I read an article yesterday in AdAge (printed version) that was discussing how MSN is trying to unload Avenue A Razorfish (AARF). I won’t go into detail on the article, because it wasn’t as interesting as the article about Sanjaya (American Idol’s popular black sheep) being spotted in AdAge’s Manhattan offices.

The article, however, did spark a severe issue with me and a colleague.  If AARF is managing PPC accounts and so is Google - but yet they are actually the ad venue, isnt’ this a conflict of interest? It’s like going to your car dealer and asking them to finance your loan.  You might as well club yourself over the head.

I’ve heard so many times how easy it is to setup a Google Adwords Account, and well, yes it is.  You just need 5 minutes and a credit card because Google will select your 20 keywords for you. And into the lions den you go.  Consider this, why would Google only say you need 20 keywords? Well, because they are making $600 million dollars a year off of their keyword advertising. So naturally any smart ad venue is going to tell you that you should be bidding on the most broad and expensive keywords available.  Do they mention anything about conversion rate or conversion tracking? No. But, they do tell you how important click-through (CTR) is.  That’s because they get paid when someone clicks on your ads.

My point really is - I can’t believe there aren’t any regulations around Google managing client PPC accounts, in addition to MSN having purchased an agency as a part of a bigger collective but also manages their accounts.  How can this be good?

Hire us to manage your pay-per-click campaigns.

While this is one of the most basic concepts of PPC search engine management, it seems to be one of the least understood, and quite possibly one of the hardest to explain to folks unfamiliar with the process. I will attempt a not too terribly mathematical explanation.

The answer lies within the paid search venues. This includes Adwords (Google), Yahoo! Search Marketing (uh, Yahoo! - see me after class if you couldn’t make that jump) and MSN/Live adCenter (Microsoft). There are some others, but who really cares. Sorry others. Anyway, when setting up a PPC campaign we go about choosing the right keywords, writing persuasive ad creative, putting the finishing touches on our landing page (you are using a landing page aren’t you? If not, send me your PPC budget and I will go blow it in Vegas, same difference. We will talk about landing pages in a later post), installing and testing our tracking code, etc. Okay, so once that laundry list of to-dos is completed you assign a budget to your campaign. Now, you are all set to go - throw that switch!!! Okay now the fun part. The paid search venue uses its NASA math to analyze your keyword list and the CTR (Clickthrough Rate) that those keywords have received across an unknown (to us) time period. Using this historical performance data, the search volume for that term is analyzed, and then the result is applied against your budget.

How about an extremely simple example, for the analytical types: Assume you are running 1 keyword (nobody is doing this I hope) and your CPC (Cost Per Click) is $1 to keep it simple. If Google determines that the search volume for your keyword is 1,000 queries per day, with a historical CTR of 10%, you could receive as many as 100 clicks or spend $100. Now assume that your daily budget is $20 a day, or 20 clicks. Google will then show your ad at an interval of approximately once every 5 searches. There are a lot of other factors involved in reality, but like I said this is a simple example. Then, based on the actual CTR of YOUR campaign Google will decide how often and when to show your ad in an effort to make sure they spend your entire budget while maximizing their CPC and CTR (since this is how they get paid, and handsomely I might add).

That was a simple example based on 1 keyword, now imagine that you are running 20, 50, 100, etc. keywords, using different match types across multiple search partners, I am sure you can see how complicated it can get.

Now next time you wonder why your PPC ads aren’t showing every time you search your favorite keyword realize that the more often you search and don’t click on your ad the less likely you are to see it the next time. So either click on it and spend the money to support your CTR or step away from the keyboard and grab a Fresca. I recommend the latter.

If you’ve got questions or comments about ppc search engine management please contact us or comment below and we’ll be happy to respond.