Millions of people use Google and Yahoo each day to research for information, look for something they are interesting in or to purchase something. This search process entails typing into Google a 'keyword phrase' of what the person is looking for. A keyword phrase can be a single word such as 'accommodation' or it can be a multi-word phrase such as 'central coast discount accommodation'. 

With PPC advertising you can have an ad display for ANY KEYWORD PHRASE you want.

Unlike traditional print media advertising, where only a small percentage of the total readership will be interested in what you sell, with PPC advertising you decide exactly who sees your advertisement and who doesn't. Maximising your return for your advertising dollars.

How much will PPC cost?

Pay-per-click advertising works like an auction system, where the advertiser that bids the most for a particular word gets the top position.

Because there are only 8 positions available on the first page of the search engines for any particular keyword phrase, bidding can become quite fierce, especially for keyword phrases that produce substantial profits for advertisers.

PPC advertising can cost anywhere between 5c per click for less competitive keywords, to as much as $25 per click or more for highly competitive, very profitable keywords such as 'refinance mortgage'.

Other factors which will contribute to how much you pay per click include:

>>	What product or service you sell - the more businesses there are competing for the same keyword phrase the more you will have to pay per click, especially if the potential profit of a sale is in the hundreds, or thousands, of dollars.
>>	How much profit you earn per sale - with PPC advertising you can track exactly how much it costs you to bring in a new customer. The amount you can afford to pay to bring in a new customer must be less than the profit you make per customer.
>>	How effective your landing page is - when somebody clicks on your ad they are taken to a page on your site (this is called the 'landing page'). The only focus of that page is to convert that website visitor into a sale or lead for your business. The better your landing page converts, the more you can afford to pay per click.

With pay-per-click advertising, the most profits are made by those advertisers that have the highest converting online marketing strategy because the less website visitors it takes for you to make a sale, the more you can afford to pay per click.

 

When using PPC advertising on Google and Yahoo, your success is based on the ability of your website to convert as many website visitors to sales or leads.

Because PPC advertising runs on an auction type system, the amount you can afford to pay per click really depends on how much profit you make per sale and how much it costs you to make that sale.

Let's take the following example:

You're paying $2 per click to advertise on the keyword 'prada shoes'... if 100 people click on your ad it costs you $200. Let's say you make $75 profit per sale. If 2 of those 100 people purchase your product (a 2% conversion rate) you'll have only made $150 profit for a $200 outlay, which means you cannot keep advertising.

On the other hand if 5 of those 100 people purchased, giving you a 5% conversion rate, you would have earned $375 (ie. 5 x $75) from a $200 outlay. Now you're in the money. This means that you can keep up your PPC advertising and start looking for other online marketing channels.

To generate maximum profits from online marketing you need a high converting website.