Even if you aren’t a marketer, you’ve heard about it — “pay-per-click advertising”.
So, you finally decide to try it out for yourself. However, you wouldn’t be here if you didn’t have that little niggling doubt about whether PPC ads can deliver (or not).
That is why you need this article about the effectiveness of pay-per-click advertising.
Here are the topics you’ll learn about.
- What is PPC advertising?
- How effective is pay-per-click advertising?
- Benefits of PPC advertising
- PPC v/s other digital marketing tools
- Is PPC right for your business?
What is PPC advertising?
Let’s begin by answering the most basic question — “What is PPC?” It is exactly what it says on the packaging.
There is a fixed minimum price set by the platforms (Meta, Google, Bing) for PPC ads. Then, there is a particular auction where you can “bid” for these ads. The person willing to pay the highest gets their ads displayed first.
You also set a budget (this can be daily or lifetime). The lifetime budget applies to each individual ad campaign.
So, you’ve got your ad ready—the copy, the graphics, everything. You place it somewhere—Facebook, Google, YouTube, Bing—and it works principally the same way. The ad is shown to people who search for keywords related to your ad.
Say you set the PPC at $0.05 and the daily budget at $10. You can get a maximum of 200 clicks for that ad campaign. You are only billed “on actual use”. That means if you got only 100 clicks, in the example above, you’d only be billed $5, even though your total budget was $10.
But PPC adverts are pretty limited, right?
Suppose someone sets a higher per-click budget than you for the same keyword. Their ad will be shown more than yours, correct? That’s undoubtedly true, but PPC ads are usually the most efficient advertising method. Let’s find out why.
How effective is pay-per-click advertising?
Pay-per-click (PPC) advertising is highly effective for businesses looking to reach potential customers online. When done right, PPC drives excellent returns on investment.
Just take a glance at how much companies spend on PPC ads.
Leading analytics firm Statista said companies spent $145 billion on PPC campaigns in 2022.
In 2023, advertisers upped their spending from $145 billion to a whopping $185 billion. (Data from Zenith and Statista Online).
Source: Screenshot
Think about it — why would businesses pour that cash into PPC ads if they didn’t see results?
The revenue numbers back that up. According to WordStream, businesses make $3 in revenue for every $1.60 they spend on Google Ads.
That’s almost a 100% return, which is unmatched.
Data confirms that, on average, businesses make an average of $2 in revenue for every $1 spent on PPC advertising. That just further proves the effectiveness of pay-per-click advertising as a channel.
Data compiled from Email Marketing Census, pg. 25 and 78
To better judge the effectiveness of pay-per-click advertising, let’s look at two metrics: CTR and CPC. These are the two most common “standards” that you, as a marketer, will use.
Bear in mind that these metrics are for PPC ads only. Most of the platforms offer other models as well, like the PPL and PPA mentioned above.
1. CTR
We’ve compiled data from Facebook, Google, Statista, WordStream, and other analytics sites. Here’s what we’ve come up with an industry-wide breakdown of the CTR for PPC ads.
Data compiled from Facebook, Databox, Mintel, and Statista
2. CPC
What about costs? Data shows the average CPC on Google ads is $1-2 across industries. Look at the image below, where we’ve compiled data from Statista to show you industry-wise CPC prices.
Data compiled from Semrush(May 31, 2023). Average cost-per-click in Google Ads
With proper targeting and planning, though, the CPC can be much lower, around $0.66.
Now, the initial metrics like CTR and CPC are undoubtedly important. However, the total effectiveness of pay-per-click advertising spans many other key areas.
75% of people say paid search ads make finding what they’re looking for easier. Google Ads influence 89% of customer journeys in one way or another. Here are some other factors that point to the effectiveness of pay-per-click advertising.
And not just we, but many academicians, agree. There have been many research papers and studies on the effectiveness of pay-per-click advertising, like this one by Brunel University London and Swansea University.
Next, let’s find out the two major outcomes advertisers try to achieve via their PPC campaigns.
Key outcomes expected from PPC campaigns
The two key goals of a PPC campaign are:
1. Brand Awareness
Pay-per-click ads put your business front and center in places like Google’s search results. This exposure is precious for getting your brand in front of potential customers.
A study by Vennor Marketing found that paid search ads boost brand awareness by an average of 80% compared to not running paid ads.
With PPC, you can get your brand name, product/service offerings, and messaging directly in the eyes of people actively searching for what you offer.
2. Quality Leads
According to HubSpot, PPC visitors are 50% more likely to purchase products or services than visitors from other sources. This means paid ads are an extremely effective channel for reliably capturing high-quality sales leads.
With the ability to precisely target customer demographics, interests, and intent signals, you can get your offers in front of the right people actively looking to buy. This helps drive lead volume and overall marketing ROI.
Benefits of PPC advertising
Let’s start by covering the top five benefits of PPC advertising.
1. Targeted Traffic
It’s a huge benefit to be able to target your ideal customer with PPC ads precisely. You can configure campaigns to show ads only to the users you want.
For example, those who match specific criteria like geographic locations, ages, genders, interests, purchase intentions, etc.
Let’s say you own a teeth-whitening product business. With PPC targeting, you could exclusively show ads to people actively searching for dental terms.
2. Detailed Metrics
Another great PPC benefit is the detailed attribution data you get access to. The best part is that you can track metrics commonly if you’re running multiple campaigns.
You can see the metrics per campaign, individual ad, or across the board. The choices for metrics are also quite diverse: impressions, clicks, conversions, conversion rates, costs per conversion, and more.
3. Customizable Website(s)
For PPC campaigns, you’ll typically want to send click traffic to dedicated landing pages rather than just your homepage. A key benefit is that you can fully customize and optimize these landing pages.
PPC best practices say that your landing page should align with each specific campaign and audience. For example, your landing pages can directly mirror the messaging, design, and calls to action from the PPC ads someone clicks on.
4. Local Marketing
PPC provides incredibly powerful local marketing capabilities. You can configure campaigns to show ads only to users located within a certain radius of a mile from your business.
You can even target specific cities, zip codes, or neighborhoods.
This localization ensures that ad spending is directed at realistic prospective customers. It keeps promotions relevant and budgets efficient.
5. Instant Visibility
PPC ads instantly allow you to appear at the top of search results pages. As a result, you can grab customers from the minute your ad goes live.
You can launch a new product or service and drive valuable visibility overnight through paid advertising.
The instant visibility benefit is compelling for quickly testing new offerings or promotions. With PPC, you can reach all customers, including non-customers, interested people, previous customers, and recurring customers.
6. Ease of “Trialing”
The best PPC platforms, like Google Ads, make it seamless to split-test different components. Elements like ad copy variations, landing pages, audience targeting, placements, and more can be experimented with.
You can quickly run A/B tests across your campaigns to determine the best creative, messaging, and targeting for achieving your goals. This powers a data-driven approach to optimize your PPC advertising continually.
In the long run, it helps improve the effectiveness of your PPC campaigns over time and helps you find which PPC best practices work for you.
7. Higher mobile effectiveness
With more online traffic shifting to mobile devices each year, the effectiveness of mobile PPC advertising is crucial. Again, PPC delivers. Wordstream found that the average mobile click-through rate is double that of desktops across most industries. As mobile ad formats and targeting capabilities improve, PPC will only become more effective for reaching audiences on the go.
Now that we have covered the benefits of PPC, let’s examine how it compares to other tools.
PPC v/s other digital marketing tools
As you know, PPC ads are not the only ones marketers use. We’ll pit PPC v/s other digital marketing tools in this section. The main difference you will see, shared across all of these, is the time and effort.
1. PPC versus SEO
PPC shows ads instantly, and you pay for each click. It catapults you to the top of search results, but the effect is only in place as long as you pay. SEO improves your site’s ranking naturally, but it may take months to see usable results.
Also, with SEO, you need to focus on permanent, long-term content. If you need to temporarily target another keyword, only PPC can help.
PPC is great for immediate traffic, such as promoting a new product or sale. SEO builds long-term presence and attracts visitors over time. PPC provides fast data and immediate results. SEO requires patience and ongoing effort.
PPC can be expensive if your keywords are competitive. SEO needs continuous work but is cost-effective in the long run. The effectiveness of PPC is in its speed and control. SEO is effective in terms of sustainability and cost-effectiveness.
The next most popular avenue after SEO is email marketing.
2. PPC versus email marketing
PPC drives traffic fast but costs per click. Email marketing is cost-effective but depends on your list quality.
Email marketing is pretty useless if you don’t have an existing email database.
Email marketing can only reach those who already know your brand. It’s inexpensive and works well for building relationships over time. Also, if you don’t have a sign-up or contact-us form, it can become challenging to compile a decent email database.
Also, PPC allows precise targeting based on several factors and filters. You can adjust your ads quickly based on performance. Email marketing, however, requires consistent content and careful timing to maintain engagement.
That said, email marketing is more likely to generate leads (in our opinion). If you have someone’s email, it’s probably because they’ve already shown considerable interest in your brand.
That person has visited your website, filled out a form, or placed an order. That is why you have their email — you’re not starting to convert these people from scratch.
However, email marketing may suit you better if you have an email database. And it doesn’t have to be an either-or choice — you can do both.
3. PPC versus social media marketing
Social media marketing is another organic marketing avenue. You upload regularly, engage with followers, and post valuable + interesting content. You know, the works.
A key difference is the payment model. Social media marketing can be done for free, but creating the content can cost a pretty penny.
The smartest thing to do is combine both methods. You can do this very simply by placing PPC ads on social media. However, organic social media marketing builds deeper connections and long-term brand loyalty.
With PPC, the end goal is to achieve visibility at all costs. Social media marketing aims to build a permanent audience for both you and your brand.
4. PPC versus influencer marketing
Influencer marketing involves partnering with large-following influencers who promote your products to their audience, building trust and credibility.
This method can get very expensive quickly. Additionally, influencer marketing has no guaranteed results. You could end up paying an influencer, which may not result in a single sale.
At least with PPC marketing, you only pay after achieving your goal (i.e., the customer clicking the ad).
And the last competitor we have for PPC is content marketing.
5. PPC versus content marketing
Content marketing mainly creates educational content like blog posts, videos, tools, and more.
The goal is to attract people and build brand authority over time. PPC takes the promotional approach of running paid advertisements.
Content marketing compounds over months/years for organic traffic growth. PPC can drive targeted traffic and conversions immediately.
Audiences tend to see content as more trustworthy and less interruptive, but PPC can sometimes be seen as pushy. Additionally, PPC marketing will stop showing results if you stop paying. On the other hand, content marketing assets will continue to generate traffic till you remove them.
In our last section, we’ll show you how to decide whether PPC is right for you.
Is PPC right for your business?
Deciding if PPC is right for your business involves several steps. Here’s how you can choose.
1. Understand Your Goals
First, identify your business goals. Do you want to increase sales quickly? Do you need more traffic to your website? PPC is great for achieving these goals fast. If you need immediate results, PPC might be a good fit.
2. Evaluate your offerings
PPC advertising can only show you a positive return if you have something specific to sell. Or if you have a specific goal in mind. “I’d like to sell X units of my product.” “I’d like 1,000 new visitors to my website within a week”. PPC will leave you sorely disappointed if you have a generic ask like “I’d like to be found more online”.
3. Analyze Your Competition
Check what your competitors are doing. Are they using PPC? If they are, it might be worth trying it yourself.
If they aren’t, you might have an opportunity to stand out. Look at their ads and see how they are targeting customers. It could be a good chance to poach their buyers.
4. Evaluate Your Website
Make sure your website is ready for PPC traffic. It should be easy to navigate, and the landing pages should be optimized. A well-designed website can turn clicks into customers. If your site is not ready, you might want to fix it before starting PPC.
5. Test with a Small Campaign
Never test the waters with both feet is the saying, so start small. Run a “test” mini-campaign with a small budget for a few days. But also remember that one bad day doesn’t necessarily mean that the campaign is at fault.
Run your test campaign over a couple days and target audiences to get a more “whole” picture. Just don’t judge too quickly – give it a few days to evaluate results holistically.
6. Seek Professional Help
If you’re unsure about managing PPC on your own, consider hiring a professional. Also, professional ad agencies can do a lot more than even your in-house marketing team(s).
For example, at RetainIQ we specialize in boosting returns from PPC channels like Facebook Ads by:
- Ensuring zero ad budget waste through precise audience/placement targeting and filtering.
- Utilizing AI and machine learning to automatically optimize creative performance.
- Avoid common mistakes that drain budgets, like poor relevance, ad fatigue, and mobile blindness.
- Replacing risky experimentation with proven, strategic, value-delivering campaigns.
- Continuously refreshing ad creative and content to maintain engagement.
With an expert PPC agency like RetainIQ, you can feel confident your advertising investment is being maximized without the overhead of doing everything in-house.
We leverage our deep paid ads experience and proprietary technology to drive outstanding measurable returns.
Ultimately, PPC is likely a worthwhile channel if you have a good product fit, a healthy website, and a reasonable budget for testing. However, ensuring you have the right resources and expertise in place is critical to making the most of paid advertising profitably.
Conclusion
The billing model is at the heart of the effectiveness of pay-per-click advertising. It makes PPC campaigns very controllable and targetable.
This is probably why one out of every three marketers says their highest ROI comes from PPC channels.
One of the main reasons for the effectiveness of pay-per-click advertising is that you can choose exactly who sees your ads. You pick the keywords that match your business. When people search for those picked-out keywords, they see your ad.
The result? You only reach people who are already interested in you.
Now, setting up effective PPC campaigns takes some effort. You need to write compelling ad copy that will make people want to click. (Ad “Copy” is just an industry buzzword for the text that your ad uses.) Your ad may also be an image or video. If so, there’s additional time and effort involved in making these.
However, the be-all-end-all argument is this: once your ad is live, people can click on it right away.
That makes PPC ads cock of the walk, among all other tools. And with that, we come to the end of this article on the effectiveness of pay-per-click marketing. We hope you found it useful, and we’ll see you in the next one.