Finding Cheaper Pay-Per-Click Rates

If you’re a merchant who’s bought keyword search terms on Google or Yahoo, you know that per-per-click advertising gets expensive; very expensive. As shown by this list of Google’s most expensive keywords, the cost per click for certain terms is almost enough to cause mild cardiac arrest. (Note: the list is in Canadian dollars, so subtract about 15 percent to get U.S. cost.)

For example, the term ‘new jersey insurance’ costs an advertiser a jaw-dropping $17 per click. But that’s nothing compared to ‘fixed equity loan,’ with a PPC rate of $38. That seems downright cheap next to ‘chicago personal injury lawyer,’ which fetches a stratospheric $67 per click.

Wow. One click. Sixty-seven bucks. Is it any wonder that Google hauls in more than $6 billion a year? While many terms are nowhere near this expensive, the cost of bidding on competitive terms is an ever-growing budget line for many merchants.

So the pressing question for e-tailers is: How can I lower the cost of my PPC advertising? The answer, experts say, is to use a multi-pronged approach. Today’s penny-pinching advertisers use second-tier and even third-tier search engines. They also use industry-specific engines, comparison-shopping engines and distribution networks that display PPC ads across the Web.

While these alternate engines can’t deliver the traffic levels that Yahoo and Google can, their PPC rates tend to be significantly lower. In some cases, traffic from these alternative engines is more targeted so it provides a higher return on investment.

The Big Dogs (and the Not-So-Big)
A look at today’s search engine landscape reveals that Yahoo and Google are indeed the big dogs of search &#151 but they’re not the only dogs.

First, Americans love to search the Net. They conducted 6.4 billion searches online in March, an increase of 15 percent from last year, according to comScore.

Google was the clear leader, with 2.7 billion search queries performed, an increase of 36 percent over a year ago. Yahoo garnered 1.8 billion, an increase of eight percent over the previous year. Approximately 11.4 percent of Yahoo’s and 11.8 percent of Google’s searches resulted in a click on a sponsored ad, based on comScore estimates.

Then there are the “also ran” engines. MSN-Microsoft had 849 million searches, Time-Warner Network saw 486 million, and Ask Jeeves/Ask Network was in fifth place with 376 million searches.

But these “also ran” engines can provide overlooked opportunities for profitable PPC buys, says Sapna Satagopan, a Jupiter Research analyst who wrote a study about search engine selection. “People are still focusing too much on Google and Yahoo and not expanding to those [other] search engines,” she says.

Some second-tier (and even some little known third-tier) engines include paid, sponsored links from Google and Yahoo, but they also sell their own sponsored links. For example, “Ask Jeeves currently uses Google [paid ads] but they’ve added their own ads on top of that.”

Traffic from these second-tier players certainly isn’t Google-sized. “When it comes to traffic, MSN and Ask Jeeves are sort of competing for the last ten percent of search traffic,” Satagopan says. However, in some cases the PPC ads on these less trafficked engines are significantly cheaper than those bought on major engines.

MSN is on the verge of entering the online advertising market in a big way &#151 a move greeted happily by Internet merchants. Microsoft is working out the kinks in its AdCenter. “Some time this summer they’ll allow all marketers to own their campaigns on MSN AdCenter,” Satagopan says.

The extra competition provided by MSN’s AdCenter could result in a softening in the PPC prices of Google and Yahoo. Or at least that’s what merchants are hoping.

MSN’s new AdCenter “brings an interesting mix to search marketing,” Satagopan says. AdCenter is generating buzz among marketers, “because they allow you to target a lot more, based on demographics.” AdCenter will allow advertisers to build a campaign that targets the gender, age and location of the searcher.

“For example, you can target college students in the middle of the afternoon on MSN,” she says. To enable this level of specific targeting, Microsoft will use data from its Passport program, which gathers user data from its Hotmail and MSN Messenger programs.

Google and Yahoo continue to dominate Internet search. That doesn’t mean you need to use them for your PPC campaign for a better ROI. (Graph courtesy of Jupiter Research)

Alternate PPC: The Comparison Shopping Engines
One of the reasons that certain keywords are so costly on Google and Yahoo is that two groups are bidding on them: merchants and comparison shopping engines.

A merchant who’s brave enough to try to buy the keyword “Plasma TV” on
Google bids not only against other merchants, but also against well-financed competitors like,, and PriceGrabber.

Shopping engines buy PPC on Google and Yahoo to divert users interested in “Plasma TV” to their pages full of merchants who sell plasma screen TVs. In effect, they are buying traffic to resell it to merchants. The result is that any search term with major appeal &#151 from ‘Mother’s Day’ to
‘MP3 player’ &#151 has a pretty scary PPC cost.

With this scenario in mind, Satagopan recommends merchants consider buying a PPC ad from a comparison shopping engine, instead of (or in addition to) competing with them for PPC ads on Yahoo or Google.

“If I’m looking at a strategy for bidding on search engines, something I should consider bidding on is, because they have the specifically targeted traffic coming into that page already,” she says. In other words, if you can’t beat them, join them.

To be sure, traffic levels from comparison engines are far smaller than those provided by Yahoo or Google. Then again, users on comparison engines are usually far closer to making a purchase. There are far fewer “idle” surfers on or Nextag.

The keyword costs on comparison engines are “not always fantastically cheaper than Google,” Satagopan says. “But you’re looking at targeted traffic.”

She stresses that bidding on the major engines is not a bad strategy &#151 they produce huge traffic. But using alternative engines is a good tactic to diversify traffic. One possible merchant strategy: “Let me use Google for a number of keywords, and if I’m going to get really specific, then I’ll go into”

The ‘Little Engines” That Could and Distribution Networks

Penny-pinching merchants sometimes include the truly small fry search engines into their PPC mix. A prime example of these smaller engines is, a “meta search engine” which displays unpaid results from several search engines next to paid ads of its own. The Mamma network of sites had two million search queries in March 2006, according to comScore.

Smaller still are the many industry-specific search engines, which are called “verticals” because they drill down into one niche area. An example is, which gathers business information of all kinds and sells sponsored ads next to the results.

In the travel industry, Kayak is a fare finder engine that displays sponsored ads next to fare results. An example of a Kayak client is Royal Caribbean Cruises, which used the fare engine to diversify its search marketing.

LookSmart is an engine that includes a group of vertical sites focused on specific interests, including music, autos, sports, tech and others. Merchants buy placement in the vertical that best fits them. In addition, LookSmart partners with numerous sites to distribute advertiser content across the Web. The site had 73 million paid clicks in the fourth quarter of 2005, says LookSmart CEO Dave Hills.

Hills compares alternative PPC search engines to the early cable TV networks. In the same way that TV advertisers in the early 1980s began to buy ads on the cable networks (whose audiences were smaller but whose rates were far cheaper) today’s Internet advertisers are looking to the smaller search engines. “Right now, we and the other smaller engines are cheaper on a cost-per-click basis than Google or Yahoo,” he says. “Though we can give a competitive conversion rate.”

Another alternative outlet for PPC campaigns is services like MIVA, which aren’t search engines but instead offer a network of Web sites to distribute advertiser content. Satagopan describes these services not as search engines but as “search providers.”

MIVA’s network is comprised of both content-specific sites and smaller search engines. Merchants pay MIVA for PPC exposure much as they would a major search engine. “MIVA provides very targeted keyword ads across a wide variety of sites,” Satagopan says.

Another such network is Enhance Interactive. Enhance partners with search engines like Dogpile, Metacrawler, WebCrawler and others.

Mark Peterson, vice-president of public relations for Marchex (which owns Enhance) describes the Enhance network as a “complementary search provider.” Merchants buy PPC campaigns on Enhance in hopes of broadening their reach. “We’re not feeding into the Googles and Yahoos; it’s new territory,” he says.

Most of the e-tailers who use Enhance &#151 80 percent, by Peterson’s count &#151 also buy PPC from Google and Yahoo. For many merchants, Enhance “is not so much an ‘instead of’ thing, it’s an ‘in addition to’ thing,'” he says. Enhance “provides a fairly low-cost way to dip your toes into the world of pay-per-click advertising.”

Juggling Search Engines: Using Multiple Engines
One of the reasons some merchants use Yahoo or Google exclusively is that it can be tricky (and time consuming) to set up a multi-engine campaign. Handling such a diverse campaign is one of the hallmarks of a “sophisticated marketer,” Satagopan says.

Being a sophisticated marketer requires expertise with the two main tools used by top search marketers:

  • Web analytics software
    This analyzes a site’s traffic in many ways &#151 traffic per page, pages viewed, user behavior on site &#151 including what keyword brought them to the site.

    Without good analytics software, keyword buys will attract traffic, “but you don’t know what they’re doing on your site,” she says.

  • Bid management technology
    This software allows a merchant to track the constantly changing costs of numerous keyword search terms across several search engines. A tool like OnePoint allows a merchant to manage bids on a multi-engine campaign.

    Merchants need robust, full-featured Web analytic and bid management tools, Satagopan says. “Not the free, downloadable tools, but tools provided by third-party vendors.”

These two tools, used in tandem, enable merchants to calculate return on investment for their keyword buys.

The key is to assign a goal to each keyword, then monitor your PPC campaign to see if that keyword is worth your investment in it. A merchant must look beyond traffic, they must look for “value traffic.” This is the targeted, purchase-ready customer base that turns a PPC buy into a profitable campaign.

The greatest pool of this value traffic is found by buying PPC on the alternative engines and Google and Yahoo. “Sophisticated marketers use a lot more of the vertical search engines and a lot more of the general search engines than the unsophisticated marketers.”

Adapted from, part of’s Small Business Channel.

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