One of the most effective ways to get internet visitors to a website or landing page is search engine advertising, but forums and review sites around the internet are filled with stories of people who have racked up thousands of dollars in advertising costs without any revenue or sales to justify that expense. When it comes to running a successful and cost-effective search engine advertising campaign, it is important to monitor the numbers carefully in order to keep costs low and profit margins as high as possible.
Which Numbers Should You Monitor?
When you decide to launch a pay-per-click search engine campaign, one of the most important numbers to monitor is called click-through rate or CTR, which means the percentage of people who actually clicked on your specific ad in relation to how many times it was displayed on the page. This is an important statistic to know because most of the major online search engines today are very concerned with the user experience, and so they will be biased towards displaying popular ads instead of the unpopular ones. You can think of CTR as a rough measure of the popularity of a given ad.
Traditional Search Engine Advertising
The traditional model that search engines would use when it comes to the paid search model is called “pay for placement,” which means that the advertiser who is willing to pay the most per individual click is awarded the top placement for their chosen keyword. This is the bidding model that most people are familiar with who have any experience with modern search engine advertsing. While this model does a good job of maximizing revenue for the search engine companies, it does not contribute to a good user experience.
With pay for placement advertising, someone might be willing to pay $1.50 per click which could be the highest bid (awarding them the top placement), but the ad or the landing page might be of such a low quality that it makes for a bad user experience. This is where performance-based search engine algorithms come into the picture, because they will determine how high or low a specific ad should be placed by taking into consideration the click-through rate and not just the highest bid cost.
Why Is Performance-Based Advertising Important?
If you are looking to drive internet traffic by using search advertising, it is important that you understand how performance-based algorithms work for two reasons: First, you cannot guarantee a good position for your ad just by throwing lots of money at it, because it is the quality of your ad copy and not the bid cost that will determine rank. Second, when you finally find a good ad that delivers a high click-through rate, many of these performance-based search engines will allow you to lower the cost per click, meaning that you can retain a higher rank and still spend less than your competitors.
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