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Online Advertising – for Dummies like me

I have came across a very good write up on basics of online advertising at all business website. Thought of sharing with you all.

One of the most popular methods of online advertising, especially for small businesses, is CPC, or cost-per-click, advertising. If you have been researching online advertising, you are probably already familiar with this term.

CPC-based advertising allows businesses to pay only for the targeted leads they receive. In the competitive online marketplace, this can spell success much more quickly than other advertising methods.

Ads are displayed in the same way as in CPM (cost per 1,000 impressions, or instances of an ad appearing on a website); the difference is in how the customer pays for the advertising.

In a CPM campaign, you pay for how many times the ad appears. If your ad performs well and a lot of users click through to your site, each click-through costs you less. On the other hand, the lower the click-through rate the more each click costs you.

CPC advertising protects you by fixing the amount you pay for each click and sets a ceiling on how much you’ll pay. By paying only for actual clicks, you save money and reach only targeted customers. You won’t pay for thousands of impressions that are uselessly displayed. This is a great way for businesses to control their advertising budget and gauge response to their advertising campaigns.

For example, if you decide to advertise with a CPC-based search engine or a featured listing with a search engine, your ad will display each time a user enters a keyword that matches your predetermined keyword list. You don’t pay each time the ad displays, only when it’s actually clicked.

If you prefer to try CPC-based banner advertising, the principle is the same. Your ad will display, and each time it is clicked by an end user, you get charged. Your ad runs until you have reached a predetermined amount of actual clicks. This means that your ad may get much more exposure than it would by using a traditional impressions calculation method.

These extra impressions allow your ad to stay up longer, which may mean that even if you do not receive click-throughs right away, you may end up with more impressions.

There are several places where you can set up a CPC-based ad as well as monitor the results.

Google AdWords is one of the most well-known CPC-based advertising venues. With AdWords, you pick the keywords you want to use and only pay for as many clicks as you can afford. Instead of having to pay for a campaign that may be more costly than you had planned, you can set a limit on the amount of times your ad can be clicked and cap the total amount you’ll spend on the campaign. This can be a lifesaver for a company that cannot risk an advertising campaign that may result in thousands of dollars of unexpected advertising bills.

Facebook offers a cost-per-click service. There is talk of Twitter beginning to offer advertising, and some social media experts say a similar cost-per-click model would work best for that social networking site.

If you prefer banner advertising, there are myriad companies offering CPC-based banner ads in addition to the traditional CPM advertising method.

But don’t spend all your ad dollars in one place. Test different methods of advertising at the same time, and always track the results. This is the only way to determine what works for you and the only way to get the most for your advertising dollars.

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