In my last post I explained how and why PPC can be so effective compared with traditional advertising. However, if it is not done smartly it can waste you lots of money.
Let’s consider Google Adwords because its by far the biggest PPC player around. Superficially its an auction. You set the maximum cost per click (CPC) you are prepared to pay to have your advert displayed and if its higher than your competitors, the ad is displayed in the first position. (Whether that’s necessarily the best position to bid for in every case I’ll leave to another time.) But that’s not how Google works. They want to give people the most relevant search results and that is not guaranteed by how much advertisers are willing to pay. So they use something called Quality Score (QS). Basically the formula is applied to the keywords you are bidding on and considers various factors to calculate the relevancy of your keyword to your ad text and to a user’s search query. Keyword QSs are frequently updated and closely relate to its performance. Usually, a high QS causes your keyword to display ads in a higher position and at a lower cost-per-click (CPC). This can be summarised as Ad Rank = CPC Bid x QS. So, it’s the interaction between your maximum CPC bid and your ad position QS that will ultimately decide which position your ad will be displayed.
Can you see the implications of this? If you do not focus on the quality and relevancy of your ads and just up the maximum CPC to try and ensure your ads are displayed, you could potentially be throwing huge sums of money away. This is just one key area that can be a major pitfall for some businesses and explains why many try a PPC campaign and then abandon it after a short while because they fail to see a return on their investment. This contrasts with others who have seen massive returns from well-managed PPC.
Watch out for some more pitfalls to avoid in future posts.
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