In these cash strapped times it is no wonder that many firms are looking very closely at their advertising budgets. Over that last year advertising spend on all media including TV, radio, newspapers and the internet has fallen. There is just one exception, and that is pay per click advertising.

In 2008 pay per click advertising accounted for 58% of the total internet advertising which was an increase of about 10% from the previous year. The switch of advertising spend from traditional methods to pay per click is due to two factors. These are the fact that it is a highly effective way of advertising and that it is easy to measure in terms of cost effectiveness.

Although many large organisations have huge pay per click marketing budgets, one advantage of the system is that small organisations can access it too and can often compete with the big boys. There is often serious competition to achieve high rankings amongst the pay per click advertisements that appear in the search results. The more money a company pays for a click on their ad, the higher it will appear in the ratings, however it is not only the price per click that determines this ranking; the match between the keywords and the advertising text is also taken into account. A well managed campaign will balance these factors to achieve acceptable results without spending too much money.

Naturally in the present climate many organisations are trying to optimise their pay per click campaigns in order to minimise expenditure and maximise benefits requiring various internet marketing tools. This always happens all the time of course, but current economic pressures have concentrated minds on saving money. One outcome of this is that it has now been demonstrated that having the highest rankings in search results is not necessarily the best place to be. Although the highest ranking ads do receive the most clicks, they do not necessarily result in the highest number of conversions. Quite often with ads appearing at much lower positions, though they are clicked less, the clicks they receive are more likely to result in sales.

This is possibly the result of searchers clicking on the highest ads because they are curious or even clicking by mistake not realising it is an ad they are clicking on rather than natural search results