Pay Per Click advertising

• The popularity of search engines with browsers. About 80% of new visitors to a website come from search engines. Chorial's clients report that 30 to 50% of all visits come from them.
• The dark art, difficulty, cost and agonising slowness of achieving high levels of visitors from organic search engine rankings.
• The decline of banner advertising. Only one in a thousand viewers click. Advertisers badly need a method that works.

Yet the majority of PPC advertisers sem not to be getting the best out of their expenditure. A survey by NetIQ of website owners (800 self-selected respondents) concluded:

Of those that do measure:

• 60% are only counting clicks.
• 27% are measuring through to conversion.
• only 11% are conducting detailed ROI analysis.

There are a lot of PPC search engines, with Yahoo! (Overture) and MSN the best known alongside Google Adwords. Google and Yahoo! provide listings for many other search engines and affiliated websites and so aggregate PPC advertisers for those other search engines. Overall, they claim to access 80% of US and UK internet users. Google alone accounts for 50% of the 6 billion searches each month - and that's just the US.

PPC is used to display an advertisement as part of the results from an online search. The advertiser chooses which searches will bring up their advertisement. As the advertisement is only displayed for matching searches the searcher often finds it highly relevant. An auction determines which advertiser is prepared to pay the most for the display of the advertisement, so costs are kept low. The advertiser pays if, and only if, the link in the advertisement is clicked. Accordingly, PPC brings together the needs of the searcher and the needs of the advertiser in an extraordinarily cost-effective way.

However, PPC may bring a visitor to a website but does it make them buy? Some searches will be much more successful than others in producing a sale or other useful outcome on the advertiser's website. If we could tell which searches brought visitors who converted to customers and which did not, the improvement in the return on advertising expenditure would be substantial. For instance if each click cost 40p, that's £40 for every 100 people who visit the site. If one of the visitors makes a purchase of £100, the return on investment is £60. But spend the same amount on an advertisement that is better targetted and converts four customers from every 100 visitors and the return rises to £360. Six times the return for a simple change in tactics.

The great thing is that the same principle applies to other forms of online marketing. Knowing the differing returns means a choice can be made among marketing methods as well as just between advertisements.

Making online marketing dramatically more cost-effective by providing actionable information presents an opportunity for a company with the right analytical skills and speed of response.