Is Pay per Click Advertisement a Waste of Money?

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The internet has helped change how people communicate and find information. As the internet matured in the 1990s, the advent of e-commerce, the ability the purchase goods and services online, helped usher in a new era where the internet could become the main vehicle for domestic and international commerce. This is where internet marketing plays a very important role.

The Age of Internet Marketing

Internet marketing arose from a need to reach the audience that consumed information on the internet. Like conventional advertising, internet marketing captures the attention and interest of consumers to help with brand creation and to make interested consumers into customers. Where internet marketing truly differs from conventional advertising is the multitude of tools a company can employ to reach potential customers across the internet. These tools employ a variety of strategies that may organically or inorganically capture the attention of consumers and promote brand awareness. On those tools is a marketing strategy called pay-per-click advertising.

Pay-Per-Click Campaigns

Pay-per-click (PPC) advertising utilizes the tool of advertisement banners on websites. For some websites, advertisement banners will appear across a website that help promote a brand. These advertising banners not only show the brand, but they also act as a hyperlink. When a consumer is interested in the brand from the advertisement, they can click the banner and they will be brought to the brand’s website. PPC works from a brand paying a website to host their particular banner. Let’s say Company X asks the owner of Website A to host X’s banner. Company X will pay the owner of Website A every time a visitor to Website A clicks the banner of Company X. The method is supposed to be designed as a win-win strategy. Website A receives a stream of revenue from Company X and Company X captures an audience from regular or random visitors of Website A. PPC is more complicated than the model example shown above. For starts, a company will research how effective their brand would be on a specific website. This is a similar logic in conventional advertising; a company that wants to sell to young men would not pay to put their advertisement in a magazine meant for retired women. PPC-target-audience

Likewise, companies research a potential target audience and coordinate with websites that target audience most likely frequents. In addition, since websites that host the banner advertisement are benefited from this strategy, the websites end up honing how their websites are searched on the internet. To elaborate, search engines pick up websites that best meet a search query based on the keywords a website has. The more a website is rich in keywords that captures the typical queries of a target audience, the more likely that website will be within the first page of search results from a search engine. Psychologically, this is very beneficial, as most internet users may only use the search results that are on the first page of results. So, the relationship between advertisers and host websites is seen as equally beneficial. Advertisers are able to capture key audiences and promote their brand and websites better their search engine optimization (SEO) so more consumers from a target audience visit the website and potentially click on the advertisements. Even if this strategy, on a simplistic model level, seems beneficial for all parties, many internet marketers may debate the effectiveness of a PPC campaign. Much of the debate may hinge on the particular brand or the particular website that has been chosen to host the advertisements. There are other considerations as well.

Keyword Issues

One of the biggest issues for the advertiser and the host website are keyword choices. The science behind keywords is a growing field in internet marketing with much of the focus on enhancing the SEO of a website. However, like anything in business, failure is a possibility. The wrong keywords may be chosen, which will radically reduce the effectiveness of the PCC campaign. Keywords may be incorrectly chosen due to human error (thinking that specific words are what a target audience is searching for) or from improper analysis of web analytic results that often show what keywords and their variations are most used on search engines.

No Structured Campaign

A PPC campaign is supposed to have a structured way it is executed. No conventional advertising campaign would just throw money at hosting services, like a magazine or newspaper, and expect brand awareness. Understanding where a target audience that the brand company wants to capture would visit on the internet is crucial and this will take time to consider. Even if some host websites seem to make rational sense that a target audience would visit it, is it the best website to have the advertisements? At the same time, no company should put all their eggs in one basket. Diversifying the websites that the banner advertisement would be on could help maximize potential customer capture, but this will take and money to execute as well.

Every Click Will Not Equal a Sale

Pay-Per-Click-Campaigns

This is a tough fact. Just because 100 people click on an ad does not mean most of those 100 people will end up buying a good or service. This is hard to accept for many companies, but many people may click an ad and just surf the website and then leave. Not only did the brand company not gain a customer, but they have to pay the host website money for the click. Internet marketers would argue that the best strategy to avoid this is to have a better landing page. For example, instead of the hyperlink bringing the person to the website homepage, it should bring them to the exact destination on the website that satiates their inquiry. Still,this cannot guarantee a customer.

Conclusion: Time and Money and Loss or Success

What these considerations are highlighting the most is that PPC campaigns can take a lot of time and thought to be properly executed. This can involve lots of money to invest in analytics and research. Finally, the results may not be as fruitful as one thinks. The worst feeling is not only knowing that the PPC campaign was poorly executed, but that as the brand company is paying the host site for minor clicks. Say the whole campaign costs $300 to execute and the deal with the host website is $5 per click. Obviously, the brand company is hoping for a large target audience capture and increase revenues. Instead, a company may only get 20 clicks for their ad on a website and only 10 of those clicks translate in a customer relation or sale. Not only was $300 wasted, the company now has to pay $100 to the host site for a low click rate and the brand only gained 10 customers. This may be tough to swallow, but, like anything in business, there can be great success with this strategy. Say, instead of 20 clicks, there were 2,000 clicks and 2/3s of those clicks translated to new customers. Yes, the brand company now has to pay the host website $10,000, but there could be tens of thousands of dollars in new sales thanks to this capture of new customers. Advertising is a business and business investments can fail or thrive. If a company has the time and money and wants to take a risk, PPC can be worth the money.

Written by Eric Sornoso

Eric Sornoso

Eric Sornoso is an avid learner and online marketing consulting. He runs Infographic Seeding and Fish Free Media, and is an author for several major SEO publications, including SocialMediaExaminer.com.

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