are paying $50 for each new customer. That's great if your average profit from a new customer is $100, but terrible if it's $10.

Another problem is known as "click fraud." Click fraud occurs when someone clicks on your ad for the purpose of charging you for the click, not for getting more information from your website. The types of people who engage in click fraud include competitors who want to run up their rival's costs and some website owners affiliated with the engines who get a percentage of each click made from ads posted on their sites. Recent studies put click fraud anywhere from 10% to 50% of all clicks, so this is not a trivial concern.

Is Pay Per Click for You?

Buying Pay Per Click ads will bring you website traffic, potentially traffic that you can't get any other way. But before you start, make sure 1) the numbers make sense for your business and 2) your website is ready to be a sales-maker. It doesn't do you any good to have lots of clicks if no one buys.