How Paid search marketing works

Table of Contents

 How Paid search marketing works

Although SEO has proved a popular form of digital marketing, paid search marketing is still of great relevance since it gives much more control on the appearance in the listings subject to the amount bid and the relevance of the ad. 

Each of the main search engines has its own paid advertising programme:

● Google Adwords (www.google.com/adwords);

● Microsoft Bing and Yahoo! adCenter (http://advertise.bingads.microsoft.com).

What is paid search marketing? We explained the principles of paid search marketing or sponsored links in the introduction to the section on search engine marketing. 

Although we said that the main model for paying for sponsored listings in the search engines is pay-per-click marketing, we have called this section paid search marketing since there are, increasingly, other options for payment on what is known as the content network.

Paid search content network

Paid listings are also available through the display network of the search engines such as Google AdSense and Yahoo! Content Match. These contextual ads are automatically displayed according to the page content. 

They can be paid for on a CPC, CPM or CPM (pay-per-action) basis and include not only text ads but also options for graphical display ads or video ads. Google generates around a third of its revenue from the content network, so there is a significant amount of expenditure on the network.

Trusted feeds

Trusted feeds or paid for inclusion is no longer significant to search advertising. However, we include reference to them since a similar approach is used by retailers to include their prod-ucts in Google’s Product Listing Ads (PLAs), where product information such as pricing and images are uploaded to Google’s servers for display in Google AdWords and within Google Shopping (see documentation for Google Merchant Blog for the latest techniques).

What controls position in paid search?

In early pay-per-click programs, the relative ranking of sponsored listings was simply based on the highest bidded cost-per-click (CPCs) for each keyword phrase. So it was a pure auction arrangement with the cost-per-click dependent on the balance of the extent of competition in the marketplace against the revenue or profit that can be generated dependent on conversion rates to sale and retention.

The inflated CPCs at the time of writing in different product sectors show how competitive Google AdWords is. Since only a small proportion of visitors to a site clicking from the ad will convert, it is difficult to generate a positive return-on-investment for these generic terms.

Contrary to what many web users may believe, today it is not necessarily the company which is prepared to pay the most per click that will get top spot. The search engines also take the relative click-through rates of the ads dependent on their position (lower positions naturally have lower click-through rates) into account when ranking the sponsored links, so ads which do not appear relevant, because fewer people are clicking on them, will drop down or may even disappear off the listing. The analysis of CTR to determine position is part of the quality score, a concept originally developed by Google but now integrated as part of the Microsoft Bing and Yahoo! search networks.

Google quality score

Understanding quality score is the key to successful paid search marketing. You should consider its implications when you structure the account and write copy or review performance with an agency.

Google developed the quality score because it understood that delivering relevance through the sponsored links was essential to its user’s experience, and the company’s profits.

The AdWords system works best for everybody; advertisers, users, publishers and Google too when the ads we display match our users’ needs as closely as possible we call this idea ‘relevance’.

We measure relevance in a simple way: 

Typically, the higher an ad’s quality score, the more relevant it is for the keywords to which it is tied. When your ads are highly relevant, they tend to earn more clicks, move higher in Ad Rank and bring you the most success.

A summary formula for the Google quality score is:

Quality score = (keyword’s click-through rate, ad text relevance, keyword relevance, landing page relevance, speed and other methods of assessing relevance) So, higher click-through rates achieved through better targeted creative copy are rewarded, as is relevance of the landing page (Google now sends out AdBots-Google to check them out). 

More relevant ads are also rewarded through ad text relevance, which is an assessment of the match of headline and description to the search term. 

Finally, the keyword relevance 

is the match of the triggering keyword to the search term entered. If you have ever wondered why the number of paid ads above the natural listings varies from none to three, then it’s down to the quality score you can only get the coveted positions for keywords which have a sufficiently high quality score you can’t ‘buy your way to the top’ as many think.