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The principle of pay per click is simple. It is a method of buying advertising space on a publishers web site whereby you only pay for that space if a customer clicks on your advert, hence 'Pay Per Click'. The cost per click is defined by the merchant and determines firstly the amount of coverage your ad will get across the publishers network, and secondly the maximum cost you will be paying per click. Search engines were the the first to take this model seriously with Goto.com leading the way. They created an auction model whereby the person paying the most for a search term (keyword) would appear the highest in the search results for that key term. This was a simple and very effective way of marketing and delivering targeted traffic to your web site. It also created a fantastic viable way for search engine based web sites to start to monitize their search results, and from this web goliaths were born!

The introduction of the Quality Score

Google came to the scene and changed the model for ever. Firstly by simplifying it to it's purest form, i.e. Google being just a Search Engine and not a portal like Yahoo! or MSN, and secondly adding a second variable of 'Quality' to the mix. The old goto.com model was simple, if you pay the most you are top, therefore a very transparent and open auction. But this had its downside in that people with no relevancy to a product or service could dominate a keyword or search term by paying the most. This from a user experience perspective was very poor. Imagine searching for "nappies" and the top listing said "Get a £5,000 loan here". Not exactly a good search result. So Google introduced 'Quality Scoring'. The quality of an ad would be the overriding factor as to where it should be placed within the search results. The basic initial algorithm was simple, it was base upon the click through rates (CTR) of the searchers who searched for the keyword.

Click through rate example:

• Ad Text 'A' has been searched and shown 20 times and clicked on 5 times giving it a CTR of 25%.
• Ad Text 'B' has been searched and shown 20 times and clicked on twice given it a CTR of 10%.

The algorithm would look at these two results and determine that ad group 'A' has a better 'Quality Score' than 'B' as more people having seen the ads clicked on ad 'A', so it must be more relevant to the the original search term. Google, because of this, would therefore give more weight to ad 'A' and rank it higher than ad 'B'.

What happens then if ad 'B' pays more than ad 'A'?

This is the clever bit from Google's perspective. Google still made it possible for ad 'B' to get top position. Ad 'B' would have to pay above and beyond the odds to achieve a position, making Google a lot more money per click. Google masked the auction so that no one knew where the competition was therefore making it really entirely in Google's hands as to where advertisers would lie within the search results. Google's masked algorithm essentially created an 'Ad ranking Score' which was deduced by multiplying your Click Trough Rate by your Cost Per Click. This score would determine your final position within the results.

Ad rank and Quality Score example:

• Ad Text 'A' a CTR of 25% and a CPC of £1.00 and therefore an advertising score of (25 x 1) = 25.
• Ad Text 'B' a CTR of 10% and a CPC of £2.00 and therefore an advertising score of (10 x 2) = 20.
• Ad Text 'A' as it has a higher score is first and ad Text 'B' is second.

Notice how within this example ad 'B' is willing to pay double of what 'A' is and yet still does not take first place. Ad 'B' would in fact have to pay above £2.50, two and half times more than 'A' in order secure top spot. This model works well in 2 ways:

1. The searcher gets the most relevant ad at the top of the list
2. Google makes the most amount of money possible from the advertiser in top spot. Remember if ad 'A' is shown 20 times it gets clicked 5 times at a £1.00 making Google £5.00. Ad 'B' in the same scenario gets clicked 2 times at £2.00 making Google £4.00. It therefore makes sense to have Ad 'A' higher as Google will make more money. Only when Ad 'B' raises it's bid to above £2.50 does it make sense for Ad 'B' to be in top spot, as that would then make Google more money.

Both MSN and Yahoo have now adopted this approach of the masked auction as they obviously see the merit of the profitability of the model and the improved user experience for their customers. It will therefore soon be the end of an open bidding auction.

Landing Page Quality Score

Google have recently moved the model further by introducing a forth variable of the landing page quality. The reason for this is that with the previous model it was possible for people to write a quality ad that says one thing but delivers the clicks and the searchers to somewhere completely irrelevant and different, again generating a very poor user experience. Google therefore now assess the landing page in order to ascertain whether it is 'relevant' to the search term you buy. So web sites with a better quality of ad text and landing page content will get preferential treatment when it come to being scored within the search results. How Google determine the quality of the landing page is for only Google to know, but it is most likely a similar method used as to the natural search algorithm which determines the ranks of the natural listings.

As you can see the world of PPC is a weird and rapidly changing one, and it is very important that you stay abreast of the changes if you are to stay ahead of the competition. Being internet Egg heads at net egg we always have our finger on the pulse when it comes to search engine changes. We have found that if you get in there first there are always hue rewards to be reaped.

The net egg Pay Per Click Service

So what can net egg do for you?

Our suppliers and partners

net egg campaign objectives

• Attract quality targeted traffic to your web site
• Increase your online sales volumes
• Attract you new customers
• Increase the awareness of the brand
• Reduce the cost of customer acquisitions
• Automate your paid search management
• Monitor online and offline results and adjust campaigns accordingly
• Monitor customers life time value and increase acquisitions accordingly
• Maximise your return on investment to and beyond agreed levels

net egg will report back on the success of the individual and general PPC campaigns and release comprehensive information and analysis. It is our intention to be transparent in our processes, procedures and complete with our reporting.

Measurement of success

The net egg tracking system would require implementation by your technical team. We have varying levels of tracking systems dependant on what is needed, but in principle the tracking is a simple cookie and pixel image based system that should be relatively easy to integrate. net egg would always be on hand to assist in this process.

Once the tracking had been implemented you would be given access to the reporting functionality and given a short demo by net egg as to what it all means.

Managing the spend through Bid Management

Getting you the ROI you need!