Paid Search Overview

What is Paid Search?

• Paid search is a form of digital marketing where search engines such as Google and Bing allow advertisers to show ads on their search engine results pages (SERPs).
• Paid search works on a pay-per-click model, meaning you do exactly that – until someone clicks on your ad, you don’t pay. This makes it a measurable and controllable marketing channel compared with more traditional forms of advertising.

Paid Search Terminology

• Click: when a user clicks on one of your ads
• Impression: when your ads are shown. It is important to note that this does not mean that users have seen your ads. An impression will still be counted if your ad is shown at the bottom of the search engine results and a user does not scroll all the way down to see it
• Click-through rate (CTR): the percentage of impressions of your ads that result in clicks – the higher the better
  • If your PPC ad had 1,000 impressions and one click, that’s a 0.1% CTR.
  • High CTR, users are finding your ad to be highly relevant.
  • Low CTR, users are finding your ad to be less relevant.
  • CTR is relative to:
    • Your industry.
    • The set of keywords you’re bidding on.
    • Individual campaigns within a PPC account.
  • CTR is not just an indication of how relevant your ads are to searchers. CTR also contributes to your Ad Rank in the search engines. Ad rank determines the position of your ad on the search results page.
  • The top position doesn’t go to the highest bidder. It goes to the advertiser with the highest Ad Rank. And CTR is a huge factor in the Ad Rank formula.
  • But Ad Rank is even more complicated than that. Google measures your actual CTR against an expected CTR.
  • So if you’ve run a lot of ads with a low CTR, Google will assume that any new ads you add to your Google Ads account are also going to have a low CTR, and may rank them lower on the page.
• Average cost-per-click (CPC): how much on average a click has cost
• Average position: where on the results page your ads have shown (position one being the highest)
• Cost per conversion: the amount you have spent on paid search, divided by the number of conversions generated. The lower the better
• Conversion rate: the percentage of users who completed a conversion after clicking on your ad. Conversion/Click. The higher the better.

How does paid search work?

Step 1. Choose your location settings

• You can choose to show your ads in specific countries, cities and zip codes.

Step 2. Select your keywords

• Keywords are search terms that people type into search engines such as Google, for example “womens shoes”, “tv repair shop near me” or “best sushi restaurant”.
• Use a tool like Google Keyword Planner

Step 3. Choose the correct match types

• Exact match: where keywords are represented like this: [womens shoes]. By using exact match keywords, your ads will only be shown when someone searches for that exact term. It will also pick up plurals and spelling mistakes, so [womens shoes] would also show ads for [women shoes]
• Phrase match: where keywords are represented like this: “womens shoes”. This keyword would trigger your ads if a user searched for the exact phrase, but with words before and after (e.g. ‘red womens shoes’ or ‘womens shoe stores’)
• Broad match: where keywords are represented like this: womens shoes. This keyword would trigger your ads if a user searched for this phrase in any order, and with synonyms too (e.g. ‘cheap womens shoes’, ‘womens blue shoes’ or ‘ladies shoes’)
• Modified broad: where keywords are represented like this: +womens +shoes. This keyword would trigger your ads if a user searched for this phrase in any order, without synonyms (e.g. ‘womens training shoes’ or ‘shoes for womens running’).
• Negative keywords: Negative keywords can be added into your campaigns to stop your ads from running on searches that are not relevant to your business.

Step 4. Create your ads

• You will create ads to show when a user searches for one of your keywords.
• Text ads have three primary elements:
  • Headline 1, 30 characters
  • Headline 2, 30 characters
  • Description, 80 characters.
• However, there are a number of things your ads cannot contain, including but not limited to:
  • All caps (e.g. FREE DELIVERY)
  • Symbols to draw attention to your ads (e.g. ***Free Delivery***)
  • Additional spacing (e.g. F r e e  D e l i v e r y)
  • Trademarked terms
  • Exclamation marks in the headlines.
• What makes a good ad:
  • Ads should engage your audience, guiding them to choose you over the other ads or organic listings on the page. A good ad will contain:
    • Words and phrases that are relevant to your keywords
    • Unique selling points
    • Calls to action.

Step 5. Set your bids

• You set how much you want to pay for a click on one of the ads showing for your keywords. This is called a ‘Bid’ or ‘Max. CPC’. Every keyword can have a different bid.
• Paid search platforms give you a guide on how much you should bid, but ultimately it’s down to you. If Google is recommending a bid of $2.50 but you only want to bid $2.00, that’s fine – it may just mean your ads show lower down the page or less frequently.
• How do search engines decide where your ad appears?
  • When someone searches for one of your keywords, your ads are entered into an auction. There are two factors that are taken into account and define where your ad appears on the page. These two factors are combined to give you an ‘ad rank’. The advertiser with the highest ad rank in the auction will appear in the first result. These two factors are bid amount and quality score.
  • Quality score is the score from 1–10 that paid search platforms assign every keyword in your account, 10 being the highest. This is calculated based on three factors: expected click-through rate; ad relevance to your keywords; and landing page experience.
  • Quality score was introduced to stop advertisers from simply paying the most to appear at the top on search terms that their website isn’t relevant to. Now paid search platforms reward higher quality advertisers – and not just those with the deepest pockets.

Step 6. Add ad extensions

• Ad extensions are additional pieces of information about your business you can show alongside your ads. In addition to providing a better user experience, they can also increase the quality score of your ads and help your ads take up more space on the results page.
• Some of the ad extensions available are:
  • Sitelinks – links to additional pages on your website
  • Callouts – additional text about your business
  • Location – show your business address
  • Call – show your phone number. This also gives users on a mobile the option to click-to-call
  • Price – show different services or products along with the costs
  • Seller ratings – these are automated snippets that may show if your business has reviews on sites like Google My Business or TrustPilot. This does not work with all review platforms so be sure to check first.

Step 7. Launch your ads

• Typically your ads will start showing within a few hours and you can see the results in your paid search accounts. You can pause your campaigns at any time.
• How do I pay for paid search?
  • Every paid search platform is slightly different when it comes to billing. When you create your account, you enter your credit card or direct debit details. You are charged either after a certain threshold has been met or every 30 days, whichever comes first. It is normally possible to get some free credit applied to your account – it’s worth a quick search to find out.

Expensive keywords

• One of the common myths about paid search is that it is too expensive; I bet you’d be horrified to learn that a click on the keyword “car insurance quotes” could cost $132.59.
• Remember this is set by the market, which means one of your competitors is happy to pay this amount per click, which means they are either making money, or running an unprofitable campaign – and it’s more likely to be former than the latter.
• Before you rule a keyword out, you need to consider what the conversion rate required is. For example, let’s say that an insurance firm is happy to pay up to $4000 for a new customer once they take into account cross-sell opportunities and lifetime value.
• By dividing the target cost-per-conversion by the CPC, we can calculate that 1 in 30 people who visit the website need to become a customer, which is just below a 3% conversion rate, meaning it’s competitive but possible to compete and make a good ROI on this keyword.