Part 1: Benefits | Part 2: Drawbacks | Part 3: Choices | Part 4: Costs

Pay Per Click has an advantage over other advertising methods where you only pay when someone clicks through to your website. Compare that with an offline alternative such as a magazine advert, you pay the cost whatever the results of the campaign.

There is no guarantee with Pay Per Click, but there is certainly less risk associated with this way of advertising. The fact is that someone actively searching for something you provide is more likely to purchase from you. There is simply no way of being this targeted offline.

This part of the guide talks about the bit you're really interested in - all of the cost considerations when running a Pay Per Click account.

Part 4: Costs

Setting Up

There is a minimal £5 fee to set up a Google AdWords or Microsoft adCenter account. With Yahoo! Search Marketing, there is a £60 deposit, but it's non-refundable and goes towards your clicks. A little cheeky perhaps, but to evaluate any of the systems properly, it's likely you will be spending more than this anyway.

Look out for vouchers, especially from Google. Voucher codes can range from £30 - £50. These can normally be picked up if you receive web marketing related e-newsletters (such as SitePro) or attend events which host Google speakers. Google also has partnerships with other companies, one being web hosting firm Easy Space which offers a £30 discount code.

Minimum Bids

These aren't really worth worrying about, but a cost is a cost! On Google AdWords, your Quailty Score will affect your minimum bid. With Yahoo, there is a minimum bid of 5p. It's important to make sure your website landing pages and ads are relevant to your keywords. This improves your Quality Score, making the minimum bid lower.

If you're bids are hovering at the minimum level, it will mean you may just get onto the first page. There are many theories about what the best position is to be in for Pay Per Click, but generally you should aim for the top three. You may purposely want to advertise out of the top three if the competition for that particular keyword phrase is high, especially if your ROI won't be that high.

Deciding a budget

Working out what a budget should be for Pay Per Click advertising can be difficult. With Google AdWords, you have an advantage with the Google Keyword Tool, which can show average cost per click prices for keywords you type in. The tool also gives you an idea of how much competitior there is for that keyword phrase.

Once you have selected the best value keyword phrases, it's worth running ads for a few days to see results. If your budget is based on how many leads you need to generate, you can see how many click throughs you've had in relation to the amount you've spent. If, on the other hand, you have a set budget already, you can soon see the best performing keywords/ads and eliminate the expensive ones.

After running ads for a while, Click Through Rates should be relatively stable and you can soon start to plan ahead. If you know you will get X amount of clicks that should end up in X amount of enquiries and sales, you can allocate more budget because you have reasonable confidence that you will get the same ratio of enquires to sales.

The Pay Per Click systems allow you to track clicks right through to the end of the purchasing stage on your website, so take advantage of the technology available to you!

Delivery

It's important to make sure your budget can cover the amount of ads that you set up, otherwise your ads won't show. Some of the Pay Per Click systems have options to spread your ads evenly throughout the day, or you may wish to allow them to spend your budget freely.

Over delivery can catch people out when checking expenditure. Your ads may exceed a daily budget because the systems will try to balance over the month as if you spent the same amount each day. If your delivery exceeds your monthly budget, you will be refunded for those clicks.

This article was written by Webtacular, the online marketing service from Sixth Sense ESP. We're dedicated to helping organisation's to get the most out of Pay Per Click advertising. We're happy to take over existing Pay Per Click accounts or start from scratch, and we can preliminary research for you free of charge, so why not get in touch?