Pay Advertising Models

The success of a PPC campaign is really measured in conversions. What combination of keywords and ad clicks are converting into sales or leads, at what rate and how much are they costing you? These are the questions you should hope to answer. Sometimes though, just to get started, traffic is good and the old adage about if you throw enough on the wall, some will stick applies here as well. Currently between Google and Yahoo! Search Marketing, advertisements can reach 75%+ of all Internet searchers but that will be changing soon as MSN, Ask and other alternative search engines pull away from the Google and Yahoo! networks.

It’s important that you pick the pay advertising method that will work best for you.

Contextual (push) vs. Search (pull)

Contextual advertising involves an advertisement that appears dynamically on a Web page. In a nutshell, a contextual ad system scans the content of a Web page for words and returns ads to the Web page based on those words. For example, if the visitor is viewing a site about travel in San Diego, and someone visits a site that is a contextual advertising publisher, the visitor might see ads for hotels, car rentals or airline tickets.

Search advertising is better known to searchers as the Sponsored Listings. Much the same as organic listings, someone enters a keyword (or combination of keywords) into a search box and along with organic result, paid advertising results are also served up as they relate to that particular keyword or phrase. Learn more about how to select keywords for search engine marketing campaigns.

Pay Per Click

Pay Per click, or PPC, does just what it says. You bid an amount that you have to pay each time someone clicks your ad. Clicks can cost as little as $0.01 and as much as you are willing to bid for your more popular keyword terms. Advertising setup fees vary and many search engines will apply their setup fee to clicks. Another term for pay per click (PPC) is cost-per-click (CPC).

There are two search engines that cover the majority of the market today, Google AdWords and Yahoo! Search Marketing. Between them they claim to cover at least 80% of the marketplace. For the business owner with a smaller budget or wanting to expand their reach, there are many alternative pay advertising companies competing for advertising dollars today. Among them are Search123, Searchfeed, MIVA, 7Search, Kanoodle, PageSeeker and Enhance. Offering minimum bids as low at $0.01 and such advantages as live chat (Enhance), free consultation to get started (Kanoodle), and fraud detection (7Search), useful tools help gauge the past performance of keywords, ROI, and a total campaign cost estimator (Searchfeed), these agencies offer some businesses a way to enter the market targeting more keywords with a minimal budget.

Cost-per-Impression

CPM stands for cost per 1,000 impressions. Although not always sold in bundles of 1,000 impressions, CPM has become the standard term for any advertising sold on an impression basis. CPM has long been a popular pay advertising model starting with banner ads in 2004 and remains the basis of many Internet marketing campaigns. Simple and effective, banners can be designed to generate clicks, promote brands, sign up for contests and produce leads. The banner ad model has declined in popularity over the years with the advent of newer Internet advertising formats, but when a graphical ad works for your campaign and is managed effectively, it can bring significant success.

Google has introduced image ads as a way of advertising on content sites through their popular AdWords program, and Microsoft offers yet another variation with their pay per visitor model at the Microsoft Small Business Center. More information can be found at the Microsoft Small Business Center and in this article on The Ad Banner Turns 10 by Tessa Wegert.

Text based ads sold on a cost per click basis are also a prevalent form of contextual advertising allowing Web site owners (publishers) to display advertisers ads on their own sites. Advertisers that opt for CPM (cost per impression) ads choose a price, select the specific sites on which to show their ads (CPM ads through Google are always site-targeted.), and pay each time their ad appears. In Google’s ad auction, CPM ads compete against pay per click (or CPC, cost per click) ads, so only the highest performing ads are served. Cost per impression advertisers wanting to compete in this arena will need to bid a higher CPM than the existing CPC ads in order to show.

Pay per call

Pay per call is the newest form of pay advertising to hit the marketing world. Like pay per click, the advertiser only pays when a call is placed between the search visitor and the advertiser. This is accomplished in a variety of ways depending on the agency handling the call, but advertisers are very excited about the potential conversion rate for this type of advertising. Historically, conversions are more attainable when a buyer reaches a live person to talk to, and the pay per call model helps accomplish just that. Tracking of the calls is done in a variety of ways and it sounds like this form of pay advertising will be costing a little more than the traditional pay per click model.

Flat-rate-Placement

In a flat-rate-placement (FRP) program, advertisers pay a fee (as little as $1.00 per month) no matter how many clicks they get. Similar to cost-per-impression but without the impression limit, your rate is fixed for the month. Tygo.com has a program called Smart Placement where they assert that with their program your budget won’t run out of money and there is no need to worry about click fraud from unethical affiliates or competitors clicking your ads and wasting your ad dollars.