What are the cons of PPC

Pay per click (PPC)

Definition and functioning

Illustration: Pay-per-Click - Author: Seobility - License: CC BY-SA 4.0

The term pay-per-click (PPC for short) comes from the field of online marketing and can be translated into German as "pay per click". The term "cost-per-click" (CPC) is often used as a synonym. Pay-per-click is defined as a remuneration model in the field of online marketing in which the costs of advertising are calculated based on the number of clicks on an ad. The value of the PPC indicates how high the costs for the advertiser are for a click on the corresponding advertising material.

As a formula, this can be represented as follows:

Figure: Formula for calculating the PPC, Author: Seobility

or.

Figure: Formula for calculating the total costs depending on the PPC, author: Seobility

Other common remuneration models in online marketing are, for example, cost-per-impression (CPI), cost-per-action (CPA), cost-per-order (CPO) or cost-per-lead (CPL).

functionality

The number of clicks is recorded by a hyperlink stored in the advertising medium in order to be able to transparently understand and calculate the total costs. The mere display of advertising on a website (also called ad impression) does not cause any costs. With this billing method, it is also irrelevant how the user behaves on the advertiser's website. In contrast to the cost per action or cost per order billing models, it is therefore irrelevant for the total costs of the advertising placement whether the user carries out a certain action or, for example, buys a certain product on the website.

From the way it works, it can therefore be deduced that this model is chosen by advertisers if they are primarily interested in luring users to their website first, whereby specific actions, such as making purchases, are initially not in the foreground.

In practice, this remuneration model is mainly used in search engine advertising (SEA) and in affiliate marketing.

Pay-per-click in search engine advertising (SEA)

With search engines like Google, companies have the option of placing ads on certain search terms for a fee. Many systems, such as Google AdWords, use the pay per click billing model.

Advertisers can use AdWords to search for various keywords that are relevant to their website or their products or services. The prices for the different keywords are calculated due to the limitation of the advertising space through a real-time bidding process and are calculated depending on the search volume and popularity among other bidders. To determine your own advertising costs, you can use the Google AdWords keyword planner, from which you can find estimated PPC values. It should be noted, however, that AdWords is now also using other remuneration models, such as cost per view (CPV) for displaying videos, and is therefore not limited to PPC, depending on the medium.

Pay-per-click in affiliate marketing

In affiliate marketing, the pay per click model works similarly to the SEA. Publishers (also affiliates) have advertising space on their websites or blogs, which they make available to so-called merchants (also advertisers) for their marketing purposes. The advertising company pursues the goal of increasing traffic to its own website by placing ads on target group-specific websites and thus increasing interest in the company.

Compared to search engine advertising, affiliate marketing merchants have much more diverse options for designing their advertisements, for example through text links, advertising banners, etc. The publisher is usually remunerated via a fixed price and not a percentage amount, i.e. he receives pro Visitors a previously negotiated fixed amount, whereby these click prices are usually in the low cents range.

Advantages and disadvantages

Probably the most obvious advantage of Pay per Click, compared to models such as Pay per Impression, is that costs are only incurred when the advertising material is actually clicked. The click prices can usually be influenced and negotiated, which means that the costs can be adapted to your own budget. As a result, the advertising company retains full cost control.

In addition, this remuneration model offers the advantage that wastage can be reduced. For example, the keywords for which advertising is to be placed on Google can be effectively selected with the help of the AdWords keyword planner or comparable systems and optimally adapted to the targeted target group. In the area of ​​affiliate marketing, it is also possible to reduce wastage by selecting affiliate websites that relate to your own products and are therefore visited by many potential customers.

However, this model also has disadvantages. For example, there is a high potential for fraud, as clicks can be generated quickly and easily by the affiliate himself, which results in high costs for the advertising company without the website being actually visited by potential customers.

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