Pay per Click or PPC is one of the most widely used systems by digital marketing platforms, especially those related to advertising.
PPC is widely used in digital marketing strategies because this system is considered more transparent and measurable for advertisers.
Understanding Pay Per Click
Pay per Click or PPC is an advertising system that charges a fee when an ad is clicked by a user.
With the PPC system, if your ad is displayed but gets no clicks from users, you as the advertiser are not charged anything.
Pay Per Click, which translates to “Bayar per Klik” in Indonesian, is widely used by various digital platforms. Examples include Google Ads, Meta Ads (Facebook and Instagram), all the way to TopAds (Tokopedia).
The PPC system has been used by digital marketing platforms for over 30 years. PPC was first widely used in the 1990s by GoTo.com, a system later adopted by Google AdWords in the early 2000s. (Source)
How Pay Per Click Works
How pay per click works is by charging a fee whenever a user clicks on the ad you set up.
However, running an ad doesn’t mean it will just automatically appear. Your ad has to compete with other ads to show up in front of users through an auction or bidding system.
The chances of your ad being shown heavily depend on the Cost Per Click (CPC) submitted by the advertiser. Setting the CPC amount itself is done in two ways:
First, the cost per click is set manually by the advertiser, or Manual CPC.
Second, the cost per click is set automatically through algorithms, such as Smart Bidding in Google Ads.
Besides the auction system, other factors determining the CPC amount include the business niche, demographics, location, and ad quality.
The Function of Pay Per Click in Digital Marketing Strategy
In a digital marketing strategy, PPC functions as a transparent and measurable marketing medium. Here is the breakdown:
Displaying Ads According to the Target Audience
PPC functions to display ads tailored to the target audience of the advertised business.
This means the ads you create can be shown to the right people.
For example, you advertise Product A strictly for the Tangerang area, or advertise Service B to a user demographic aged 25+.
Displaying Ads According to Search Intent
Search intent is the motivation behind why people search for something. Typically, search intent is categorized into 4 types:
- Informational (user is looking for general information without a specific goal)
- Navigational (user is looking for directions or a specific site)
- Commercial (user is researching specific products or services to get deeper information)
- Transactional (user is looking for specific products or services to make a transaction).
With PPC, it becomes possible to display ads for searches with specific intents. For instance, displaying tailored ads to people looking to make a transaction to boost conversions, or to people looking up price information to generate leads.
The impact of applying search intent is significantly better ad performance compared to serving ads randomly to users with varying intents.
More Measurable Performance
Platforms that offer PPC provide comprehensive performance reports that can serve as KPIs for the digital marketing team.
Example reports vary from commonly used metrics like impressions, clicks, conversions, and CTR to fairly advanced reports like analyzing click counts in specific areas or demographics.
With complete reports, the impact of ads on the business can be measured with certainty. Decision-making can also be driven by data rather than pure guesswork or gut feeling.
Conclusion
Pay Per Click or PPC is a digital marketing system where advertisers only pay when a user clicks on a displayed ad.
This system works through an auction or bidding process that determines whether an ad gets displayed or not. Deciding the Cost per Click can be done manually or automatically via algorithms.
In a digital marketing strategy, PPC serves as a marketing platform whose impact on the business is more transparent and measurable.