You may think PPC advertising is the same on every network. There are some different flavors out there.

1. Hybrid auctions
2. High-bidder auctions
3. Contextual auctions

Each of these auction flavors has a different set of rules which you need to know before you start plunking down your money. Let's take a look at each to see what's the best fit for you.

Hybrid Auctions

Hybrid options are really the killer app of PPC advertising and the main reason Google generates so much revenue. When the whole concept of PPC advertising began, it was simpler. Starting with Overture back in the good old days, top placement went to the highest bidder. But as with so many other things related to search, Google made it better. Google added the element of quality into the mix. This means that Google ranks and places your PPC advertisement on the searcher's results page not only by how much you are willing to pay for a click, but also how likely searchers are to click your ad. This is called "clickthrough rate."

Quality as measured by clickthrough rate means that getting the number one spot for a PPC ad is more than a matter of how much one is willing to bid. For example, you may be willing to bid high to get top placement but phrase your ad in such a way that you pre-qualify all your clicks so you only pay top dollar for serious clickers. Great plan… but that doesn’t maximize revenue for Google, does it? So, Google tracks how many people click on your ads and how many people click on your competitor's ads. If your competitor’s ads are more likely to be clicked than yours, your competitor may get the top rank even if they bid lower than you. Tricky business! Although this technique greatly benefits Google by increasing payable clicks, it also benefits the searcher by promising greater relevance of what appears on the search result page.

Another key element of your quality score is whether the content of your landing page is "relevant" to the keywords bid on and the key words in your ad copy. Supposedly, the less relevant your ad, the lower your score and the more you have to pay in order to get ranked higher in the paid search results. If you have keywords that are crucial, you may need to tweak your site content to match the search key word you are bidding on. Needless to say, this takes some of the joy out of PPC advertising by making it much, much harder. GDM InterActive can help you work around this sticky situation with some tried-and-true techniques, but nothing is going to beat a good match between your content, your ad, and the keyword being searched.

Hybrid auctions are difficult to forecast and project which makes the lives of media planners and buyers difficult. The good news is that after running a program for awhile, and then seeing it through a few iterations, you should get a pretty good handle on projections and traffic.

High Bidder Auctions

The high bidder auction was the original paradigm for PPC advertising, but these days it is only used by some of the minor search engine options. Yahoo! and MSN have both followed Google in the use of a hybrid auctions for their networks.

Because of this, developing strategies for high bidder options is of secondary importance. However, if you are targeting the second- or third- tier networks, you will need to have a different bidding strategy for bid jamming or gap surfing. Using third party bidding software is your best bet but not usually an available option for small businesses. GDM Interactive licenses bidding software that allows management of high bidder auctions in an integrated format with hybrid and contextual auctions - as at (888)-GDM-4977 or send us an e-mail to discuss how you can best take advantage of these options. 

Contextual Auctions

Contextual auctions are an exciting variation of hybrid auctions. The difference being where your ads are displayed. Paid search ads running in a network offering contextual advertising, such as Google, could end up appearing on pages almost anywhere on the web. You’ve seen these types of ads. They appear on most every site with lots of traffic, such as CNN or ESPN. These ads appear as a group of text-based copy with a link beneath and are usually accompanied by an "Ads Powered By Google" disclaimer. Like so:

These contextual ads have tremendous reach into very small niche audiences like the example here from Linked-in. For example, Google itself runs such text-driven ads on the same page their G-mail customers use to read their e-mail (why do you think they developed the FREE G-mail service...?). So, G-mail users are likely to see ads related to the content of their e-mails--wow, that's some serious reach! This may be really scary to some, but for marketing purposes it is a tremendous opportunity to reach new customers at all levels.

GDM InterActive is a big fan of contextual advertising. If you let us work with you to develop your PPC advertising program, we will help you develop effective strategies for maximizing your reach through contextual advertising.

Deciding What Type of PPC Auctions Can Work For You

Deciding what type of PPC auctions are best for you can take a little bit of experimentation. Our advice is not to write off any of these three flavors of paid search without a solid test because you could be missing out on a big chunk of marketshare. If you'd like to start testing paid search but are not sure where to start or just unable to get the results you need from your existing campaigns, give us a call at (888)-GDM-4977 or send us an e-mail.  We'll help you hit the ground running and avoid commonly made mistakes and wasted advertising dollars.