An Investigation of Pay Per Click Search Engine Advertising:

Modeling the PPC Paradigm to lower Cost per Action

By

Alexandre Douzet

Co-Founder & CEO, TheLadders.com

Presented By: Neeraj Narang

Apr-11-2013

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• Analyze PPC paradigm

• Analyzing differences in bidding and valuation between vendors like Google & Overture

• Delivery methods like content or search listings

• Analyze it from the advertiser’s perspective

Overview

Investigating PPC Advertising

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Lecture: Search Engine Advertising

• Search Engine Marketing and Optimizationi.e Getting to the first position

• Banner Advertising

• Using PPC advertising for your businessCreating PPC campaignsAds on search and content networksTracking the campaigns

Where it fits in with the course?

Investigating PPC Advertising

The 'Auction'-The most apparent feature of the PPC advertising marketplace-Implementation differs across search engines

Primary auctions:-Sealed Envelope or sealed bid-English auction

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The Terms

Investigating PPC Advertising

Other industries have the same business paradigm

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It’s Not Rocket Science

Investigating PPC Advertising

Natural Resource Industry

PPC Arena

Resource Iron ore Impressions

Conversion Raw resource processed before use

Conversion from impressions to clicks

Manufacturing

Produce steel Clickers into paying customers

-Emerged in 1998, introduced by GoTo.com

-In 2000, GoTo provided service to Inktomi, yahoo, AltaVista, alltheweb.com, etc...

-2001, renamed to Overture: controlled nearly entire PPC market

-Yahoo purchased Overture in 2003

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The History

Investigating PPC Advertising

Advertising first appeared on Google.com in January 2000 — text ads were sold on a CPM(cost per impression) basis. (Yes, that’s right, there was no pay-per-click, no self-serve, no bidding)

In 2002, Google switched to a model similar to Overture and offered paid results to Earthlink, AskJeeves, and America Online

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Google Ad Model

Investigating PPC Advertising

By 2005, Google and Overture were the giants of search engine marketing

Both offered a second model, in the form of content networks i.e. allow websites to offer ads based on their content.

In this model, the ads relate directly to the content being viewed.

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Investigating PPC Advertising

2005: Enter Content Networks

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Investigating PPC Advertising

Search based Clicks are out of a need to find something.

20 or 30 words that will be auctioned in a search auction

Clicks that come from the content side of the PPC networks are out of curiosity

There are fewer than five spaces for ads on a content page making it more costly to be seen on a content page

SEARCH Vs CONTENT NETWORKS

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Investigating PPC Advertising

Position and efficiency of content and searchTheLadders.com conducted a test They used thousands of keywordsThey used different types of matching like exact, phrase, broad

Each keyword was then given an average position

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Investigating PPC Advertising

Position and efficiency of content and search

Observation Search and content should be treated as separate things

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Investigating PPC Advertising

Auction Types

Where do keywords get their prices from?A new auction is held every single time a search happens.

-A Second Price, Multiple Round, Sealed Bid Auction-Google-A second Price, Multiple Round, English Auction-Overture

Difference between Keyword Auctions and Other Auctions?

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Investigating PPC Advertising

A Study of the Creative AdMinor changes in creativecan have major impacts

Better creative can increaseperformance of the same position

Optimize creative on a costper action basis

Can make your second position keyword act like it’s on the first position

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Investigating PPC Advertising

Pros The paper gives exhaustive explanation of the different types of auctions

Compared search and content delivery models very wellQuality of tests performed is high

Does not really tell what delivery model is suitable for a particular business

Focuses more on advertising with Google

Cons