Pay Per Click Advertising

January 17, 2008

By the time our website was up and running in July 2004, pay-per-click advertising was becoming popular and we immediately starting using this form of advertising to attract shoppers to our new website. Pay-per-click (PPC) is an advertising model used on search engines where advertisers only pay when a user actually clicks on an ad to visit the advertiser’s website. Advertisers bid on keywords they think their target market will use as search terms when they are looking for a product or service. When a user types a keyword query matching the advertiser’s keyword list, a small ad by the advertiser is shown. These ads are called a “sponsored ads” and appear along with the “organic results” on search engine results pages. The search engines clearly differentiate between the two types of results so that users are aware which results are paid advertisements and which are not.

While it would be great to rely only on search engines leading customers to our website via organic search results–since these are free–a new website normally does not appear near the top of the organic search results. It normally takes time for a website to be recognized by search engines and assigned a high position. And initially few people even knew our website existed, so it would be rare that they would type in our URL and come directly to our website. So the best way to get quick recognition and begin selling our products via the Internet was by using pay-per-click services.

The price advertisers pays per click depends on the number of bidders on each word or phrase. We were fortunate that our products are highly specialized and there are not that many web businesses that compete for the words that we have chosen. Thus the cost per click has been relatively low, averaging thirteen cents per click over the last several years. The cost per click has also been rising gradually over time, with the average last month being up to eighteen cents per click. However, the effectiveness of our campaigns has increased even more rapidly, so that the cost of the ads relative to our Internet sales has declined quite dramatically over the past three and a half years. Clearly Internet sales at the LadyBug Shop would be a fraction of what they are today if it were not for pay-per-click advertising.

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