The rank or relative positioning of PPC campaign ads are based on an open bidding system. In this system, advertisers bid to have their advertisement listed. The bid amount is paid by the advertiser when a visitor clicks on the ad; hence, this is also known as a "cost per click" program. These terms are sometimes used interchangeably to describe Pay Per Click web advertising even though PPC refers to a payment method and CPC refers to the cost involved in each payment. Theoretically, whoever bids highest gets the highest listed position, although some search engines, such as Google, have made it a little harder by using a formula that bases position on more factors than just your bid. And as more of your competition enters into this developing market, the competition will only become more fierce. Optimizing your PPC campaign will keep you one step ahead of the pack.

To read a more general introduction about the benefits of PPC, please refer to our overview.

Need More PPC Help? PPC Overview, Article: Pay Per Click: The Crown Jewel of Search

A PPC account acts as a great keyword conversion testing ground to determine if your search engine optimization campaign is targeting the right keywords. Run a PPC campaign to see how well your chosen keywords convert. Then, incorporate the best keywords into your SEO (search engine optimization) campaign.

To a large extent, search engine marketing is about identifying the most effective keywords for your web site, and keywords in a PPC campaign are just as important as in an SEO campaign. By identifying your industry's most targeted keywords, you will eliminate wasted words and increase your chances of gaining conversions. Targeting your ads for the wrong keywords will cause you to miss certain customer groups and decrease your ROI.

So, what is a keyword? A keyword is a word or phrase that people (consumers or businesses) would employ to locate information on the products or services or topic that they are interested learning more about or purchasing.

For example: A mother of seven is interested in purchasing a new type of peanut butter. She turns on her computer and visits her favorite search engine.

In the search box, she enters the keyword peanut butter. In addition, she may also enter chunky peanut butter, creamy peanut butter, or natural peanut butter. Of course, since she is a savvy consumer, certain types of peanut butter are important so she might also enter organic peanut butter, soy butter, or reduced fat peanut butter.

Finally there are different ways to use peanut butter: peanut butter cups, peanut butter cookies, and peanut butter recipes.

The core idea behind keywords is identifying the words or phrases that are important to your target audience and therefore will be the most effective to use on your Web site.

Traffic is good, but the bottom line is really conversions. Some questions to consider are: