The acronym PPC (pay per click) used to be synonymous with search advertising, and that pricing model is a big part of what drove search growth and made the channel as ubiquitous in online marketing plans as it is now. But PPC is not just for Google or for search anymore.
Advertisers love PPC for the ease of deployment, the directness of paying only when action is evidenced, as well as the aura of risk reduction in a pricing model that allows you to bid only what you deem to be the value of that action. Those with deeper pockets or for whom that click is worth more at that particular time can bid more. It's a dynamic and efficient market that maximizes value all along the chain of sellers (publishers or engines), middlemen (networks, exchanges, or technology platforms), and buyers (advertisers), and differentiates between one click and the next. Different clicks have different values to different advertisers.
Now you can use similar bid auction models to control and drive display media through ad exchanges and demand-side platforms as well as social media advertising on Facebook and LinkedIn. Real-time bidding allows you to pay more for more valuable impressions and clicks, less for others. The benefit of this approach has clearly extended past search marketing because the core benefits of the cost per click (or action or conversion) model extend as well. Pay based on targeted audience action; set the price you are willing to pay. Search engines were one of the first to extend this model past search with Google's content network of display advertising leading the way, and now we have many options to buy display inventory along with text or other ads with real-time bidding. But we need to be careful in applying the same pricing criteria across channels.
A search click is not the same as a display ad click is not the same as a social ad click. When we are bidding on search clicks, we are factoring into our bid the degree of intent as evidenced by the relevance of the search query. More relevant search queries are simply worth more to the advertiser and that helps make the bidding process an economic win for both the sellers and buyers of those clicks. But with display or social display ads, you typically work with demographic and profile data which can help to determine if that prospect looks and acts like your customer base but does not tell you if they are in the market for your content, product, or service at this particular time. Behavioral data, particularly search query history, has the potential to close that gap to signal intent, but display advertising is still primarily used to create awareness and drive demand. It's both possible and beneficial to place a price on those business objectives closer to the top end of the traditional sales or information funnel; it just needs to be logically differentiated from the price placed on those different business objectives much closer to the sale.
Facebook and LinkedIn offer phenomenal geographic and demographic targeting options and you get the considerable benefit of wrapping in social interactions that will dramatically improve the likelihood of the user's click. But CTR still tends to be lower in general in a social environment because the user's frame of mind is less conducive to conversions. Users in a social environment are there to be social. Users on a search engine are task-oriented. Again, the clicks are still valuable, they just need to be valued against different criteria. The social ad unit provides a bit more flexibility than a search ad and includes an image to help you more aggressively encourage engagement. Industry players like Marin, Clickable, and even Omniture, among others, have unveiled platforms to leverage the Facebook API and help advertisers more efficiently produce and optimize display and social ads. It's no surprise that search veterans are taking the lead here. It's an obvious extension of the foundation carefully set.
Search ad volume is effectively self-limiting. Search ads do not create search volume, they can only respond to the available demand expressed in the market as search queries. In order to expand the universe of available searches, we would typically make broader use of relevant keywords, but an even more effective strategy leverages an integrated approach across traditional and display-based ad programs and other means to help increase the number of those most highly relevant searches. Search companies win when they support the means to increase the number of searches.
Along with ad targeting, production, and bidding differences from search PPC, you also need to factor in scale and budgeting impacts when you move into display and social with a bid model. For instance, Facebook's minimum suggested bids are usually higher than those on Google or Yahoo because you are fighting for one or two spots instead of Google's max of 10. Impressions on Facebook add up very, very quickly, so you need to be strategic in your pricing strategy and budgeting approach. Set careful budget caps and don't take your eye off that campaign. And don't forget that if you're running a CPA or CPC display or social program, you'll rack up a lot of impressions. That's a good thing but may incur significant third-party ad serving charges unless you have negotiated those out.
We currently enjoy a wide array of pricing models and technology options across digital channels that continue to evolve and respond to market changes. Sometimes it's helpful to look at CPM or other programs with a CPC or CPA filter, converting to an effective CPA or eCPA to make sense of the offer and value against other program options. Likewise, you should know what your CPC or PPC programs are driving in impressions to understand the full value they bring to the table beyond the click. The best methods of targeting will vary with the advertiser, audience, campaign objectives, budgets, timeframe, and competitive environment. Make sure you review all your options including the new ones that seem to appear with challenging frequency.
Meet Your Favorite ClickZ Contributors
Many of ClickZ's leading expert contributors will be at ClickZ Live, the new online and digital marketing event kicking off in New York (March 31-April 3). Hear from the likes of: Jeremy Hull, Lisa Raehsler, Andrew Goodman, Bryan Eisenberg, Mathew Sweezey, Aaron Kahlow, Stephanie Miller, Simms Jenkins, Jeanne S. Jennings, Dave Hendricks and more!
Robin is the CEO and cofounder of NetPlus Marketing Inc., a top 50 interactive agency established in 1996 to focus exclusively on online marketing and advertising best practices. Robin brings innovative strategy and a depth and breadth of marketing experience to the agency's practice and management. As one of the industry's pioneers, she is a driving force behind NetPlus Marketing's ongoing success with a diverse and discerning client base that considers online results critical to their business success.
Robin is a frequent speaker at national industry events, including ClickZ, internet.com, OMMA, Ad:Tech, SES, Online Marketing Summit, and Thunder Lizard conferences and is a sought-after resource for industry and business publications for her insight and advice on such topics as digital strategy, social media marketing, and behavioral targeting.
March 19, 2014