Rob MacDonald had a problem. His Vancouver based bicycle company, jorg&olif, had become the talk of town, but his website traffic wasn’t reflecting the buzz. Frustrated, he Googled his company, but his website was nowhere to be found…

Sound familiar? Ready to give pay-per-click advertising a try, but not sure where to begin? Here’s our starter guide to paying for clicks, drawing traffic and doing it on your own terms.

By now, most of us are aware that simply having a website is not enough to ensure that people can find you online, especially when 80% of web surfers use keyword-driven search engines to find what they’re looking for. Therefore, in order to grow your business online, it is critical that your website be listed in search engines. The problem arises when so-called organic or natural search engine indexing (the anticipated payoff of optimizing your website) doesn’t provide the desired results. Let’s go back to Mr. MacDonald and his burgeoning bicycle business for a minute, and we’ll show you why.

Jorg&olif is an interesting case on a number of levels. To begin, the company’s website was so new that it had not yet been optimized for search engines. Not that that really mattered, since the site was built in Macromedia Flash, a coding language that helps to create edgy, visually impactful websites. Since search engine spiders tend to index text only, Flash, a graphic based design solution, is not search engine friendly, and as a result, Flash websites require clever optimization techniques to get the spiders to notice them. In addition, the name jorg&olif is not easy to pronounce, much less spell. As such, many people simply began calling the company ‘Dutch City Bikes’ and searched for it online using keyword variations of that label. Few web surfers however were able to find the company without the direct website address. Since natural search listings weren’t working for him, MacDonald needed to find a quick solution to bolster the company’s online presence during keyword searches.

Enter pay-per-click advertising. Within minutes MacDonald set up an account on Google’s pay-per-click advertising system called AdWords. He chose keywords that his customers were using to look for the company online, he decided how much he wanted to pay each time someone clicked on his ad, and boom! There it was in the Google Sponsored Search Results for the world to see: www.jorg&olif.com.

In this case, search engine optimization couldn’t have done a better job of ensuring the website was front and centre in search engines.

Go to Google and type in “Dutch bikes, Vancouver” and jorg&olif comes up in the results across the top. Type in “Dutch city bikes” and you’ll find them first along the right side. And it goes on. Essentially, pay-per-click advertising gave jorg&olif the potential for instant traffic. And, best of all, the company didn’t have to give up their Flash website.

Does this mean natural search engine optimization could be overrated? Maybe, when pay-per-click advertising can ensure your site ranks highly in search engines, even at the top of search results. And, with self-serve solutions offered by Google and Yahoo, pay-per-click advertising is fast, easy and doesn’t have to cost a bundle. In fact, sometimes it’s just pennies a click.

What is Pay-per-click Advertising?

Pay-per-click advertising (PPC), or keyword bidding, is simply a form of Internet advertising in which you pay each time someone clicks on your ad and lands on your website. Google AdWords and Yahoo Sponsored Search are the two most popular PPC solutions for small and medium-sized business owners, so we’ll focus on them here.

Google and Yahoo offer integrated listings in their search engines/directories on a for-pay basis. This is in addition to their natural listings that are powered by constantly evolving formulae that relate to a website’s level of search engine optimization. If you visit Yahoo or Google and type in a keyword phrase, say, “dog daycare”, you’ll see the pay-per-click listings first, across the top or down the right side of the page. You can tell these listings are actually ads by the subtle grey text nearby that says “Sponsored Results/Listings”.

To buy these spaces, an advertiser bids against other advertisers on specific keywords that relate to their products or services (the highest bidder usually gets the top listing). Each time a user clicks on the ad associated with a keyword and connects to the website, the advertiser pays Google or Yahoo a pre-determined amount. As an advertiser, you get to decide what keywords you want to bid on, how much you are willing to pay per click back to your website, and you get to set a limit as to how much you are willing to pay in total per day: $1? $100? More? It’s completely up to you.

Why use Pay-per-click on Google or Yahoo?

For many business owners, this flexibility makes Google and Yahoo PPC a cost-effective way to advertise online. In fact, some Internet marketers will tell you that since web surfers are increasingly inclined to click on sponsored links, keyword bidding is a must in order to compete in search engines and directories today.

Here are some reasons why you might want to consider PPC:

• You are new to the online space. Most Search Engine Marketers will tell you to give the search engine crawlers a few months to find and rank your website naturally. By comparison, PPC can generate nearly-instant traffic.
• Your website is built primarily in Flash. Some coding languages such as Flash (though ideal for building creative, interactive websites) are unfortunately not search engine friendly. Sponsored listings overcome this issue.
• Your keywords are competitive and you are not ranking well in natural listings. Though you may pay dearly for the same keywords in a sponsored spot (remember, the more competitive a keyword, the more it’ll cost you), if ranking on the first page is critical to your business, PPC is a way to get there.
• Your customers use highly specific key phrases to find you, say, “Dutch city bikes”. These niche terms are usually offered at bargain basement rates (sometimes pennies per click) making PPC a cost-effective way to drive traffic to your site.
• You have a short-term campaign where you need to generate instant buzz or you simply want to test the online market for your product or service. PPC is flexible, allowing you to quickly adjust your strategies to adapt to changing market behavior.

Here’s How it Works

Simply provide an initial deposit/activation fee to Google or Yahoo using your credit card, and then bid on the specific keywords and keyword phrases that you want. When a web surfer enters that keyword/phrase and clicks on the link to your web site, you are automatically charged whatever you bid for the word(s) — from a minimum of five cents up to tens of dollars per click or more.

Keep in mind, you pay only when someone clicks on your ad, regardless of how many times it shows up in the listings. Further, if you hit your daily spending limit (that you set in advance), your ad comes off the listings entirely so you’ll never be charged more than you expect.

Set up procedures are different for each solution. But here’s an overview to get you started:

1. Choose your keywords wisely. These are words and phrases your customers would use to find your business online. Actively use the tools available for each solution, such as Google’s Adwords Keyword Tool.

2. Write a short description (which will accompany your link) with your target market in mind.

3. Open a Yahoo Sponsored Search Account by depositing a minimum of $30 US using your credit card. Open a Google AdWords account by providing a credit card and paying an activation fee of $5 US. Set your daily spending limit.

4. Wait minutes (Google) to a few days (Yahoo) for keyword approval.

5. Watch and adjust your bids. This is critical to ensure you’re not overspending or paying more for a keyword than you should be. To keep costs down, you may want to start near the minimum bid of pennies, and work up from there. Keep in mind, Yahoo does have a minimum $20 US per month spending requirement. There are no minimums with Google.

Each solution also offers an introductory tutorial. You can find them here:

• Yahoo Sponsored Search (http://searchmarketing.yahoo.com).
• Google Adwords (http://adwords.google.com).

Which Solution is Right for You?

Whether you choose to advertise in Google or Yahoo (or both) is really a matter of your particular business needs and budget, and your target market’s online habits.

On the face of it, advertising on Yahoo would appear to be more expensive. But, in the long run, when you consider your conversion rates per click, you may find Google will actually cost you more simply because there are more users searching on Google for general information or researching and comparing particular products.

In fact, Pauline Pageau of SearchWerx search engine marketing tells us that some of her clients get better conversion rates with Yahoo ads than they do with Google, simply because Yahoo seems to draw more serious researchers and shoppers than it’s more popular counterpart.

To increase the likelihood of success, Pageau suggests you look closely at what you’re getting for your money, and where your customers are. Determine your budget and split it between both solutions to ensure you’re not putting all your eggs in one basket. Then, you can always adjust to fit.

Tips to Help Save Time and Money

As with any advertising strategy, you’d like to get it right the first time. Though modifications will always be necessary, there are some things you can do at the outset which will minimize your financial risk and increase the efficiency of your campaign.

• Research, research, research. Analyze your competitors and their keyword choices. Choose keywords that are relevant to your products and services, and adjust as you monitor your listing(s) and changes in market behavior.
• Experiment with keyword niches (underutilized keyword phrases), where per keyword costs are low and traffic generated will be very targeted. This will allow you to drive traffic to your site for a fraction of the cost of other online advertising and will lessen the risk of having your keywords disabled for lack of clicks
• Consider forgoing a number one spot in place of a number three spot in listings. It may be cheaper, and your ad will still get noticed. Besides, Google and Yahoo only require a top three ranking to ensure you’ll be seen over their distribution networks.
• Be careful with features that automatically increase your bid amount to maintain a particular rank. This can get expensive fast, particularly if you’re not watching it closely.
• Track your results. Be sure to watch your click-through activity and analyze and adjust your keywords accordingly. Use the conversion measurement tools that come with your Google or Yahoo service or use your log files to help you to track your return on investment.
• Don’t neglect your ad copy. Remember, you’ll be required to write a short phrase to accompany your link. Just because you’ve managed to secure the top spot for “herbal medicine” doesn’t mean people will click through to your site. Without the right message, your link is virtually useless.
• Consider consulting with an Internet Marketer who specializes in pay-per-click campaigns, understands trends and can help you determine your goals, monitor and adjust your strategies, and measure your success.

With all the hype surrounding search engine optimization, the increased competition for keywords and the sometimes prohibitive cost of achieving and maintaining high, natural search engine rankings, it’s no wonder Google’s ad revenue broke $1 billion in the last quarter of 2004. Numbers like these clearly indicate that online merchants are beginning to see pay-per-click advertising as a necessary part of their marketing strategy and a sales driver for their business.

Makes sense, doesn’t it? If you’re going to pay someone to get your site seen online, why wouldn’t you want to guarantee your position at the top?

Reprint. Originally published in Webnames.ca’s The Server Room and at SOHO.ca.