This post is intended to be an introduction to search engine marketing (SEM) and paid search for marketing managers. In short, SEM is the practice of managing your online assets to improve findability. If you’re interested in learning about search engine optimization (SEO), which is part of SEM, check out my previous post Search Engine Optimization (SEO) Basics For Marketing Managers. In this post, I’ll focus on the practice of buying paid search listings from search engines such as Google.
The Big Take Away
Before reading any further, you should know that SEM is something with which most companies gradually gain experience. It’s rare that I would recommend that any company jump into an aggressive paid search program because it takes time to understand the market for the terms that are relevant to your brand, to identify what those terms are, and to determine their value. This is partly because services like Google’s AdWords are based on an auction model, which I’ll discuss below. For now, think of paid search as something that you want to get into gradually so that you can measure ROI and iterate on your program as you go.
- Keyword – This is just another way of saying “search term”. Consumers enter keywords into Google to find things. For example, if you’re trying to find a local auto-mechanic your keywords might include “mechanic”, “subaru” and “San Francisco” or “94110″.
- Pay Per Click (PPC) – This is a pricing model for paid search where advertisers pay only when someone clicks on their advertisement and is taken to their website.
- Cost Per Click (CPC) – This is the cost associated with each clicked-on advertisement within the pay-per-click pricing model.
- Cost Per Action/Acquisition (CPA) – Another online advertising pricing model where the advertiser pays when a specified action takes place after a click-through to their website (for example, a purchase, a form submission, etc). Sometimes, the action might be entering contact information, in this case the cost is measured as the Cost Per Lead (CPL).
- Cost Per Impression (CPI) or (CPM) – The cost per impression isÂ measured by the thousand, or cost per thousand (CPM), and refers to the cost associated with exposing a customer to an advertisement. In this pricing model, the advertiser is charged by the number of impressions (i.e. number of times the advertisement appears) regardless of whether or not it gets clicked on.
- Click Through Rate (CTR) – This is calculated by dividing the number of users who clicked on an ad on a web page by the number of times the ad was delivered (impressions).
- Conversion Rate (CR) – This is the ratio of people who take a specified action on a website divided by the number of people who were offered the opportunity to take the action. For example, you might have a page on your site where people land, after clicking on your ad, that includes some kind of offer. If 100 people land on that page and 25 of them take the offer than your conversion rate would be 25%.
- Click Fraud – Click fraud happens when people click on advertisements online not out of interest in the related products or services, but so that the advertiser will be charged for the click. Such fraudulent clicks can be automated so as to financially damage a company or competitor. Search engines have developed technologies to prevent click-fraud, but they are not completely motivated to resolve this issue because they are a beneficiary of the fraud.
- Flat Rate vs. Bid Rate – With flat rate placements the advertiser pays a fixed amount for each ad placement. With bid rate placements advertisers are bidding on the price of each placement. Google’s AdWords is a bidding rate model based on the ongoing auction of chosen keywords.
Google’s AdWords & AdSense
Chances are that if you’re interested in paid search you’ll want to start with Google’s AdWords because Google is the current market leader. That said, other paid search options are available including, Yahoo! Search Marketing, and Microsoft ad Center. (now combined under the Bing search engine).
As I mentioned above, Google AdWords is based on an auction model that serves contextually relevant advertisements in search engine results pages and on ad network websites. This means, that the paid advertisements that show up along side a search should be relevant to the search terms, or keywords. Where a paid advertisements show up on the page (how high up) depends on an advertisement’s rank number. The rank number is calculated by the cost per click bid multiplied by a quality score. The advertisement quality score is determined by the keywords it contains, the keywords on the page the advertisement is directed to, and other factors such as it’s historical click through rate. The quality score essentially insures that relevant advertisements have an advantage with respect to page rank and cost per click. If you want to get a sense of how your advertisement will rank and how much it will cost to get to the top of the paid search results, you can use the Google AdWords Traffic Estimator Tool. For more detailed information about how pricing works, check out the Paying for AdWords tutorial at the Google Education Center.
Google AdSense is worth mentioning because paid advertisements can be served not only to search engine results pages, but also to websites in the AdSense ad network. For example, if you’re a blogger you might set up an account with AdSense that would allow Google advertisements to show up on your blog. Google tries to serve contextually relevant ads based on the content of the site on which they appear rather than on search terms. If someone clicks on an advertisement that Google places on your blog then you’ll get a cut of the cost per click. If you’re an advertiser, you can specify where Google can serve your ads. In essence, you’re trying toÂ help Google make sure that your advertisements are being placed in the most relevant places whether that is ad network sites, search engine results pages, or other specific sites.
Placement choices can be specified across a variety of dimensions (i.e. time of day, regions of the world, ad networks, etc). But, keep in mind that AdSense customers can block specific advertisements from showing up on their sites, such as advertisements from competitors who might seem to be a good contextual fit!
Search Targeting vs. Contextual Targeting
Google serves advertisements in two situations, either on a website in the AdSense network (they call this the content network) or on a search engine results page. We’ve already discussed the latter, which offers search targeting using a cost per click pricing model to serve text based advertisements based on keyword relevancy on search engine results pages.
With contextual targeting Google doesn’t have search terms to determine which advertisements to place. Thus Google looks at the information on the page where the advertisement will be placed and compares it to your advertisement’s keywords to determine which ads will be most relevant.
Another thing to know about contextual advertisements is that they are not limited to the four-line format that you find on the search engine results page. With contextual advertisements Google offers additional formats including: image ads, flash ads, video ads, and gadget ads. Finally, the pricing model can be either cost per click or cost per impression. Which brings me to the anatomy of the AdWords advertisement.
The Anatomy of A Google AdWords Advertisement
A Google AdWords text advertisement has four lines including.
- Headline – you’re looking for a succinct message which immediately identifies your advertisements relevance.
- Description Line 1 – this is usually used for a key benefit of your product or service
- Description Line 2 – this is usually an action request or demand.
- Destination URL – the link where the user can make the purchase or learn more, but may not be the actual landing page URL where you send them when they click on the advertisement.
Here’s a sample of what an advertisement might look like for my consulting practice:
As you write advertisements, you’ll want to have several variations running so that you can determine which ones perform best and migrate towards those. For more on Writing Targeted Ad Text check out the Google Education Center. You may also want to explore Ad Groups, which allow you to set up different keyword combinations for your advertisements so you can learn about which keywords produce the best results for your business.Â Which brings us to keywords.
A Word About Keywords
Choosing the right keywords is important because they can allow you to get more relevant placements at lower cost. As I mentioned above, you’ll want to experiment with keywords to see which groups work best for your business. I’ll introduce the four types of keyword matching options that Google offers, but if you’d like to learn more visit the Keyword Matching Options tutorial on the Google Education Center.
The four types of keyword matching options include:
- Broad Match – Allows your advertisement to show on similar phrases and relevant variations
- Phrase Match – Allows your advertisement to show for searches that match the exact phrase
- Exact Match – Allows your advertisement to show for searches that match the exact phrase exclusively
- Negative Match – Ensures your advertisement doesn’t show for any search that includes that term
By combining these matching options, it’s possible to target your advertisements and improve your click through rate. This in turn will allow you to improve your quality score and reduce the cost of getting top placements. If you need help finding appropriate keywords to experiment with try Google’s Keyword Tool.
The Campaign Management Process
Campaign management is an ongoing process. Assuming that you’ve created some advertisements that are running, you’ll want to establish a review cycle that captures enough data to support statistical significance. In other words, you’ve got to let the advertisements run long enough to get a realistic sense of how they are performing over time.
The next step it to review the performance metrics such as click through rates, cost per click, etc. You should see that some advertisements are performing better than others … which is where you’ll want to look to identify what’s working and what’s not. Next you’ll want to set some performance goals to work against and start iterating on your advertisements to improve your overall performance.
If you’re setting up an AdWords program at your organization plan on dedicating ongoing resources for campaign management. This will require more time until you get a set of advertisements that are optimized and performing well. To learn more visit the Google Education Center’s Campaign Management Overview tutorial.
Learn By Doing
Many small businesses can’t afford to work with a professional to set up an AdWords account and campaign management program, so they start experimenting on their own. Google’s learning center is wonderful and if you have time to go through the entire center you should have everything you need to get started. That said, the single best thing you can do to start getting results from AdWords is to simply get an account and start experimenting.
As you do this, I highly recommend spending a good amount of time running every search that you can think of that someone might enter to find you or your competitors. Take a good look at the advertisements that come up and ask yourself how relevant they are. Are your competitors there? What does their copy look like? Is there a set of keywords where they don’t come up? Take a look at your competitors landing pages, and in general get a feel for the market and where you might fit in.
As a final note, buying AdWords is not a good fit for every business. And, if I had to choose between spending on AdWords or improving my SEO, I’d go with the latter to improve where I come up in organic search results first. That said, the nice thing about AdWords is that you can start slow and with any sized budget. Thanks for reading and let me know if there’s any other high level stuff I should add to this post!