By Eric Blair
Most companies today have hopped on the pay per click service advertising model, whether internally or through a management company. Given that the costs of other forms of advertising have risen dramatically, this type of advertising is almost always more cost efficient when it comes to sales revenue to advertising budget ratio. Most people do not understand how the costs are calculated, but there are actually two separate methods, each of which has unique advantages and disadvantages.
The first type is the flat-rate PPC cost model. This method involves a price that a company and the client agree upon, which is paid by the client every time an ad is clicked. A big reason that this is a good method is that the advertising firm is put on the side of their client, pushing to get ad spots in more relevant areas and the client’s site associated with more relevant keywords for more clicks. Another positive side of this is that the client is allowed opportunities to push out limited time specials immediately to attract customers quickly. More customers will buy when a company puts the ads in the spots people search when ready to buy. Some ppc management companies will even guarantee a certain result, but this can sometimes be less than what another company can potentially give.
The negative aspect of this method is that some management companies that provide these services will provide a better result when paid more. This gives companies with a bigger advertising budget more of an advantage when it comes to displayed advertisement priority. Depending on the method that the company uses to prioritize their advertisements, this may actually not be a negative feature. Some paid search advertising companies have systems that provide a fair shake to everyone in a rather effective way.
The bid-based model is another way in which PPC companies charge. This method sets up an auction that companies bid in to get a job. Usually, they will start at a certain amount and people will actively go into a bidding war, lowering the price until another company will not lower the price any more. The company advertising takes somewhat of a risk when putting their advertising requests into a bidding system, but ultimately, the result is guaranteed in some way. The only issue that comes about from this is the lack of personalization when it comes to how the result is achieved. No company will give away their darkest secrets, but some will simply get the result for the client and move on to the next job. Some others will look to build a relationship with their customer to entice them into doing further business after a job is completed, but a great number of these companies do not operate in any other way besides through auctions.