In this article, we'll go over the basics of PPC and give you some insight as to how the whole process works.

What Is PPC?

PPC lives up to its name. It's an online advertising strategy in which you only pay when people click on your ad.

It's often considered the "go to" method for online advertisers because they don't want to pay just to display their ad. They want to pay only when people take action based on their ad.

That seems like a much better way to invest in marketing, doesn't it?

The Most Popular Types of PPC

There are several ad networks that allow you to run PPC ads. Some of them are more popular than others.

There's no doubt that Google AdWords is the most popular of the lot. That network allows you to run ads on the search results and on private websites.

But Google isn't the only search engine in town. Bing has its own version of PPC that allows you to run ads on a variety of Microsoft search properties and partners.

Facebook also offers a PPC advertising model. Many marketers love advertising on Facebook because it's relatively inexpensive.

You can also run PPC display ads that are a great alternative the more boring, text-based ads that run on a lot of websites.

Finally, you can also run a retargeting campaign with PPC. That's a great way to reel in customers who've already visited your website.

How Much Does PPC Cost?

How much does it cost to run a PPC campaign? It depends.

For starters, PPC campaigns are based on keywords. Some keywords cost more than others.

Why? Because they're in higher demand. If you want to run an ad with "car insurance" as the keyword, you can be sure that it's going to cost a lot more per click an ad with "St. Ignatius" as the keyword.

That's because more advertisers are bidding for "car insurance" than "St. Ignatius."

The cost of a PPC campaign is also determined by you. Most ad networks give you the option to set a budget so that your costs don't get out of control.

For example, you might run a campaign with a budget of $100 per day. Once you've spent that much, the ad network will turn off your ads for the rest of the day so you don't spend any more.

The Elements of PPC

As we've seen, PPC is more involved than many marketers realize. In fact there are several components to a PPC campaign:

The Campaign Itself - At the top of the hierarchy is the campaign itself. You might, for example, have an advertising campaign that's based on a holiday theme.

The Ad Group - An ad group is a group of ads related to a campaign. For example, you might have one ad group related to gag gifts for a holiday party. You might have another group related to Christmas cards.

Keywords - Your keywords should be relevant to your ad group. Google will use keyword relevance in determining ad placement (more on this in a bit).

Ad Text - You'll want to run some catchy text in your ad that tempts people to click on it. It's usually best to enlist the aid of a professional copywriter when creating ad text.

Landing Page - The landing page is where people "land" when they click on your ad. It should also be relevant to your keywords.

How Does the Auction Work?

Ad networks typically allow people to bid on a keywords in an open auction. But don't think that you know everything there is to know about bidding on keywords just because you've visited eBay a few times.

Bidding for keywords is a bit more complicated.

That's because your ad placement is determined, in part, by your bid. The other factor that goes into ad placement is the quality of the ad itself.

Google determines the quality of your by evaluating its relevance to your keywords, your landing page relevance, and the ad's click-through rate.

To determine your overall ad rank, you just multiply your bid by your quality score. For example, if you quality score is 10 and your bid is $1.00 than your rank is 10 (10 x 1).

If that number is higher than the ad rank of other advertisers bidding on the same keyword, then your ad will appear on top.

Keep in mind, though, the amount you pay is different than your bid. It's going to be lower.

That's because Google calculates your payment as follows: it divides your quality score by the ad rank of the next highest bidder and then adds a penny. So if your quality score is 10 and the ad rank of the next highest bidder is 9, then you pay 91 cents (9/10 + .01).

See? It's complicated.

Hire a Pro

If you take anything away from this article, take this: you shouldn't go it alone when it comes to PPC.

There are just too many ways to lose money when you venture into online advertising without professional guidance.

Locate a company (or hire a rock star employee) that can help you find the best ad network for your brand and work with you on ad copy, bidding strategies, and testing. Also, make sure to do plenty of competitive analysis before you start.

You've invested a lot to build your business. Keep it profitable by working with a reputable PPC company when you want to advertise online.