Globlization And Its Impact Of Insurance Industry In India

INTRODUCTION

The word “Fear” has only four alphabets like love but both of them have very different e meaning. Whatever man (malor female) does for the love of their families always starts with the background of fear. Generally so many times we have been asking our selves that, what will happen if we were not there, but we keep on asking rather then doing something for it. Time is precious, it never stops for any one and we are living in the world of uncertainty; the uncertainty of job, the uncertainty of money, the uncertainty of property and like this the story goes continuous for the whole life of a man.

A thriving insurance sector is of vital importance to every modern economy. Firstly because it encourages the habit of saving, secondly because it provides a safety net to rural and urban enterprises and productive individuals. And perhaps most importantly it generates long- term invisible funds for infrastructure building. The nature of the insurance business is such that the cash inflow of insurance companies is constant while the payout is deferred and contingency related.

This characteristic feature of their business makes insurance companies the biggest investors in long-gestation infrastructure development projects in all developed and aspiring nations. This is the most compelling reason why private sector (and foreign) companies, which will spread the insurance habit in the societal and consumer interest are urgently required in this vital sector of the economy. Opening up of insurance to private sector including foreign participation has resulted into various opportunities and challenges in India.

LIFE INSURANCE MARKET

The Life Insurance market in India is an underdeveloped market that was only tapped by the state owned LIC till the entry of private insurers. The penetration of life insurance products was 19 percent of the total 400 million of the insurable population. The state owned LIC sold insurance as a tax instrument, not as a product giving protection. Most customers were under- insured with no flexibility or transparency in the products. With the entry of the private insurers the rules of the game have changed.

The 12 private insurers in the life insurance market have already grabbed nearly 9 percent of the market in terms of premium income. The new business premium of the 12 private players has tripled to Rs 1000 crore in 2002- 03 over last year. Meanwhile, with regard to state owned LIC’s new premium business has fallen.

Innovative products, smart marketing and aggressive distribution. That’s the triple whammy combination that has enabled fledgling private insurance companies to sign up Indian customers faster than anyone ever expected. Indians, who have always seen life insurance as a tax saving device, are now suddenly turning to the private sector and snapping up the new innovative products on offer.

The growing popularity of the private insurers is evidenced in other ways. They are coining money in new niches that they have introduced. The state owned companies still dominate segments like endowments and money back policies. But in the annuity or pension products business, the private insurers have already wrested over 33 percent of the market. And in the popular unit-linked insurance schemes they have a virtual monopoly, with over 90 percent of the customers.

The private insurers also seem to be scoring big in other ways- they are persuading people to take out bigger policies. For instance, the average size of a life insurance policy before privatization was around Rs 50,000. That has risen to about Rs 80,000. But the private insurers are ahead in this game and the average size of their policies is around Rs 1.1 lakh to Rs 1.2 lakh- way bigger than the industry average.

Buoyed by their quicker than expected success, nearly all private insurers are fast- forwarding the second phase of their expansion plans. No doubt the aggressive stance of private insurers is already paying rich dividends. But a rejuvenated LIC is also trying to fight back to woo new customers.

INSURANCE TODAY

In 1993, Malhotra Committee, headed by former Finance Secretary and RBI Governor R. N. Malhotra, was formed to evaluate the Indian insurance industry and recommend its future direction. The Malhotra committee was set up with the objective of complementing the reforms initiated in the financial sector.

With the setup of Insurance Regulatory Development Authority (IRDA) the reforms started in the Insurance sector. It has became necessary as if we compare our Insurance penetration and per capita premium we are much behind then the rest of the world. The table above gives the statistics for the year 2000.

With the expected increase in per capita income to 6% for the next 10 year and with the improvement in the awareness levels the demand for insurance is expected to grow.

As per an independent consultancy company, Monitor Group has estimated a growth form Rs. 218 Billion to Rs. 1003 Billion by 2008. The estimations seems achievable as the performance of 13 life Insurance players in India for the year 2002-2003 (up to October, based on the first year premium) is Rs. 66.683 million being LIC the biggest contributor with Rs. 59,187 million. As of now LIC has 2050 branches in 7 zones with strong team of 5,60,000 agents.

IMPACT OF GLOBALISATION

While nationalized insurance companies have done a commendable job in extending the volume of the business, opening up insurance sector to private players was a necessity in the context of globalization of financial sector. If traditional infrastructural and semipublic goods industries such as banking, airlines, telecom, power etc., have significant private sector presence, continuing a state of monopoly in provision of insurance was indefensible and therefore, the globalization of insurance has been done as discussed earlier. Its impact has to be seen in the form of creating various opportunities and challenges.

The introduction of private players in the industry has added colours to the dull industry. The initiatives taken by the private players are very competitive and have given immense competition to the on time monopoly of the market LIC. Since the advent of the private players in the market the industry has seen new and innovative steps taken by the players in the sector. The new players have improved the service quality of the insurance. As a result LIC down the years have seen the declining in its career. The market share was distributed among the private players. Though LIC still holds 75% of the insurance sector the upcoming nature of these private players are enough to give more competition to LIC in the near future. LIC market share has decreased from 95%(2002-03) to 81% (2004-05). The following company holds the rest of the market share of the insurance industry.

TABLE – 1

IMPACT OF GLOBALISATION

NAME OF THE PLAYER MARKET SHARE (%)

LIC 82.3

ICICI PRUDENTIAL 5.63

BIRLA SUN LIFE 2.56

BAJA ALLIANZ 2.03

SBI LIFE 1.80

HDFC STANDARD 1.36

TATA AIG 1.29

MAX NEW YORK 0.90

AVIVA 0.79

OM KOTAK MAHINDRA 0.51

ING VYASA 0.37

AMP SANMAR 0.26

METLIFE 0.21

PRESENT SCENARIO OF GLOBALISATION

In a tough battle to expand market shares the private sector life insurance industry consisting of 14 life insurance companies at 26% have lost 3% of market share to the state owned Life Insurance Corporation(LIC) in the domestic life insurance industry in 2006-07. According to the figures released by Insurance Regulatory & Development Authority, the total premium of these 14 companies have shot up by 90% to Rs 19,471.83 crore in 2006-07 from Rs 10, 252 crore.

LIC with a total premium mobilisation of Rs 55,934 crore has been able to retain a market share of 74.26 % during the reporting period. In total the life insurance industry in first year premium has grown by 110% to Rs 75, 406 crore during 2006-07. The 2006-07 performance has thrown a few surprises in the ranking among the private sector life insurance companies. New entrants like Reliance Life and SBI Life had shown a huge growth of over 381% and 210% respectively during the year. Reliance Life which has become one of the top five companies ended the year with a premium of Rs 930 crore during the year.

Though ICICI Prudential Life Insurance remained as the No 1 private sector life insurance company during the year. Bajaj Allianz overtook ICICI Prudential in terms of monthly market share in March, for the first time ever. Bajaj’s market share among private players in non-single premium for March stood at 29.1% vs. ICICI Prudential’s 23.8%. Bajaj gained 4.6 percentage point market share among private sector players for FY07.

Among other private players, SBI Life and Reliance Life continued to do well, each gaining 4% market share in FY07. SBI Life’s growth was driven by increasing contribution from ULIP premiums. Another notable developments of the 2006-07 performance has been the expansion of retail markets by the life insurance comapnies. Bajaj Alliannz Life insurance has added 20 lakh policies while ICICI Prudential has expanded over 19 lakh policies during the year.

With the largest number of life insurance policies in force in the world, Insurance happens to be a mega opportunity in India. It’s a business growing at the rate of 15-20 per cent annually and presently is of the order of Rs 450 billion. Together with banking services, it adds about 7 per cent to the country’s GDP. Gross premium collection is nearly 2 per cent of GDP and funds available with LIC for investments are 8 per cent of GDP.

Yet, nearly 80 per cent of Indian population is without life insurance cover while health insurance and non-life insurance continues to be below international standards. And this part of the population is also subject to weak social security and pension systems with hardly any old age income security. This itself is an indicator that growth potential for the insurance sector is immense.

A well-developed and evolved insurance sector is needed for economic development as it provides long term funds for infrastructure development and at the same time strengthens the risk taking ability. It is estimated that over the next ten years India would require investments of the order of one trillion US dollar. The Insurance sector, to some extent, can enable investments in infrastructure development to sustain economic growth of the country.

Insurance is a federal subject in India. There are two legislations that govern the sector- The Insurance Act- 1938 and the IRDA Act- 1999. The insurance sector in India has become a full circle from being an open competitive market to nationalisation and back to a liberalised market again. Tracing the developments in the Indian insurance sector reveals the 360 degree turn witnessed over a period of almost two centuries.

Important milestones in the life insurance business in India

1912: The Indian Life Assurance Companies Act enacted as the first statute to regulate the life insurance business.

1928: The Indian Insurance Companies Act enacted to enable the government to collect statistical information about both life and non-life insurance businesses.

1938: Earlier legislation consolidated and amended to by the Insurance Act with the objective of protecting the interests of the insuring public.

1956: 245 Indian and foreign insurers and provident societies taken over by the central government and nationalised. LIC formed by an Act of Parliament- LIC Act 1956- with a capital contribution of Rs. 5 crore from the Government of India.

In a tough battle to expand market shares the private sector life insurance industry consisting 14 life insurance companies at 26% have lost 3% of market share to the state owned Life Insurance Corporation(LIC) in the domestic life insurance industry in 2006-07. According to the figures released by Insurance Regulatory & Development Authority the total premium these 14 companies have shot up by 90% to Rs 19,471.83 crore in 2006-07 from Rs 10, 252 crore.

LIC with a total premium mobilisation of Rs 55,934 crore has been able retain a market share of 74.26 % during the reporting period. In total the life insurance industry in first year premium has grown by 110% to Rs 75, 406 crore during 2006-07. The 2006-07 performance has thrown a few surprises in the ranking among the private sector life insurance companies. New entrants like Reliance Life and SBI Life had shown a huge growth of over 381% and 210% respectively during the year. Reliance Life which has become one of the top five companies ended the year with a premium of Rs 930 crore during the year.

Though ICICI Prudential Life Insurance remained as the No 1 private sector life insurance company during the year Bajaj Allianz overtook ICICI Prudential in terms of monthly market share in March, for the first time ever. Bajaj’s market share among private players in non-single premium for March stood at 29.1% vs. ICICI Prudential’s 23.8%. Bajaj gained 4.6 percentage point market share among private sector players for FY07.

Among other private players, SBI Life and Reliance Life continued to do well, each gaining 4% market share in FY07. SBI Life’s growth was driven by increasing contribution from ULIP premiums. Another notable development of the 2006-07 performance has been the expansion of retail markets by the life insurance companies. Bajaj Alliannz Life insurance has added 20 lakh policies while ICICI Prudential has expanded over 19 lakh policies during the year.

OPPORTUNITES

- A state monopoly has little incentive to innovative or offers a wide range of products. It can be seen by a lack of certain products from LIC’s portfolio and lack of extensive risk categorization in several GIC products such as health insurance. More competition in this business will spur firms to offer several new products and more complex and extensive risk categorization.

- It would also result in better customer services and help improve the variety and price of insurance products.

- The entry of new players would speed up the spread of both life and general insurance. Spread of insurance will be measured in terms of insurance penetration and measure of density.

- With the entry of private players, it is expected that insurance business roughly 400 billion rupees per year now, more than 20 per cent per year even leaving aside the relatively under developed sectors of health insurance, pen More importantly, it will also ensure a great mobalisation of funds that can be utilized for purpose of infrastructure development that was a factor considered for globalisation of insurance.

- More importantly, it will also ensure a great moblisation of funds that can be utilized for purpose of infrastructure development that was a factor considered for globalisation of insurance.

- With allowing of holding of equity shares by foreign company either itself or through its subsidiary company or nominee not exceeding 26% of paid up capital of Indian partners will be operated resulting into supplementing domestic savings and increasing economic progress of nation. Agreements of various ventures have already been made to be discussed later on in this paper.

- It has been estimated that insurance sector growth more than 3 times the growth of economy in India. So business or domestic firms will attempt to invest in insurance sector. Moreover, growth of insurance business in India is 13 times the growth insurance in developed countries. So it is natural, that foreign companies would be fostering a very strong desire to invest something in Indian insurance business.

- Most important not the least tremendous employment opportunities will be created in the field of insurance which is burning problem of the present day today issues.

CHALLENGES BEFORE THE INDUSTRY

New age companies have started their business as discussed earlier. Some of these companies have been able to float 3 or 4 products only and some have targeted to achieve the level of 8 or 10 products. At present, these companies are not in a position to pose any challenge to LIC and all other four companies operating in general insurance sector, but if we see the quality and standards of the products which they issued, they can certainly be a challenge in future. Because the challenge in the entire environment caused by globalisation and liberalization the industry is facing the following challenges.

- The existing insurer, LIC and GIC, have created a large group of dissatisfied customers due to the poor quality of service. Hence there will be shift of large number of customers from LIC and GIC to the private insurers.

- LIC may face problem of surrender of a large number of policies, as new insurers will woo them by offer of innovative products at lower prices.

- The corporate clients under group schemes and salary savings schemes may shift their loyalty from LIC to the private insurers.

- There is a likelihood of exit of young dynamic managers from LIC to the private insurer, as they will get higher package of remuneration.

- LIC has overstaffing and with the introduction of full computerization, a large number of the employees will be surplus. However they cannot be retrenched. Hence the operating costs of LIC will not be reduced. This will be a disadvantage in the competitive market, as the new insurers will operate with lean office and high technology to reduce the operating costs.

- GIC and its four subsidiary companies are going to face more challenges, because their management expenses are very high due to surplus staff. They can’t reduce their number due to service rules.

- Management of claims will put strain on the financial resources, GIC and its subsidiaries since it is not up the mark.

- LIC has more than to 60 products and GLC has more than 180 products in their kitty, which are outdated in the present context as they are not suitable to the changing needs of the customers. Not only that they are not competent enough to complete with the new products offered by foreign companies in the market.

- Reaching the consumer expectations on par with foreign companies such as better yield and much improved quality of service particularly in the area of settlement of claims, issue of new policies, transfer of the policies and revival of policies in the liberalized market is very difficult to LIC and GIC.

- Intense competition from new insurers in winning the consumers by multi-distribution channels, which will include agents, brokers, corporate intermediaries, bank branches, affinity groups and direct marketing through telesales and interest.

- The market very soon will be flooded by a large number of products by fairly large number of insurers operating in the Indian market. Even with limited range of products offered by LIC and GIC, the consumers are confused in the market. Their confusion will further increase in the face for large number of products in the market. The existing level of awareness of the consumers for insurance products is very low. It is so because only 62% of the Indian population is literate and less than 10% educated. Even the educated consumers are ignorant about the various products of the insurance.

- The insurers will have to face an acute problem of the redressal of the consumers, grievances for deficiency in products and services.

- Increasing awareness will bring number of legal cases filled by the consumers against insurers is likely to increase substantially in future.

- Major challenges in canalizing the growth of insurance sector are product innovation, distribution network, investment management, customer service and education.

ESSENTIALS TO MEET THE CHALLENGES

- Indian insurance industry needs the following to meet the global challenges

- Understanding the customer better will enable insurance companies to design appropriate products, determine price correctly and increase profitability.

- Selection of right type of distribution channel mix along with prudent and efficient FOS [Fleet On Street] management.

- An efficient CRM system, which would eventually create sustainable competitive advantages and build a long-lasting relationship

- Insurers must follow best investment practices and must have a strong asset management company to maximize returns.

- Insurers should increase the customer base in semi urban and rural areas, which offer a huge potential.

- Promoting health insurance and using e-broking to increase the business.

CONCLUSION

Thus, in the last on basis of above the discussion we can conclude that need for private sector entry is justifiable on the basis of enhancing the efficiency of operation, achieving greater density and insurance coverage in the country and for greater mobilization of long-term savings for long gestation infrastructure projects. In the wake of such competition it is essential for the government monopolies (LIC and GIC) that they quickly up grade their technology, restructure themselves on more efficient lines and operate as broad run enterprise. New players should not be treated as rivalries to government companies, but they can supplement in achieving the objective of growth of insurance business in India.

* Lecturer, Department of Commerce, Bharathiar University, Coimbatore-46

Email – [email protected]

** Ph.D Scholar, Department of Commerce, Bharathiar University, Coimbatore. Email – [email protected]

Satellite Internet Bandwidth Providers

Satellite internet connections are great in those regions were there is no access to DSL or cable internet bandwidth. This type of service connection works by the data being sent via satellite. A satellite equipment dish is arranged pointing toward the south. This dish transmits signals to satellites which are in a position about the earth usually stationary and internet access from the Internet provider is provided through this type of connection. Satellite internet bandwidth is available worldwide including ships at sea or mobile vehicles.

Advantages and Disadvantages

This type of bandwidth service makes access to the internet in those areas where other forms of bandwidth are not available. It also eliminates the need to use dial-up – in fact this bandwidth is faster than dial-up. An advantage with this type of bandwidth is that downloading and uploading is much faster. Installation is also fairly rapid.

Since the signal from the computer must travel so many miles in order to reach a satellite and return to the computer this causes a delay or latency between the request for data and receiving that data. The average lag time for satellite internet is often found to be between 500 to 900 milliseconds. This is not acceptable for any applications where real-time access is necessary for instance internet gaming, video conferencing, video chats as well as any VolP telephone calls. Another disadvantage is the weather does affect this satellite feed. Rain does not actually block the signal but it can cause a form of interference that is known as "rain fade" and this can slow the download as well as upload speeds causing a very irregular internet connection.

Initially as Well as Monthly Cost

Satellite internet access is more expensive that other types of broadband access in fact it is 2 to 3 times more expensive than DSL internet access. Not only is the monthly fee more expensive but the initial cost of setup is very expensive since it involves satellite dish and satellite modem. Initial setup may range from between $ 600 to $ 2000.

Major Providers

HughsNet is the number one satellite internet provider with a basic monthly fee of $ 49.99. HughsNet offers uploading and downloading speeds that are fairly fast and have great technical support. But the internet speeds fall off sharply during the evening peak hours and also there is a daily limit on uploading and downloading or bandwidth usage.

The number 2 satellite internet provider is WildBlue with a monthly basic package of $ 69.95. They offer much higher download and upload limits but in exchange for this, the download speed suffers. But if you have a concern with downloading and heavy internet use, this provider would probably be the best for you.

Provider number 3 is the internet provider MyBlueDish which monthly fee is also $ 69.95. They currently work with provider WildBlue in order to provide faster internet and allow for a lot of download bandwidth monthly. But, they are much slower than the other providers. MyBlueDish also has 24/7 tech support that is excellent.

Basically, satellite internet bandwidth usage is great for those living in remote area or who are based on ship or who are constantly mobile or any situation where there is no other option for broadband. Internet access by satellite is extremely better than the next viable option, which is, dial-up and is the only other method of accessing the internet in remote areas.

Employment Law, Part I

Just how serious is employment law to the small businessperson? Very serious and let me tell you a true story; A horror story, which will make you think about just how serious these issues can be. In San Antonio TX one of our wash trucks was driving down the road and a border Patrol Officer passed them. We run a company which does onsite washing; Http://www.CarwashGuys.com . Down the road they dropped over two trucks and were handcuffing Mexican illegal aliens from those company's work trucks. Our crew drve by on their way to work. They had just left the shop and had on board two workers who worked for Labor Ready Co, for a year and a half previously and were still employed from them from time to time. We had gotten extra workers and filled our service truck with workers who were temporaries to work for us since they needed extra help with the full schedule that day.

The border patrol officer was then done with the other companies' trucks and saw we had Hispanic labor in the back and folded over our truck after chasing it down the highway. Turns out Labor Ready had hired the illegals because theyave fake identification to them; I question the Labor Ready procedures. Labor Ready charges us $ 11.95 per hour for workers they pay $ 5.40 per hour. That is fine with us on those super busy days. So it's a deal and saves us from background checks for jobs that are not too serious like rinsing car lots. Well we found out that 4 of the five workers we had gotten from Labor Ready did not have green cards or US Identification of any type, so they cuffed them right on the highway and took them in. Good, we do not hire illegals anyway. But think about it we hired labor from a reputable nationwide company, a franchise called Labor Ready. They take care of all this stuff and charge us up the gazooo for the workers.

We know they are overcharging but for temporary extra labor for one day it is worth it. They told us there are certain questions that can not ask them when hiring, such as are you a US Citizen or where were you born or things like that. I can not believe we have laws in the banking industry called "Know your customer laws" yet in employment we have no "Know your employee laws". We have an unspoken do not ask the employee anything except when you can start and explain the type of work. We have laws in banking so we catch money launderers and those who are working hard to not pay taxes they owe.

So it is okay for the government to enforce those laws through private enterprise, but it is not okay for employers to ask questions to protect homeland security and save themselves from embarrassment. Of course in this case it is not a crime to hire someone who has given you false information, and we can not collect damages from a company who followed the employment laws? So what the hell do we do here? We want to help enforce the law as well, so do all true Americans. But we have so many laws in place that keep us from helping the situation.

Incidentally the workers who were handcuffed called us at 7 am morning two-days later and are ready to work and asked what time to meet. They were picked up at 9 am hand cuffed and stamped and exported that day. They were back in one day ready to work within 2 days. Some border patrol we have, what a complete joke; Protecting America, me ass? Why not implant a homing devise in these illegals and track them by satellite and find out the leaks in the system and plug them; Homeland Security or Homey Land of opportunity. You step up border patrol and catch these people and document on a board the number of deportees, yet they come the day back into the country. This is a true story you can call me for more information.

We have half a notice to go to the border patrol and give them free truck wash every morning and ask them to run the workers records and remove them from the crew. Sometimes the yellow truck will be known for not hiring illegals. A few weeks of that and every one who comes to work for us from Ready Labor will know it. Is this what we have to do to plug the system? Can not the border patrol guys figure it out; Then we will? If you can not enforce our borders then open them. But do not lie to the small businesses of America that somehow we are protected at our borders. We are not. This is a sham. Did not the Jordan Commission spend years putting together a plan only to have it never implemented? Why did we waste or breath? This is pure politics, not reality; Another of Smoot's points in his book "The Business Side of Government." One of the workers asked to work for us again and he wanted to borrow the twenty dollars he spent for the bus ride from Laredo to San Antonio. Even the illegals think this is a joke. We told him he could not work for us anymore. He did not understand why, because other businesses would have I guess that is why he was dumfounded when we told him to get lost. We called the border Patrol and they said they could not pick him up unless we knew for sure he was illegal. We said well you picked him up yesterday is he suddenly legal now? Can you prove it? No, all we can prove is your system does not work and that Labor Ready is doing an injustice to its customers, stocksholders and this country by not enforcing the laws of our land; The same laws, which have provided economic wealth to them over the years. Are they doing this all over the country? Yes.

The manager of Labor Ready said they did not like the laws either, but they needed to make a living and the companies need workers. So does this mean that Labor Ready who has offices all over Texas never disclosed this to their stockholders or customers? Yes it does, which is a gray area at least and a violation of disclosure law at best. The truth here is that no one cares. We make rules to appease the masses who vote for these things and tell the people we are saving them from terrorists. What about terrorists who are dark skinned and speak Spanish? What if a Middle Eastern spoke Spanish and was a terrorist and told the others he snuck over the border with he was from Argentina, they would not know either. And the business owner would hire them through a temp agency, who was making money off the business owner pointing to employment laws and said, well they had fake paperwork not my fault. Maybe it is not the border patrol's fault but shunning responsibility does not save us from the next attack.

Either we are worried about the next attack or we are not. I want someone to call me from the INS or Border Patrol to discuss this and I want a satisfactory answer or we will take this true story and document it and send it to the media one day before we send it to all the Congressmen and Senators. If we are not worried about terrorists then tell us. If we are, then fix the leaks. Why does it take 10 years to fix problems, when international terrorist groups only wait 3-5 years between acts? Good question worth answering and with all the BS and rhetoric we are seeing opposition from the Hispanic Chambers of Commerce and Hispanic Politicians. With 65% of the population of San Antonio Hispanic who do not want these laws at all, then extend the Mexican Border to include San Antonio TX as a free zone. Why not make it all of Texas and we can then defend the borders of Texas, which can be a free zone with Mexico.

If you are just going to give it lip service and not fix the leaks of illegals then open the borders and forget it. This is pathetic. We know how to enforce the barriers and we give out fines to businesses who do not complain, yet allow free entry by anyone who can walk. I am surprised we have not made ADA mandated border crossings for those in wheel chairs or are asthmatically challenged. Put in 1 foot per 1 inch inclines over the Rio Grande for those in wheel chairs and then nice sidewalks all the way to Washington DC so they can have a baby and run for Congress or become a radical speech writer and proponent of mass demonstrations and guns . You think I am kidding do not you. I am serious all this is so fake and such a ridiculous waste of breath and tax payers money.

End of Employment Law, Part I

Advertising Through a PPC Campaign: Significance, Benefits & Effectiveness

In this tech-savvy world, a click gains a lot of significance. Almost all the entrepreneurs, big or small, know that to make the business successful, the growth of online reputation is required, which can be obtained through a good amount of traffic to the website. Nowadays, popularity grows online and nonetheless to say, PPC is the best tool to approach visitors to a website in a short span of time.

Now, every PPC expert knows, how does it feel to gain more clicks to the website without the growth of conversion rate. Return On Investment or ROI & Return On Advertising Spending or RAOS are the two key factors that can measure the conversion growth of a PPC campaign.

With the progress of digital marketing, pay-per-click has got a global approach for its generation of clicks. Google AdWords & Microsoft Bing are the platforms that help the marketers to run a PPC campaign where the advertisers have to pay a particular amount for each click on their ads. This process is more appropriate for buying visits to your sites and is different from the organic visit learning process.

Why are PPC campaigns effective?
This paid online advertising system ensures your ad will be displayed on the SERP and will come forward once a particular keyword or phrase is being typed. This makes the search fast and accurate. Once the ads are clicked, it redirects the visitors to the website or to the landing page, the advertisers wish their viewers to show. The advertisers have to pay on the basis of the clicks on the ads.

These clicks can be of two types. Some of the clicks can be considered as false clicks as they do not generate any sale or increase revenue of the organization. On the other hand, the clicks that generate sales actually proclaim the ROI from the campaign.

In spite of these issues, an optimized PPC campaign can be proved quite cost-friendly as it approaches the visitor's individuality. Let's see why-

The comprehensive pay per click management services help you to save time as the advertisers have to pay once the ad is clicked. The advertisers can easily track the conversion rate and can also check out whether the clicks are genuine.

The fastest approach is the major advantage of a PPC campaign. As an advertiser, you can get search results faster and your traffic ad campaigns are also launched fast.

PPC ads focus on the targeted traffic and generation of the high rated leads to your website which makes a campaign faster and competitive in the fast growing market.

Control on the budget as per the need of the advertisers is easier in the PPC campaigns. Setting a budget goal depends on the requirements of the advertisers.

Flexibility is the major benefit one can acquire from the PPC ads because the budget can be modified at any time on the basis of the advertisers' requirements.

Moreover, importing the report from the Google Analytics helps the advertisers to track the entire situation and parameters which give them a platform to judge their performance level.

So, is PPC useful for the smaller businesses too?
This is one of the major questions that can come to the mind of a small scale business entrepreneur. The reason behind this is most of the beginning businessmen think that PPC campaign may cost them a lot of bucks. But in reality, a small-scale trade requires much more attention than a big scale organization.

Experienced tradesmen know that the first impressions can be acquired in the beginning. Achieving better rank than others is not an easy thing in this highly competitive market. So, no doubt, a good and thorough survey is needed before a small scale entrepreneur jumps into a PPC marketing.

Before jumping into the action, a small scale tradesman should remember that if an optimized PPC campaign is handled carefully, it can generate good revenue and if not, it can ruin the entire scenario. Starting slowly and spending money gradually on the campaign can help the small scale businessman to track the progress depending on which they can spend more money in the future.

No matter how small you are and how new your company is, hiring experienced PPC campaign can provide you benefits always. Lowering the CPC rate is one of them, which can be done with the help of many techniques. Not only that, a previous experience of PPC campaign organizing platforms like AdWords, Bing or Facebook ads is certainly an added advantage.

Things to keep in mind before running a PPC campaign

CPC – Cost per click determines the cost that the advertisers have to pay for the per click in the campaigns.

CTR- This is the ratio of the viewers who have clicked on the ads and the users who have viewed the page only. In a nutshell, it refers to the ratio between the false clicks and the genuine clicks.

Google AdWords- This is a PPC advertising platform that helps people to create ads that appear on the search engine and helps the advertisers to get the major rank on the SERP.

What to do before running a PPC campaign?
The majority of the pay per click ad benefit comes into action when the click and sales conversion rate goes parallel. But in reality, the conversion rates become less than the click rate most of the time. That may affect the CTR or click through rate.

Searching the potential and targeted audience is the first and foremost thing one should do before beginning a campaign. An entrepreneur should know to whatever he or she will sell his or her product or service and should generate the ad campaign on that basis.

Some tools that facilitate a PPC campaign
A PPC campaign has to run smoothly and for that, you need to utilize some of the equipment that simplifies the PPC ad system. Some of them are given below-

Google Analytics
AdWords Editor
Bing Ads Editor
Facebook Power Editor