Keyword Advertising on a Cost-Per-Click Model
by Deborah Kilpatrick


Fact: Of all Internet users in the United States, 94% use 
search engines to find information on the Web (Nielson-Net 
Ratings), and 81% who use search engines find the information 
they're looking for every time they search (NPD). Considering 
these numbers and how relatively inexpensive and risk free 
Internet advertising is compared to traditional media, it is 
a wonder why more businesses are not optimizing their sites on 
search engines to strengthen their online presence. 

Why Internet Advertising?

Reaching the ever-increasing number of online users is critical 
to establishing your corporate presence on the Net. Corporate 
websites should be information rich for both returning and new 
users, and should effectively communicate your company's values 
and offerings. Attracting clients or potential business partners 
to your website is the key to forging long-term relationships, 
and to bolstering online sales. Listing your site on search 
engines with a broad reach is therefore imperative if you wish 
for your product and/or services to be found. Search engines 
provide the technology to bring your site to people who are 
actively seeking your offering. Since over 80% of web site 
traffic is guided by search engines (Forrester Research), the 
question remains: assuming you are on all the right search 
engines, how do you use your keywords and creatives effectively 
to draw clients, partners and industry experts to your site?

Building A CPC Keyword Campaign

The keywords you choose will be subjected to different pricing 
models depending on where you advertise. The two most popular 
pricing models are "bid-for-placement" and fixed CPC 
(Cost-Per-Click) - both models only charge you when a searcher 
clicks through to your site from one of your listings. This 
translates to little risk in comparison to traditional 
advertising media, which charges strictly on demographics, 
circulation, and the likelihood of how many people will see or 
hear your message. Paying for a "cost-per-click" referral to 
your site is akin to having someone deliver a bus load of people 
to your store and charging you pennies for every potential 
customer who steps through the door. In this scenario, even if 
two people purchase, you will have been successful in your online 
marketing efforts.

The first of the above-mentioned pricing models is 
"bid-for-placement", in which each of your selected keywords has 
an individual price in an auction-style environment. The higher 
you're willing to bid on a particular keyword, the higher your 
listing. This system provides lots of flexibility by allowing 
you to set specific bid-prices for each keyword - though it can 
become cumbersome if you have many keywords and phrases.

Another more efficient system takes a step back from pricing 
individual keywords and assigns a fixed CPC to all of your 
keywords and phrases. CPCs are determined according to the 
category in which your site falls and the market value of that 
category. This means that all advertisers in the same category 
pay the same price and allows for smaller sites with limited 
budgets to compete with large sites that tend to have much 
larger marketing budgets and that can easily out-bid them in 
the bid-for-placement model. What can make this task difficult 
is the average price in the industry for CPC advertising 
(including categorization) is fragmented and the CPC can range 
from 1 cent to 2 dollars depending on the industry (Click Z). 

THE STRATEGY

Keyword Advertising

Keyword building is the backbone of your online advertising 
campaign - it is these words that will lead the millions of 
online searchers to you. However, there is more to building 
keyword lists than just coming up with a few words that describe 
your product or service offering. The market presently indicates 
that generic terms such as "investment" and "insurance" are 
highly valued and that more obscure, but targeted keywords are 
valued much less (e.g.: "Atlanta Georgia car insurance"). 
However, contrary to what the market is determining, searchers 
are becoming savvier and are using more specific keyword 
combinations to find what they're looking for. Results show that 
45% of searchers use a combination of keywords (key phrases), 
28% use one keyword, 18% search by a pre-defined option (such 
as browsing through a directory category) and 9% search by 
typing in a question (NPD).

You therefore have two choices when it comes to creating a 
keyword list. The first is listing generic keywords in order 
to generate the most traffic possible to your site, resulting 
in high click-through ratios, but low conversion rates. The other 
option is listing targeted keywords that will drive targeted 
traffic to your site, resulting in traditionally lower 
click-through rates, but higher conversion ratios ratios 
(e.g.: "Atlanta Georgia car insurance"). 

For example, if you are selling insurance services in Atlanta, 
Georgia and are only capable of delivering your services there, 
then you may not want to list the generic keyword phrase "car 
insurance". You would receive a high volume of click-throughs, 
but from geographic places you would not logistically be able 
to supply. This is a waste of your advertising dollars. +The 
number of keywords that you list on a search engine is also 
crucial to your online success. Each additional keyword and 
keyword phrase you suggest will increase your site's chances of 
being found. Think of it as, not only placing as many hooks as 
possible in the lake, but also making sure they are of the right 
type to attract the clients you want. 

Powerful Creatives

Almost as important as the keywords are the creatives that 
support them. In the search industry, creatives refer to the 
titles and descriptions that expand upon the keywords you 
select. They provide a small glimpse of what your website has 
to offer. It is important to be as clear as possible for a 
number of reasons. 

First, it is preferable not to use superlatives, caps or 
exclamation marks in your titles because this reduces the 
validity of your offer and is not viewed as a professional 
listing.  Second, it is suggested that the title and the 
description include the keyword it is associated with - this is 
to reinforce that the result is relevant. It should also expand 
in as few words as possible what the website is offering. Using 
the car insurance company as an example, the title should have 
the following elements: "Company ABC car insurance for residents 
in Atlanta, Georgia". The description, as an expansion of the 
title, should have the following elements: "Reputable car 
insurance solutions that are affordable and offer excellent 
coverage". Using this method of advertising on search engines, 
you are sure to attract your target market to your site, (from 
a purely geographic demographic).

Relevant URL's

In addition to using specific and relevant titles and 
descriptions, the URL that you submit to the search engine must 
also be targeted. Ideally, the user should go to the exact page 
that they are looking for on the first click. For example, if 
the user is searching for a specific type of insurance among 
your assortment of solutions, the submitted destination URL 
should take them directly to the page describing the solution in 
question. Internet searchers have low patience levels, and, if 
they cannot immediately find what they are looking for on your 
site, they will give up and move on to the next result on the 
list. 

Added Benefits of Advertising Online: Tracking your ROI

You can analyze down to the penny your increase in sales through 
keyword advertising by tracking the conversion rates (sales 
generated from clicks) for each ad dollar that you spend. You 
only have to create a specific URL per initiative, pointing to 
your website so that you can track which marketing effort the 
click is coming from. You will then be able to monitor someone 
clicking on your advertisement, going to your site and converting 
into a sale. This information will notify you which keywords, 
creatives and marketing efforts are producing an acceptable ROI 
and which efforts are not.


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Deborah Kilpatrick is the Product Marketing Manager of Mamma.com. 
She holds a Bachelor of Commerce in Marketing from the John Molson 
School of Business at Concordia University.

Mamma.com Inc., The Mother of all Search engines (NASDAQ: INTA), 
uses its meta-search technology to search multiple engines, 
directories and other information sites, combining results and 
returning the top listings. Mamma.com also distributes results 
to a network of 2,000 sites with accumulated traffic of 1 million 
unique users a month.
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