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A Comparison of Paid Search Advertising Models

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      Article Title:
      ==============
      A Comparison of Paid Search Advertising Models

      Article Description:
      ====================
      The most common advertising offer at the search engines is the
      PPC (Pay-Per-Click) advertising model. There are also other
      search advertising models such as CPM (Cost Per Thousand
      Impressions) and Featured Listings. In this article, we will
      look at the advantages and disadvantages of each advertising
      method.


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      Copyright: 2006
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      A Comparison of Paid Search Advertising Models
      Copyright � 2006 Bill Platt
      the Phantom Writers
      http://thePhantomWriters.com



      As webmasters, we are all chasing customers. We are looking for
      human visitors to come to our websites and to buy what we are
      selling.

      To serve our needs for targeted traffic --- potential customers
      --- the search companies have begun to offer us a share of their
      significant traffic through many paid advertising methods.

      The most common advertising offer at the search engines is the
      PPC (Pay-Per-Click) advertising model. There are also other
      search advertising models such as CPM (Cost Per Thousand
      Impressions) and Featured Listings.

      In this article, we will look at the advantages and disadvantages
      of each advertising method.


      PPC (PAY-PER-CLICK) ADVERTISING MODEL

      By far, PPC is currently the most popular advertising model. From
      the buyer's perspective, it is usually the most expensive type of
      advertising and the one that generates the most fear of fraud. In
      fact, many experts suggest that click-fraud might be as high as
      20 to 25% of all click-traffic.

      Pay-Per-Click is exactly what it sounds like. The advertiser bids
      on keywords and tells the advertising company that they will pay
      X number of cents or dollars for every click that they receive to
      their website through the PPC-provider's website.

      Advertisers compete for position within the search results with
      the highest bidder getting the best advertising spot at the top
      of the results. The second highest bidder gets the #2 spot, etc.

      Generally, Pay-Per-Click providers serve three listings on
      the first page of search results. Only when there is strong
      competition for a particular keyword term and a number of
      advertisers vying for placement, will the PPC-provider show
      results with more than three advertisers.

      If you bid the minimum five cents per click (the standard for
      most PPC systems), then it is possible that you might not see
      your listing on page one or page two of the search results. Let's
      face it; PPC providers are interested in making the most money
      they can from the traffic they send to people. So, if one
      advertiser is paying a dollar per click and you are only bidding
      five cents a click, who do you think will receive the best
      placement? Yep, the one-dollar per click advertiser will get
      the most attention and the best placement, even if it requires
      pushing your placement back to page three of the search results.

      The top two PPC-providers are:

      http://adwords.google.com/
      http://www.content.overture.com/d/ - Now owned by Yahoo!

      Other not-so-well-known providers of PPC traffic, in
      alphabetical order, include:

      http://www.411web.com/
      http://www.7search.com/
      http://www.abcsearch.com/
      http://www.adbrite.com/
      http://www.ask.com/
      http://www.brainfox.com/
      http://www.enhance.com/
      http://www.kanoodle.com/
      http://search.looksmart.com/
      http://www.lycos.com/
      http://www.miva.com/ - Formerly FindWhat.com
      http://www.search123.com/
      http://www.searchfeed.com/
      http://turbo10.com/

      The biggest advantage to these systems is that they serve large
      pools of consumers online, and they let you target specific
      search keywords.

      The disadvantages are numerous. Those most often cited include:
      the high cost of bids for certain keywords, poor conversion
      rates on purchased clicks, and click fraud (generally regarded
      as people clicking your link just so they can get paid for it).

      Personally, I have paid as high as a dollar per-click for a
      service that sells for $35, and $20 in volume. I have spoken to
      others who operate for-profit websites and have paid as much as
      $2.50 per click on an average keyword. In some really competitive
      markets, people pay as much as $30 per click.

      If you use the Web-Professor bid tool to check keywords at
      Overture ( http://web-professor.net/tools/bidstats/ ) and you
      type in the keyword "mesothelioma", you'll find 30 bidders vying
      for that term and a maximum bid of $29.88 per click! If the
      maximum bidder converts traffic to sales at the national average
      of 3%, then he or she is paying an average of $900 to get one
      client! Insane, but true.


      CPM (COST PER THOUSAND IMPRESSIONS) ADVERTISING MODEL

      CPM advertising is most often associated with banner advertising,
      but can now be purchased for text ads as well. This type of
      advertising is available from many sources, including:

      http://adwords.google.com/
      http://www.realtechnetwork.com/
      http://www.joetec.net/

      CPM advertising can be cheaper than PPC, but it fails to address
      the effectiveness of your advertising copy. Before undertaking
      a large CPM campaign, you need to be confident your advertising
      copy will deliver results.

      As with any other type of advertising, you need to track click-
      through and conversion rates to determine the advertising copy
      that is most effective for your business.

      You also need to have a solid understanding of how many
      impressions it will take to generate a visitor, and how many
      visitors you will need to generate one sale. And, on the
      backside, you will need to know what the average earnings from
      your sales will be. With these stats in hand, you'll know how
      much you can afford to pay for CPM advertising or any other type
      of advertising.

      Using Google Adwords, you can buy CPM advertising for as little
      as $2 per thousand impressions. The one time I went that route,
      thinking my advertising might be cheaper, I ended up dropping
      $180 in three days with only one sale to show for my investment -
      -- utilizing the exact same ad that generated a 4% click-through
      rate (CTR) in Google's PPC advertising system.

      The major appeal of CPM advertising is its perceived low-cost,
      with rates ranging between $2 - $3 per thousand impressions.

      The major disadvantage to this type of advertising is that you
      need a good handle on how well your advertising is performing.
      Your advertising copy can make or break you. Additionally, you
      need to keep an eye on your advertising budget. From first hand
      experience, I can tell you that although CPM advertising can
      appear inexpensive, it can in short order surpass the costs of
      PPC advertising.


      FEATURED LISTING ADVERTISING MODEL

      Featured listings differ from the other two advertising models
      in that you do not pay for "ad clicks" or "ad impressions". With
      featured listings, your advertisement appears in the purchased
      location for 30 days, 90 days, or one year.

      Featured listings can be bought on individual websites and even
      on networks of websites. Below are a few examples of advertising
      networks that offer featured listings:


      Geek Files ( http://www.geekfiles.com/advertising/ )

      Geek Files offers various Featured Listing placement options with
      ad rates ranging from $19 to $179 per month. You get two months
      free if you buy advertising for a full year.


      Aardvark Travel ( http://www.aardvarktravel.net/featured/ )

      Aardvark Travel is a travel search engine. Featured listings
      appear in a colored box between the top five listings and the
      bottom five listings in the travel-related search results. There
      is a $50 setup fee for each Featured Listing and a $10 per month
      recurring charge for as long as you keep your listing active.
      Aardvark claims featured listings generate 40 times more clicks
      than any other listings on their pages.


      The Independent Search Engine & Directory Network
      ( http://www.isedn.org/ )

      The ISEDN offers a program that allows you to purchase Top Ten
      exposure for your website(s) across their network of 200 plus
      member websites.

      The network is comprised of specialized search engines, search
      directories, and article directories. Featured Listing placements
      for specific keywords are displayed across the entire ISEDN
      system.

      The cost of a keyword term (the word or phrase associated with
      the listing) is $12 for three months or $36 for 12 months. The
      price drops for each additional 5 listings you purchase. If you
      are buying in volume, discounts can be significant. For example,
      the cost for 16 to 100 listings is $6 per listing for 3 months
      and $18 per listing for 12 months.

      The main drawback to the ISEDN program is that the network,
      although large, does not yet have the traffic volume of the major
      engines.

      The major benefit, of course, is that you can buy a lot more bang
      for your advertising dollars. Additionally, you can see your ads
      appearing on pages in a position that will attract more attention
      and click-through traffic to your website.


      WHICH ADVERTISING MODEL IS RIGHT FOR YOU?

      It really depends on your business model. More so, it depends on
      your absolute click-through averages and your website conversion
      rates.

      Your advertising needs to cost you no more than what it earns for
      you. Ideally, your advertising will cost less than it earns for
      you.

      Some businesses trade on the lifetime value of customers and are
      willing to pay more to get customers than what they earn on their
      first sale, but not all of us can afford to build a customer base
      in the same way that Amazon built theirs.

      If your advertising budget is small, your goal should be to make
      every advertising dollar count. Grow your business to the point
      where you might be able to afford some of the more expensive
      advertising solutions. But then, if the lower-cost solutions
      generate sales for you, why would you want to pay more?




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