Pay per Click Advertising: Why Businesses are Using and Profiting from Paid Search

Some time ago, businesses realised that their prospects were searching online for products and services and that, if they wanted to reach their target market, they needed to have a website. However, the growth of the internet as an advertising platform, resulted in tougher competition. Business owners are now realizing that just having a website is not enough and optimising it for search engines is often also not enough. The pure “organic” or free traffic won’t keep the cash register ringing if the market is very competitive. They need pay per click or PPC advertising to supplement their “organic” online marketing efforts.

Unlike SEO, you need to pay for traffic when implementing PPC, which is also known as paid search. There’s a good reason why the big players are investing heavily in this channel – they are earning from it. Indeed, PPC can boost your traffic and contribute towards better search results. When you want instant, targeted traffic, paid search is the way to go.

What Marketers Get from PPC

Marketing research firm MarketingSherpa research results showed that PPC accounts for 25% of online marketers’ budgets. One can assume that the big players are getting something out of pay per click. Otherwise, they would not be channeling such a larger portion of their budget to PPC. The same survey showed that marketers primarily use PPC advertising to:

  • Increase web traffic – 63%
  • Generate more leads – 62%
  • Increase online sales revenue – 57%
  • Achieve or increase measurable ROI – 50%

These figures show that increasing a website’s traffic and leads are the main benefits of a PPC campaign. Mostly, this is due to PPC’s ability to display your ads on the first page of Google instantly making it an logical choice for marketers who can’t wait for the results of search engine optimization (SEO) to take effect. Because PPC’s return on investment (ROI) is measurable, it’s an good choice for businesses that want to track their ad spending.

Paid Search Fuels Google’s Growth

Google is built on advertising, especially PPC. The search engine not only displays PPC ads on search results, it also displays advertisements on its web properties like Gmail and YouTube, as well as via millions of affiliate websites, collectively known as the Display Network.

Google’s revenue rise can be largely attributed to paid search’s massive growth through the years. Surveys show that paid search is already a multi billion industry worldwide. It’s bigger than radio advertising , outdoor advertising and cinema advertising. It’s also closing in on TV advertising, bringing down the gap every year.

Biggest PPC Players, Budgets Exposed

WordStream estimates that in 2011, the IAC/InterActiveCorp spent $174.23 million on Google AdWords, making it the biggest PPC spender for that year. IAC owns a number of businesses, including popular websites Ask.com. Dictionary.com, and Vimeo. Retail giant Amazon.com is second with a budget of $118.50 million. Telecommunications provider AT&T completed the top three after spending $115.56 million.

Meanwhile, these industries spent the most on Google AdWords:

  • Finance & Insurance – $4.0 Billion
  • Retailers & General Merchandise – $2.8 Billion
  • Travel & Tourism – $2.4 Billion

Under Finance & Insurance, the top three spenders are familiar brands: State Farm ($43.7 million), Progressive ($43.1 million), and Geico ($23.7 million). Familiar names also topped the Retailers & General Merchandise industry: Amazon.com ($55.2 million), ebay.com ($42.8 million), and Macy’s ($35.6 million).

Can Your Company Compete?

Most likely, your marketing budget will be dwarfed by those of big guns like Amazon, eBay, and State Farm. Does this mean small businesses can’t and shouldn’t try paid search? Is PPC an advertising platform where only the big players can compete? What about small and medium-sized businesses?

According to the Google Economic Impact Report, Google search and advertising tools usage in 2012 resulted in $94 billion worth of economic activity for 1.9 million businesses across the U.S. This basically shows that the benefits of pay per click advertising are not limited to the big corporations. That figure of “1.9 million” includes small business and massive enterprises. Therefore, even smaller players can use PPC advertising to get themselves on the first page of Google and reach a targeted audience.

Options for Professionals, Small Businesses

Google AdWords is still the best advertising platform. According to estimates by eMarketer, Google has a 73.8% share of U.S. search ad revenues. That share is expected to grow to 75.7% by 2015. Google also reported that AdWords advertisers usually gain a $2 revenue for every $1 they spend on the PPC.

Next best is Bing Ads, which has links with Yahoo and other partners. Together, this group has a total search engine market share of 30%, or 6 billion searches conducted every month, according to comScore. This network reaches 162 million unique searchers.

Before you proceed, here’s some advice: while in general, PPC can be beneficial to businesses both small and huge, be careful with whom you entrust your marketing budget. Be sure to get to know the agency first, ideally through a free consultation or meeting, to ensure that you know what you are paying for. Trust an agency that understands your needs and your business goals. That’s the only way to earn profits when spending on PPC.

We can help you get instant, targeted traffic via paid search. Call us now at 1-800-350-5095 or send us an email at info@canyonmarketing.com so we can schedule your free in-depth consultation on PPC advertising.

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