Introduction to SEM or PPC or Paid Advertisements
Search engine marketing (SEM) refers to advertising or marketing a business using paid advertisements that appear on search engine results pages (or SERPs) along with organic (natural or unpaid) search results. Advertisers bid on keywords that customers use on search engines, such as Google, yahoo, Bing, etc to search for certain products or services. This (SEM) gives the advertiser(s) an opportunity to place their ads above or alongside organic (natural or unpaid) results for those search queries.
Traditionally, Search Engine Marketing consisted of the following components:
- Search Engine Optimization (SEO): It is the practice of applying techniques to maximize your website’s (or web page’s) ranking in organic or natural search results. Organic search results are the rankings of websites (or web pages) returned by a search engine after you search for a specific “keyword(s)” or “keyword phrase”. Under this, owners of website(s) do not pay Google even a single penny. SEO rankings (the higher the better, obviously) are determined by each search engine’s secret algorithm (a process or set of rules to be followed to calculate rank) that considers factors such as freshness, originality, relevance, number and quality of links (to trustworthy and authoritative websites), and site architecture to determine the position of website for a query.
- Paid per click (PPC) advertising: These are the advertisements, advertisers place for their website(s) on search engine(s), such as, Google, Bing, Yahoo, etc. Advertisers bid the amount they are willing to pay per click. More the advertisers bid, greater are the chances of their advertisements appearing higher in search engine results. To ensure quality advertisements (although paid), Google AdWords has implemented an additional factor of Quality Score (which includes expected click through rate, ad relevancy and landing page experience) along with maximum cost per click that the advertiser is willing to pay for each click. It is almost impossible to manipulate the Quality Score which is an ingredient of Ad Rank. Higher Ad Rank results in higher position of search engine results page.
With the passage of time, Search Engine Optimization (SEO) has evolved into separate specialized field and Search Engine Marketing has been used interchangeably with paid advertising. Some people also use the following terms to refer to Paid Advertising or Search Engine Marketing:
- Paid search
- Paid search advertising
- Paid search ads
- PPC (“pay per click” or “pay per call”)
- CPC (cost per click)
- CPM (cost per thousand impressions)
Growing Importance of SEM or PPC
An advertiser may or may not decide to use search engine marketing as part of his marketing or advertising strategy. If the advertiser doesn’t have a Website for his business and doesn’t plan to have one in near future, he certainly doesn’t need search engine marketing. However, it is advisable for businesses in today’s scenario to have business website.
PPC or SEM can help increase traffic to your website, which in turn can increase lead generations and revenues. Compared to traditional (offline) marketing and advertising, PPC or SEM can be very cost effective. The results of implementing PPC or SEM are almost instantaneous and measurable. It is very easy to make mid-term course corrections in PPC campaigns or SEM (which is quite unlike traditional marketing).
Given below is a diagram (results page for search query titled “PPC”). The portion of the page (given below) highlighted by red frame is result of PPC or SEM and rest are the natural / organic/ unpaid results.
The greatest advantage of using PPC or SEM is that it offers advertisers an opportunity to put their ads in front of (prospective) customers who are willing to make a purchase. No other marketing medium can do this. This unique feature makes PPC or SEM so effective and a powerful medium to grow business. This flexibility, this reach, this control makes PPC or SEM a favourite marketing tool in marketer’s arsenal to market their businesses effectively and in a targeted manner. These features, control are the prominent reasons for the increasing popularity of SEM or PPC during the past decade all across the globe.
With increasing awareness about Digital/ Internet/ Online/ E-Marketing, companies have started spending more and more on Digital/ Internet/ Online/ E-Marketing. The proportion of advertising expenditure on Digital/ Internet/ Online/ E-Marketing as compared to traditional advertising is rising rapidly. With increase in Internet penetration across the globe, the role of SEM or PPC will increase substantially not only in India but all across the globe.
Search Engine Marketing Terms Explained:
Given below is a list of Search Engine Marketing (SEM) terms which are explained. Efforts have been made to include all terms related to SEM.
Actual cost per click (CPC): The actual cost-per-click (actual CPC) is the final amount an advertiser is charged for a click on his advertisement. Advertiser is often charged less, sometimes much less, than the maximum cost-per-click (max. CPC) bid allowed by the advertiser.
Advert (Ad): This is sponsored result(s) that appears on a search engine results page (SERP) when a query is entered in a search engine. Adverts (Ads) are generally a few lines of text and may include additional information like business address, site links to additional pages, location maps, phone numbers, etc.
Ad rank: This is the value that is used to determine an ad’s position in search results. Ad rank is calculated using Max CPC and the Quality Score (includes expected click through rate, ad relevance and landing page experience) and the expected impact of extensions.
Average ad position: The position or placement of advertiser’s ad on the search engine results page (SERP). Search engines typically denote the highest position as ‘Position 1’. If advertiser’s ad appears half the time in Position 3 and half the time in Position 5, advertiser’s average ad position would be 4.
Click through rate (CTR): It is the number of clicks that advertisers ad receives divided by the number of times his ad was shown i.e. number of clicks ÷ impressions = CTR. For example, if you had 10 clicks and 1000 impressions, then your CTR would be 1%.
Conversion rate: The conversion rate is the percentage of visitors to an advertiser’s website that complete a desired goal (sign, purchase, etc) out of the total number of visitors. High conversion rates are indicative of successful marketing. Conversion rates vary from industry to industry.
Cost per click (CPC): Cost Per Click (CPC) refers to the actual price an advertiser pays for each click in his pay per click (PPC) advertising campaign.
Cost per acquisition (CPA): Cost per acquisition (CPA), also known as “Cost per action” or “cost per conversion”, is an online advertising pricing model where the advertiser pays Google for a specified acquisition, for example a sale, click, or form submit (e.g., newsletter sign up, etc.)
Goals/conversions: Using values for goals lets an advertiser focus on the highest value conversions, such as, transactions with a minimum purchase value. When a visitor to an advertiser’s website or user of an advertiser’s application performs an action defined as a goal, Analytics records that as a conversion.
Impressions: It is the measure of the number of times an advertisement was shown – it doesn’t necessarily mean someone clicked on it.
Keyword: When someone searches on search engine (for example Google), an advertiser’s ad could be eligible to appear based on the similarity of his keywords to the person’s search terms, as well as his keyword match types.
Landing page: The first page that a person sees when they reach any website. It may or may not be the home page.
Maximum CPC: Also known as maximum bid, it is the highest amount that an advertiser is willing to pay for one click on his ad.
Organic search results: A free listing in Search Engine (Google, Bing or Yahoo) that appears because it’s relevant to someone’s search terms.
Pay per click (PPC): An advertising model (under digital/ internet marketing) where advertisers pay only when people click on their advertisement.
Quality score: A variable, measured from 1 to 10, which is used to determine the order in which advertisements are listed on a Search Engine Results Page. Improving the quality score, by making the ads more relevant to the keywords, can help an advertiser achieve better ad positions at lower costs per click.
Query/search term: A word or phrase that a user enters into a search engine in order to find what they’re looking for.
Search engine marketing (SEM): Search Engine Marketing (SEM) is a form of Internet marketing that involves the promotion of websites by increasing their visibility in search engine results pages (SERPs) primarily through paid advertising.
Search engine results page (SERP): Search engine results page (SERP) is the page displayed by a search engine in response to the query posted by a user. SERPs contain organic results as well as paid advertisements (or ads).
Valuable Additional Resources for Reading
Some valuable resources (websites) for further reading and fine tuning knowledge with respect to Search Engine Marketing are mentioned below: