The first article in this series is called "What is PPC?"
PPC is an acronym for Pay Per Click. It is an advertising method that has been around the internet for many years, but just within the last 5 years has really gained steam with internet marketers and company advertisers.
Pay per click means that you are going to pay a certain amount of money, usually between $.05 and $5.00+, every time someone comes to your site from a search engine, or a partner site (like this site).
The beauty of PPC is that you decide exactly how much you will pay for each customer. This is similar to the offline mortgage industry when a broker will pay for a lead. This broker tells his friends and family members, "I'll give you $20 every time you send someone to me that is interested in a mortgage."
This works well for the broker because he only has to pay when he gets a customer. In the same way, PPC works well for you because you only pay when a potential customer gets to your website or landing page.
Let me give you an example. My company sells widgets for $50 each. There are approximately 1000 clicks per day available (I know this because I study where I am positioned on Google search results, and if I pay the maximum I get about 800 clicks and I assume that my competitors get about 200 of the people who don't click the first advertiser).
If my gross revenue per widget sold is $10, including everything except advertising, I now have the information I need to form a PPC campaign.
For example if I pay $1 per click, I have to convert 10% of my customers into buyers to break even. If I only convert 5% of my customers, I would need to pay $.50 per click to break even.
However, nobody wants to break even, everyone wants to make money. With that in mind, if I convert 10% of my clicks into sales, and I pay a daily average of $.90 per click, I make $10 and spend $9 per 10 clicks.
That means on a daily average I will spend $7,200 per day in advertising and make $8,000 total. My average daily profit would be $800 for this widget.
That is how PPC works, and you can see how easy it is to understand where you need to be on CPC (Cost Per Click) in order to stay in the black.
In the future we'll talk about ways to pay less per click and where you can find clicks as low as $.05 that are still relevant to your industry.
The picture to the right is a picture of Google Adwords advertisers who are paying per click.
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