PPC advertising uses short, 'classifieds-style' advertisements which appear next to regular search engine results. You'll usually see a heading that says 'Sponsored Results' above pay-per-click ad listings.
Here's an example from Google:
1-XML Feed Partner: High CPC's & exclusive advertisers. Huge revenue potential
2-Affiliate marketing: Turn Your Traffic into Revenue Join Our Network of Affiliate Sites
3-Top Affiliate Program: Earn money promoting credit cards. Very high payouts. Join us today!
Those are just a portion of the sponsored ads which came up when I typed in the search phrase: "affiliate marketing". There are several things to make note of here.
First, realize that these ads were triggered by the search phrase of 'affiliate marketing'.
What this means is that the advertisers behind these ads have chosen specifically to target people searching on 'affiliate marketing'.
By bidding for that phrase. Remember, this is 'pay-per-click', so the bid represents the amount the advertiser is willing to pay each time someone clicks on the ad link to his web site.
If you're totally new to PPC advertising, this can be a bit confusing at first, so let me give you another example.
Let's say you are promoting e-books related to 'cooking' (e.g., how to's, recipes, etc) as an affiliate, and you want to drive traffic to your opt-in page. Obviously, you want to target people who are looking for information about cooking, recipes and so on. During your market research in Step One you should have generated a large list of terms that your market is searching on. These terms will be your targets for pay-per-click advertising.
For example, let's say a portion of your keywords list looks like this :
Now, if one of your affiliate products is an e-book of Indian cuisine recipes, then the above key phrases are ideally targeted to your offer, and you would want to run pay-per-click advertisements for each targeted key phrase. In other words, you would have an ad that runs on the phrase "curry recipes", one that runs on "curry chicken", on for "Indian recipes", and so on. Each key phrase (most of the time) should get its own advertisement, like so:
1-Curry Recipes, Delicious red, green and yellow curry recipes. Complete Indian cookbook.47£, http://www.your-site.com
2-Indian Cookbook, Includes all the most popular dishes. Download free sample recipes today, http://www.your-site.com
So, in the example, Ad 1 would go with the key phrase 'curry recipes', and Ad 2 would go with the key phrase 'Indian cookbook'. Note that you do not always need to write separate ads when bidding on groups of similar keywords. For example, you could use the "curry recipes" ad alone for key phrases including "curry recipe", "how to make curry", "recipes for curry sauce", etc...
Now, when you are ready to run your ads, you must specify a maximum bid amount for each key word or key phrase. (Note: This is different from the minimum bid, which is the minimum amount you must bid in order for your ads to run at all. Minimum bid amounts are affected by how much competing advertisers are bidding on the same key words.) Your maximum bid is the most YOU are willing to pay per each click on your link. This amount is not necessarily the amount you will have to pay, but it affects your advertisement's placement or 'rank' within the listings.
For example, let's say that you're using Google Adwords and find that the current minimum bid amounts for your key phrases are as follows:
So, for example, in order to run your ad on the key phrase "curry chicken", you must bid at least 5 pence per click. This gets you in the game. However, it may not get you as high of a placement among the competition as you want. Let's say you want the 1 position in the sponsored listings. As a new advertiser, you will have to bid at least 6 pence per click. If this is what you know you can afford, then 6 pence per click becomes your maximum bid. If you have the budget for it, however, you could also try to lock out some of your competition by setting your maximum bid much higher . For example, you could bid 10 pence per click.
The key here is keeping all of this within your budget. Most PPC sites allow you to set a 'Maximum Daily Spend' which serves as a 'cut off point' for how much money you spend each day on clicks.
For example, with Google Adwords, you could specify a daily budget of 10£. Google will keep serving your ads until you've received enough clicks (on any ad) to total 10£. Once you hit your maximum, ads will stop running until the next business day.