Search engine advertising (or search engine marketing-SEM) is the process of placing ads that show up depending on what keywords are being searched for. They appear at both the top and bottom of the search page results bracketing the organic listings. This is also called pay per click (PPC) because the advertiser does not pay for the ad unless the customer clicks on the ad and is taken to a landing page associated with the ad. So if you place an ad that you want displayed when someone types in “Business Consultant” and you bid enough for it, it can appear on the first page of Google.
To get started, you need to come up with keyword phrases that someone might use to find your product or service (in the same way you might do this for Search Engine Optimization (SEO) discussed last week). Again, you can use Google Keyword Planner. The next step is to group keywords into groups of similar terms. Using Google’s advertising platform AdWords, you write ads that will attract customers to click on them. The ads need to have different ad copy that directly relates to the keywords in the group. You can have has many groups of keywords and ads as you want. You can relate various groups to a single campaign. You then run the ads. Potential customers click on the ads and are taken to your website and hopefully follow through with an inquiry or purchase. To be most effective, the search keywords in the group need to directly relate to the ads which need to directly relate to the landing page.
AdWords measures the clicks you get as a percentage of the number of times the ad was shown. This is called the click through rate. When you set up the ad campaign, you decide on various bidding strategies as part of your ad budget and the maximum you want to pay per click for that ad. When someone searches for your keyword, Google’s algorithm has the effect of having all people with the search term in their group bid against each other until the top three (for the top of the first page) have beat out everyone else because the bid went above all the other bidders max budgets. You can see how advertisers with deep pockets have a big advantage here and can drive up the cost per click of the most popular search terms.
To be profitable for you, the cost per acquisition (CPA) of a sale (or customer) has to be less than the profit you are going to earn on that sale (or customer) in order to leave some profit for you. The cost per acquisition is simply the cost per click divided by the conversion percentage. So if you pay $5 per click, and every tenth person buys your product (i.e. you have a ten percent conversion rate) you need to have a gross profit of at least $50 on that sale because you will have paid for the ad to be clicked ten times before you get a sale ($5×10=$50).
The good thing about paid advertising is that you can bring in customers right away to get things going. You also learn quickly about the keywords that customer’s use to find you which can inform all your other messaging and advertising.
There are a million things to learn about paid advertising to really optimize it but these are the basics. I will write more in later posts.