Digital Marketing Education- Paid Search

This Digital Marketing Education topic the next two weeks is Paid search marketing which means you advertise within the sponsored listings of a search engine or a partner site by paying each time your ad is clicked (pay-per-click – PPC). As an example, when a user searches for ‘buy digital marketing textbooks’ on a search engine, the search engine results page (SERP) reveals the following:

 Why should you use paid search?

1) Appearance at the top of the SERPs. With organic results decreasing rapidly further down the screen, it’s vital that your company appears within the top five results in order to stand a chance of click-through.

2) PPC is the fastest way to get to the top. If you know your way around the platform, you can set up a PPC campaign in less than an hour, and appear immediately in the sponsored results.

3) Tracking is a lot easier using SEM.  You no longer have to take a gamble on ads you’ve paid for in advance in other media, with little way to measure how successful they are. With SEM every ad, keyword and penny spent can be tracked, allowing for a more accurate ROI. This also means it’s a lot easier for an advertiser to test campaigns too.

All of this, along with access to the respective search engine’s network sites and platforms included in its packages, and the ability to schedule ads and target them to specific locations and times, means that paid search is an almost essential part of your marketing strategy.

Google AdWords 

AdWords is Google’s own advertising product. It offers PPC and CPM advertising as well as site targeted banner, text and rich media and  is also Google’s main source of revenue.

If you use its service you will be able show your ads on one or both of Google’s advertising networks:
1. The Google Search Network, featuring the standard Google Search, Google Shopping, Maps and its various search partners. This will be discussed in Stukent chapter 6.
2. Google Display Network, which is any website that partners with Google, and other Google sites such as Gmail, YouTube and Blogger. This will be discussed in Stukent chapter 7.

With AdWords, if you choose CPC, you can set your bid (the amount you’re willing to pay for each click) to manual or automatic. With manual you choose your bid amounts, with automatic Google chooses the bid amount for you within your budget.) With CPC and CPM you can set your maximum bid amount.

Buying Ad Space

When a company chooses to advertise on a billboard, it picks a billboard and pays a set rate per month to keep its ad on that billboard. While that rate could change at some point, the advertiser might go years paying the same price per month for the same ad to appear on the same billboard. With paid search advertising, the price paid to advertise on any given keyword is dynamic—it could change from one minute to the next. Stukent chapter 6 explains how to buy ad space and how search engines determine where to show an ad.

Cost-per-Click Bidding. Search engines sell keyword ad space using an automated auction platform. In simplistic terms, advertisers place a bid on a keyword (instruct the search engine the maximum amount they are willing to pay for a click from a searcher who has searched for that keyword), and the winning bid gets the best ad location for searches on that keyword. However, the bid from each advertiser is not the only factor that determines which ad “wins the auction” and ranks higher than the other ads. The Ad Rank (advertising position) of each advertiser is also determined by the ad’s Quality Score.

The maximum CPC bid is the amount the advertiser agrees to pay for a click. The actual CPC is the amount the advertiser ends up paying when a searcher clicks on his/her ad. These two amounts are typically different because the actual CPC is usually lower than the maximum CPC. Google explains it this way:

“If the advertiser immediately below you bids US$2.00, and if that advertiser’s ad is the same quality as yours (and has equal-performing extensions and ad formats), you’d typically need to bid a penny more than US$2.00 to rank higher than that advertiser and still maintain your position and ad formats. With AdWords, that’s the most you’ll pay (about US$2.01), whether your bid is US$3.00, US$5.00, or more.”

This auction model Google uses is called a second-price auction. In a second-price auction, the winner does not pay what he bid but instead pays a penny more than the bid of the next-highest bidder. In AdWords, rather than paying the CPC amount he bid, an advertiser will pay one penny more than the bid of the advertiser below him.

Average Ad Position. Just because an advertiser is the highest bidder on any given keyword does not mean he will always have the number one ad spot. In fact, advertisers commonly bid less and yet rank higher than another advertiser. Search engines are driven to make money off of advertisers, but at the same time, they use a metric called Ad Rank to ensure that the advertisers showing up in search results are relevant to the keyword being searched. Google defines Ad Rank as “a value that’s used to determine your ad position, where ads are shown on a page. Ad Rank is calculated using your bid amount and Quality Score”

To learn more about Ad Rank, please watch the following video:

These are some of the basics of Paid Search Marketing and I look forward to our class discussions.