The Ultimate Guide to Understanding Pay Per Click Terms

Understanding Pay Per Click (PPC) Terms

ppc, pay per click

Read Time: 4 minutes

You’d be hard-pressed to find any marketer or business owner who isn’t, at least, familiar with pay-per-click or PPC. However, despite its widespread recognition, many marketing professionals still find themselves stumped with understanding the various terms associated with PPC or how to best leverage PPC for results. If you’re considering a PPC campaign or strategy for your business, keep reading. We’ll provide the definitions and clarity you need to better understand all the variables associated with PPC.

PPC, Purpose And Definition

Starting with the basics, PPC or pay-per-click refers to the marketing process whereby companies bid on certain keywords and use ad spend to try and position their ads prominently on search engine results pages (SERP) through things like improving local SEO results. It’s called pay-per-click because you’re essentially paying a fee with each click on your ad. Not everyone who clicks on your ad will become a buyer, though. So, ad spend can add up quickly without driving sales and conversions. However, those businesses who strategically use PPC with their metrics can create PPC campaigns that provide twice as many visitors.

Quality Scores

Search engines will assign a quality score to your PPC ad based on a few eligibility criteria. For starters, the keywords you use carry a significant amount of weight. Click-through rates and the landing page quality of your link redirects will also contribute to your quality score. The amount of ad budget you spend on PPC, in other words, isn’t going to automatically position your ad for click-through success. And a quality score can work in your favor or against you, penalizing those campaigns that try to “pay” for irrelevant keywords or cheat the system. Search engines won’t help to direct browsing consumers to poor-scoring web pages with subpar keywords. So, using your quality score, along with your intended budget, search engines will establish a cost-per-click (CPC) amount as well as ad positioning.

CTRs or Click-Through Rates

Speaking of click-through rates, these refer to the ratios established by the number of clicks your ad receives versus the number of online users who see your ad. For example, if your chosen keyword captures 100 people who search it, but only two of those searchers click on your ad, it’s not necessarily a great CTR. For example, if a user searches for “plumbers in New York” and they see your ad for plumbing in Florida, they’re not likely going to click on your ad.

However, if 50 or 60 of those users end up clicking your ad after keyword searching your PPC keyword, it’s a sign you’re targeting the right audience with the right messaging and using the right keywords. So, if your PPC campaign is bidding on “plumbers in Florida,” and they see your ad as a plumbing contractor in Florida, they’ll be more likely to click on your ad. Ultimately, CTRs are essential metrics to know to effectively gauge the success of your PPC campaign and make sure you’re marketing to the right audiences and investing in the right keywords.

Conversions & Conversion Rates (CRs)

How you define success for your PPC campaign will ultimately determine how you define a conversion. For example, if it’s more valuable to you that a user visits your website or landing page, that’s your conversion. Alternatively, if it’s more valuable to you that a user purchases your product or books your service, that’s your conversion element.

From there, you can begin to assign conversion rates or CRs. It’s how your PPC campaign will be evaluated, either at the keyword or landing page level. However you define your conversions, divide that number by the number of clicks on your ad to determine your CR.

Ad Positions

Ad position in PPC refers to the obvious – where your ad appears on the search engine results page. Typically, a user will encounter ten paid ads on every SERP, and when you achieve “position 1,” it means your ad is at the top of the page. Ad positions are determined by two factors, your bid (how much you’re willing to pay per click) and your quality score.

Ad Extensions

Don’t think of ad extensions as actual add-ons to your ad. Instead, think of them as revenue opportunities for Google and additional information about your company, including more page links, product images, and contact details. Ad extensions are great tools for customizing your PPC campaign. A service provider might provide a 24/7 emergency phone number, for example. And a retail store will want to add the storefront address and product line information.

PPC Landing Page

When an online user clicks on your PPC ad, where do you send them? Typically, the landing page is the first stop for anyone who clicks to view your ad. The design and layout of your landing page are mission-critical, especially when determining your quality score and looking to create conversions. It’s recommended not to use your website’s homepage either. Instead, choose a precise landing page that prompts the user to the next step, even if it means creating a customized landing page that speaks to these users.

ROAS or Return on Ad Spend

Of all the PPC definitions and terms in this ultimate guide, ROAS might be the most important to understand. Return on ad spend, or ROAS evaluates the revenue you can generate with your PPC campaign. This calculation will help you compare ad performance and assign value far better than traditional cost-per-lead metrics. Your ROAS equals the value of your conversions divided by the ad costs. If you invest $20, for example, and you sell $100 worth of services, your ROAS would be $5 for each dollar spent.

PPC Impressions

Part of your pay-per-click campaign involves impressions. And while they’re important metrics to know with your PPC, don’t be swayed into thinking thousands of impressions will result in thousands of conversions. PPC impressions are tabulated each time your PPC ad appears on a search engine results page or other Google Network site. So, while impressions are important in determining the validity of your chosen keywords, they’re not indicative of click-through rates or conversion results.

Turn To The PPC Experts At Connectica LLC

PPC continues to be a great method for driving online traffic to your products and services. But keep this ultimate guide on hand so you can better understand the various terms and definitions associated with these campaigns. And when you’re ready to explore PPC options or any other marketing initiatives, let the team at Connectica, LLC be your guide!

Our team of professional marketers can ensure you understand every aspect of your PPC campaign with ongoing expertise and advice to drive results! Call us at 1-877-816-2259 to explore how PPC can help drive online traffic to your company!

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