First off, let’s take a step back and understand people’s behavior online.

Every minute there are 70 new website domains registered on the World Wide Web, adding to the millions of websites that already exist. This rate of websites being created makes it impossible for anyone to keep up with all of the information available. Tools like search engines were created to simplify this massive amount of data by using a complex algorithm that rank these millions of websites and consolidate them into a short list on a single page. Search engines fund this service by allowing businesses to purchase advertising on these search engine results pages (SERP). This advertising is known as Paid Search.

Paid Search is a marketing tactic that involves placing an advertisement for when, and only when, a user searches a specific keyword and clicks on the advertisement. That last part is what differentiates this kind of advertising from other forms of advertisements online, such as banner placements on websites. Most other advertising, up until Paid Search, was cost by impression or CPM for short. Paid Search is billed only after a user clicks on the ad. This is known as a cost per click, CPC for short. The distinction, although subtle, means that businesses like yours are only paying if a prospect or customer not only sees your advertisement, but is engaged enough to interact with it by clicking the hyperlink.

An important aspect of online marketing, and Paid Search, is to understand the purchase funnel. There are many versions of this model but it basically breaks down to 1) Awareness, 2) Opinion, 3) Consideration, 4) Preference, and 5) Purchase. Awareness means that users are just researching and seeing if they have a need and Purchase means they’ve made their decision and are ready to buy. When shopping for products online, people consistently use search engines regardless of their stage in the funnel. However, it is believed that users will modify their search queries depending on their stage. For example, if a user is just starting a search to buy a new printer they’ll likely type “printer” into a search engine like Google and click “Search.” Only after some research, and as they move their way down the funnel, do they modify their query to something like “all in one inkjet printers,” and then likely adding a brand name.

Paid Search strategies can now be crafted off of these concepts and understanding of the model. If you want to affect the future purchase decision at the very beginning, and have a large budget, it would be valuable for a business to bid on broad keywords such as “printer,” “printer copier,” “inkjet printer”, “printing,” etc. It’s important to note that these keywords have a large volume of visitors but are highly competitive, very expensive, and likely have a low conversion rate as they are more in the Awareness or Opinion stage. Another strategy would be to target very specific Long Tail keyword phrases that are searched less often, but are further down the purchase funnel. Targeting keywords such as “wireless all in one laser printer for mac” will likely be less expensive, less competitive, and have a higher conversion rate. Targeting many of Long Tail keywords can add up to a significant revenue stream while building an online presence.

Most small and medium size businesses don’t have the budget to pay upwards of $18 per click for keywords such as “printer.” Therefore, a more targeted approach that aims at specific Long Tail keywords would develop into a successful strategy. To further optimize Paid Search, campaigns can be limited down to other factors such as mobile or desktop device, keyword match (broad, phrase, or exact), geography (X miles from Zip Code), time of day and day of week, and languages. Campaigns should also intentionally direct users to the appropriate page based on their keyword. If someone clicks on an ad shown for “laser printer toner cartridge red”, it should go directly to the page related to that keyword. Landing Pages that focus on one call-to-action, encouraging a user to make a phone call, order a product online, or download a whitepaper are a great best practice. Limit the amount of options users have and they’re more likely to complete the designed action.

To get started with Paid Search, businesses can create a small campaign with Google AdWords or Bing Search Advertising. Build a list of a very targeted keywords and add destination URLs to the appropriate product pages. Add some more advanced targeting and set a small budget. All online advertising should be based on a foundation of testing. Try campaigns for a product, a product category, an industry, a brand, etc. Keep testing, keep learning, and you’ll likely find digital campaigns like Paid Search a valuable marketing tactic.

It’s hard to keep track of all the digital marketing buzzwords that are flying around the internet today. Especially, if those words are thrown into acronyms that further decode their meaning. For those of you just starting to dabble in online marketing, we wanted to provide a quick explanation as to the difference between SEO and SEM.

First off, what do they stand for? That would certainly help. SEO stands for Search Engine Optimization, and it refers to the process of increasing your website’s search engine ranking for a specific keyword or set of keywords. Said another way, search engines look for specific things on and off of your website that determines whether or not it’s relevant for a specific query, and SEO is the goal of doing those things.

So then what is SEM? Search engine…? Marketing? Exactly. Search engine marketing is the strategy to increase your traffic and sales through the search engine channel. Search engine marketing includes the tactic SEO and the tactic Paid Search. Paid Search refers to those “sponsored” advertisements you see at the top and right side of Google, Bing, and the rest. Businesses are in a bidding war for every click that drives them to their website. The more relevant your website landing page to the query and the more you pay, the higher you’ll appear on the search engine results page (SERP).

Should you even care? Well, yes, because 93% of all online experiences begin with a search engine (Forrester Research, 2006). That means that your customers and prospects are likely finding or not finding you by first visiting sites like Google.com and Bing.com. They type in a search query such as “brown leather office chair” and start visiting the websites that appear. What’s even more important is that you want to appear first. That’s because 97% of searchers never look beyond the first three results. It’s more likely that they’ll change their search query before hitting that “next >” button at the bottom of the page.

A few years ago those top coveted results of the search engines were known as the “Google Golden Triangle” as they get all of the attention and clicks. That triangle has become even more competitive as Google and Bing have introduced other content such as news, images, videos, and social feeds. That and every sixty seconds 70 domain names are registered and 60 new blogs are created, makes it even harder to compete.

The best thing you can do as a company is to get in the game. If you’ve got a website, then you need to understand how people come to it. Take a look at your website analytics. You can set up an account with Google Analytics for free. See how many people are coming from search engines and what they’re searching for. Try out some paid search advertising and follow the SEO best practices [PDF].

I recently stumbled upon an useful infographic created by Digital Net Agency, a performance-based search agency with a concentration on Search Engine Optimization (SEO) and Search Engine Marketing (SEM). The infographic provides great insight into one of the most important aspects of paid search advertising, the Google Adwords Quality Score.

The Quality Score is essential for digital marketers to understand because it helps determine how much you have to pay to receive a position in the “sponsored” area of the search engine results page. You can optimize your Quality Score to receive a higher position for a lower bid that your competitors. Said another way, you’ll pay less money for more clicks and visibility. Therefore, it is important to understand and measure.

Quick summary of Google Adwords Quality Score factors:

• Click-through rate (CTR)
• Relative (CTR)
• Landing-page quality
• Keyword/search relevance
• Ad/site Performance
• Display URLs past CTR
• Account history
• Keyword/ad relevance
• Geographic performance
• Targeted devices

Focus on your “kewords, ads, and landing-page relevancy” and you can improve your Google Adwords Quality Score.

How to Improve Google Adwords Quality Scores Infographic:

Source: DigitalNetAgency.com

In the world of online marketing, pay-per-click campaigns are an advertising medium that marketers use on a regular basis. This method of marketing can provide a number of benefits to webmasters that you can’t find elsewhere. If you haven’t considered getting involved with this strategy, there are two advantages for using pay-per-click advertising. Before we get into these two advantages of this medium, lets explore what PPC is.

What is Pay-Per-Click?

Pay-per-click is a marketing method that is primarily offered by search engines like Google. With this strategy, you sign-up for an account as an advertiser and then create an ad campaign. You come up with an ad, a link to your site and keywords that trigger the ad. You set the amount that you are willing to pay for each click on your ad. Then when someone types in a keyword that you have listed in your campaign, your ad will show up in the advertising section of the search engine results. If someone clicks on the ad, they are taken to your website. You then pay a fee for each person who clicks on one of the ads.

1) Pay-per-click works with your branding strategy by increasing traffic

One way that you could effectively use pay-per-click marketing is to increase the overall traffic to your website. Pay-per-click marketing can be a highly effective way to bring targeted traffic to your site. Depending on the niche that you are targeting, it may not be that expensive to get visitors to your site. The best part is that the people who come to your site from these ad campaigns are actively seeking what you have to offer. This means that you’re not just throwing money away to get people to your site who may or may not be interested in what you have to offer. This makes it more likely that you will be able to increase sales or conversions. However, the positive takeaway you can count on is the brand awareness associated with starting a pay per click campaign.

2) Pay-per-click is effective for conversion testing that increase sales

Another advantage when it comes to taking advantage of pay-per-click marketing is to use the traffic to test your regular site pages or sales pages. If you are building a new site, it probably doesn’t have much weight with the search engines yet. This makes it difficult to get any traffic to the site. Without traffic, it can be difficult to tell if what you are doing is actually working or even something that people will purchase. By purchasing some traffic for the site with pay-per-click marketing, you can get a lot of people there quickly, so you can see if your design actually works and whether your market is actively seeking to purchase your product or service.

Something Important To Consider

When it comes to using pay-per-click marketing, you can definitely get results quickly. However, you have to be careful that you don’t spend too much money with this technique. If you set your daily budget too high, you could end up paying a very big bill for all of the traffic that you get. Make sure and set a spending daily spending limit to your campaign. And remember, Google may go above that limit in any given day but it will offset the over spending less in another given day. Google does this in order to try and maximize your click through ratio.

Marketers can immediately increase their campaign success by using metrics and a payment model that is closer toward the end of the sales funnel. A “sale” is more valuable than a “prospect”. A “prospect” is more valuable than an “viewer”. In direct and online marketing, if a campaign is very targeted and also uses a model that only incurs cost if they get a customer or prospect to take an action, such as purchase a product or sign up for a service, it’s guaranteed that those advertising dollars will be well spend.

The advertiser that only pays if they get a customer uses the CPA (cost per action / acquisition) model and is popular for affiliate marketing where publishers are willing to drive traffic to high quality brands and only expect payment when an action is completed. It protects the advertiser by defining the action and relating it directly to their business. If the action isn’t completed, no matter how many customers are referred, the advertiser doesn’t pay a penny.

On the opposite side of the spectrum is the CPM (cost per impression / view) model. This is used by most private websites and display advertising. If a web page gets 10,000 views per month and you charge $0.01 for every view, they can charge $100 to host an advertisers banner. There is no guarantee that any of those 10,000 visitors will necessarily see the banner but the advertiser is paying regardless. Even more complicated systems that charge for impressions as defined by the banner loading on the page doesn’t guarantee it’s above the fold. It also doesn’t guarantee that someone will see it and take the time to engage or click on it.

In the middle of CPA and CPM is the CPC (cost per click) model. This guarantees that someone (or a bot in some cases) has not only viewed your text or banner ad, but has seen it and clicked on the link. Tracked by the hyperlink redirect and not by the image loading, this model drives the success of Google Adwords and similar Paid Search tactics. Marketers like it better than CPM because it at least follows some sort of engagement, even if it’s a quick click by a researcher or competitor.

Recently Google proposes new metrics for online advertising called the Google Activate Initiative, that I believe falls somewhere in between CPM and CPC. Launching on the Google Display Network Reserve platform, the metric called “Active View” will be an enhanced impression. In other words, the impression will only count if the display ad is at least 50% viewable on the screen for at least 1 second. If the ad loads below the fold, it doesn’t count. If the viewer bounces to another page in less than a second, it doesn’t count.

This modification has huge ramifications for advertisers as the billions of dollars being spent becomes just a little bit more refined. Some marketers shy away from banner advertising because historically it has been difficult to justify, especially when stacked up against other models such as CPC. I’m personally excited to see these changes and believe it has been a long time coming in improving the efficiencies of charging on impressions.

More sources of explanation:
Mashable.com - Google Proposes New Metrics for Online Advertising
Double Click - Making the Web Work for Brand Marketers

Least Effective to Most Effective

1. Cost per impression (CPM) - charged usually in the thousands for when the banner image displays on a targeted website.
2. Google Activate Initiative - charged for when 50% of the banner image is visible to the viewer for at least 1 second. Also tracks the duration and percentage for deeper analysis.
3. Cost per click (CPC) - charged when an viewer of the ad sees and clicks on the hyperlink to the advertiser’s landing page.
4. Cost per action / acquisition (CPA) - charged when a visitor completes an action such as purchasing a product or signing up for a quote.

Watch this video below for even more explanation: