History of PPC
The history of PPC is a fascinating portion of the internet marketing saga. This post provides a few significant dates in PPC’s inception and uses key facts and a few figures to show the size and prevalence of the PPC internet marketing sales technique.
Important internet moments. The internet is so ubiquitous in our lives today that it’s hard to believe what we know as the world wide web is only about 40 years old. Assembling the networks that provided the infrastructure for navigating the internet began in the 1980s. Then on August 6, 1991, computer scientist Tim Berners-Lee opened the World Wide Web to the public and ISPs began to populate the internet.
Businesses soon realized the internet’s power to connect internet users with their products and services through internet advertising. Less than 20 years after the first networks were created, Bill Gross, founder of GoTo.com, introduced pay-per-click marketing to the world.
What is Pay-Per-Click (PPC)? In 1998, PPC marketing was a novel idea. In the beginning, PPC meant that advertisers paid the internet browser company for advertising their products only if and when users actually clicked on an ad. Clicking on the ad took the user to the company’s website, or showed the user a video, or engaged the user on-site.
Advertisers submitted bids on their choice of search terms related to their products/services. The higher the bid, the higher an ad would appear in the listed search results. (The general wisdom is that the ads need to appear within the first ten search results in order for users to bother to click on the ad.)
Soon advertisers started bidding up the price of search terms that had no relation to their products so that their ads appeared higher than other bidders on the list of search results related to the terms they chose. This practice was based on the theory that the ad appearing in the search results might entice users to click on it even though they weren’t searching for that product in the first place. (We’ve all probably had the frustrating experience of conducting a search and seeing unrelated items popping up in the search results. Now you know why.)
Why did PPC become so popular? Because it works. PPC gives advertisers the opportunity to track the success of their ads – and whole ad campaigns – by tracking the number of users who click on it. PPC’s appeal is that advertisers only pay for successful clicks. This is very different from print ads where advertisers pay publishers for every ad they run – even those to which no one pays any attention. And advertisers can not track the success or failure of print ads in real time. PPC is a game-changer.
Google ups the ante. In 2000, Google entered the PPC arena with its Google AdWords marketing tool. Advertisers pay Google when users click on their ads. Google makes its primary income from PPC to the tune of $70 billion in 2015. All the rest of its business lines only accounted for $7 billion in 2015 (10% of its PPC income). In 2017, AdWords accounted for 96% of Google’s annual revenue, or $43.7 billion. Google Search and AdWords make their 1.5 million advertisers/publishers/non-profits about “$283 billion in economic activity” in the US alone. Google search engine claims a 78.01% market share in 2018.
Are there other search engines that provide PPC? Yes.
- Microsoft has Bing Ads which, according to its 2017 market share report, has 33% of the PPC market in the US and 9% of the worldwide market.
- Yahoo has a native advertising and search platform for mobile devices called Gemini that launched in 2014. Yahoo search engine has 3.63% share of the search engine market in 2018.
- AdRoll is an online, digital marketing tool that helps convert clicks to actual customers. AdRoll works by helping advertisers collect and analyze customer information so they can improve their advertising campaigns to turn surfers into buying customers.
- Many social media sites also have PPC advertising, such as YouTube, Facebook, LinkedIn, and Twitter, to name a few.
What is Pay Per Lead (PPL)? You may have heard the phrase Pay Per Lead in relation to internet advertising. This type of advertising is more expensive because advertisers get more information. They pay for the click-through if the user:
- views a particular landing page, or
- provides enough contact information that advertisers can trigger further user interest in products/services and eventually convert them to buying customers, or
- purchases a product or signs up for a new service.
What’s the biggest trend on PPC marketing in 2018? Two words: Machine Learning. Harnessing machine learning promises advertisers a greater ability to:
- create messages that resonate with potential customers,
- target ads to specific audiences, and
- refine the bidding process toward targeted word search terms that reflect a new understanding of how potential customers think and act.
In addition, Google Home and Amazon Echo will change the way customers buy – via voice command. PPC marketers will seek advantages from such active searchers, to gather insights on how to provide them a customized, more personal shopping experience.
To Use or Not To Use PPC. For advertisers, that is the question and, before they can answer it, they must know two things:
- What is the (affordable) budget for PPC? (The average cost of a Google AdWords click is $1.00; however, some AdWords charge up to $50 per click.)
- What is the expectation with respect to a return on investment?
Knowing how much a potential advertiser is willing to pay per click is an important part of deciding whether to use PPC. In determining a company’s magic number, potential PPC advertisers should consider:
- the revenue they receive per customer,
- the number of deals they usually close compared to the number of presentations they make, and
- their historical conversion rates.
To learn more about PPC, read the searchenginejournal.com article from August 2018 entitled “5 Surprising Ways Great Content & PPC Can Help Each Other.“