The Advantages and disadvantages of paid search marketing PPC
Paid search listings, or sponsored links, are very important to achieve visibility in search engines when an organisation is in a competitive market, given the competition to appear on the first page of the natural listing for target keyphrases.
As a result, many companies with an established paid search programme may generate more visits from paid search than SEO, although this wouldn’t be true for companies that are class leaders in SEO.
Advantages of paid search marketing
The main benefit of paid search marketing are:
● The advertiser is not paying for the ad to be displayed. As we explained at the start of wastage is much lower with paid search compared to traditional advertising. Cost is only incurred when an ad is clicked on and a visitor is directed to the advertiser’s website.Hence it’s a cost-per-click (CPC) model! However, there are increasingly options for paid search marketing using other techniques – Google also offers CPM (site targeting) and CPA (pay-per-action) options on the Google Display Network (GDN),where contextual ads are displayed on third-party sites relevant to the content on a page.
● PPC advertising is highly targeted. The relevant ad with a link to a destination web page is only displayed when the user of a search engine types in a specific phrase, so there is limited wastage compared to other media. YouTube users can also be targeted through Google’s ‘promoted video’ PPC option. Users responding to a particular keyphrase or reading related content have high intent or interest and so tend to be good quality leads.
● Good accountability. With the right tracking system, the ROI for individual keywords can be calculated.
● Predictable. Traffic, rankings and results are generally stable and predictable in comparison with SEO.
● Technically simpler than SEO. Position is based on combination of bid amount and quality score. Whereas SEO requires long-term, technically complex work on page optimisation, site re-structuring and link building.
● Remarketing. Google offers retargeting through cookies placed on the searchers computer to display ads on the content network after someone has clicked on a paid search ad or visited a specific page on a site as a reminder to act.These can be effective in boosting the conversion rate to lead or sale.
● Speed. PPC listings get posted quickly, usually in a few days (following editor review). SEO results can take weeks or months to be achieved. More over, when a website is revised for SEO, rankings will initially drop while the site is re-indexed by the search engines.
● Branding. Tests have shown that there is a branding effect with PPC, even if users do not click on the ad. This can be useful for the launch of products or major campaigns.
Disadvantages of paid search marketing
The main disadvantages of paid search marketing are:
● Competitive and expensive. Since pay-per-click has become popular, some companies may get involved in bidding wars that drive bids up to an unacceptable level. Some phrases such as ‘life insurance’ can exceed £10 per click.
● Inappropriate. For companies with a lower budget or a narrower range of products on which to generate lifetime value, it might not be cost-effective to compete.
● Requires specialist knowledge. PPC requires a knowledge of configuration, bidding options and of the reporting facilities of different ad networks. Internal staff can be trained, but they will need to keep up-to-date with changes to the paid search services.
● Time consuming. To manage a PPC account can require daily or even hourly checks on the bidding in order to stay competitive. This can amount to a lot of time. The tools and best practice varies frequently, so keeping up-to-date is difficult.
● Irrelevant. Sponsored listings are only part of the search engine marketing mix. Many search users do not click on these because they don’t trust advertisers, although these are mainly people involved in marketing! Best practice in planning and managing paid search marketing With PPC, as for any other media, media buyers carefully evaluate the advertising costs in relation to the initial purchase value or lifetime value they feel they will achieve from the average customer. As well as considering the cost-per-click (CPC), you need to think about the conversion rate when the visitor arrives at your site. Clearly, an ad could be effective in generating click-throughs or traffic, but not achieve the outcome required on the website such as generating a lead or online sale. This could be because there is a poor incentive call-to-action or the profile of the visitors is simply wrong. One implication of this is that it will often be more cost-effective if targeted microsites or landing pages are created specifically for certain keyphrases to convert users to making an enquiry or sale. These can be part of the site structure, so clicking on a ‘car insurance’ ad will take the visitor through to the car insurance page on a site rather than a home page.
shows how cost-per-click can differ between different generic (e.g. ‘car insurance’) and specific (e.g ‘women’s car insurance’) keywords, as well as the impact of different conversion rates on the overall CPA. The cost of PPC search in competitive categories and why companies will strive to maximise their quality score to help reduce costs.
The cost per customer acquisition (CPA) can be calculated as follows:
Cost per acquisition = one hundred over cost–per–click conversion rate % times cost per click. Given the range in costs, two types of strategy can be pursued in PPC search engine advertising.
If budget permits, a premium strategy can be followed to compete with the major competitors who are bidding the highest amounts on popular keywords. Such a strategy is based on being able to achieve an acceptable conversion rate once the customers are driven through to the website. A lower-cost strategy involves bidding on lower-cost, less popular phrases. These will generate less traffic, so it will be necessary to devise a lot of these phrases to match the traffic from premium keywords.
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