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1. How does search advertising work?

When you enter a query in a search engine, that search engine might list a number of ads on the top of the search engine results page. Which ads to show and in what order is determined by different things, such as the keywords that are in the query and the amount of money (budget) the advertiser has invested in those keywords.

You’ve most likely encountered search ads many times before. You just might not have recognized them as such, because search engines tend to make them less and less obvious to mislead the users into thinking they’re actual organic results.

But typically they appear at the top of the search engine results page (SERP), labelled as advertisements or sponsored posts in non-obvious ways.

In this example, ads are labelled as “Sponsored” results in the SERP

How do they get there, and how do they work? And why should a technical marketer be concerned with them?

Search advertising, often known as pay-per-click (PPC) advertising, involves creating ads that appear in SERPs when users type certain queries.

These queries are tokenized into keywords that advertisers can then bid on. Bidding means that advertisers set a certain budget of money they’re willing to spend for their ads to show up for that keyword. The more popular the keyword, the more it will cost to show in the results.

When the user then makes a relevant search query, the search engine runs an automated auction that determines which ads get shown on the SERP and in what order.

Importantly, in PPC, the advertiser only pays the search engine if the ad is clicked

Bid on keywords in relevant queries

Keywords are the backbone of search advertising.

These are the terms and phrases that advertisers bid on, hoping to display their ads when users search for these specific words.

Choosing the right keywords to bid on is complicated. There’s an entire discipline of keyword research that’s focused on figuring out the terms that best reflect the purpose of the digital ad.

Keyword research isn’t an exact science. Sometimes you’ll want to bid on keywords you know might not generate you clicks or conversions.

Example

Bidding on brand keywords like your company name or your most important trademarks might be a good idea to make sure that your listings show up when search engines search for your brand.

Deep Dive

Keyword research

Coming up with keywords for ads is more than just playing linguistic games. It’s an established process that needs to be constantly monitored and nurtured.

There are many ways to come up with the keywords that fuel your ad copy.

  • Understanding business goals – what is the purpose of the ad? What keywords help best achieve this purpose?
  • Keyword research tools – search engines have their own keyword research tools to help you choose the right terms, but there are third-party services that also let you identify what the best terms to bid on might be. You can even use organic search as your assistant – simply type in keywords into the search field of a search engine to see a list of suggested queries you might want to bid on.
  • Competitor keywords – third-party tools can also be used to show you what keywords your competitors are likely targeting. You can then outbid them for these terms to make sure that you occupy more of your shared marketplace.
  • User intent – targeting the correct user intent might change the shape of your bid quite a bit. Transactional queries (“cheap fridge”) are often more expensive to bid on than informational queries (“how does a fridge work”).
  • Group keywords by theme – when you plan the keywords for your content, create ad groups where keywords are grouped by theme. This helps improve ad relevance and consequently the performance of your ads.
  • Choose the correct match type – match type might impact your budget quite a bit, too. “Exact match” requires the query to have a close match with the keywords you’ve bid on, whereas “broad match” takes into account misspellings, synonyms, and related searches. Sometimes “negative match” is useful, too, if  you don’t want your ads to show up for certain keywords.
  • Evaluate keyword metrics – when you’re choosing keywords, there are many metrics to evaluate in the keyword research tools. Search volume tells you how often these keywords show up in queries, keyword difficulty lets you know how much competition there is for these terms, and estimated cost-per-click (CPC) tells you how much you’ll be expected to pay if a user clicks your ad.
  • Consider long-tail keywords – long-tail keywords are terms and phrases that might be searched for less frequently, but they are elaborate enough that if users do search for them, your chance of scoring an ad click and a conversion are higher.
  • Iterate and refine – an important aspect of advertising is to constantly refine the keywords you are bidding on. The research doesn’t end when you launch your ad campaign.

This isn’t an exhaustive list. Once you create your ads and place your bids, you’ll need to re-evaluate your decisions many times during any given campaign.

Don’t miss this fact!

Not every ad needs to lead to immediate results. Especially bigger companies (with bigger budgets) tend to bid on brand terms to make sure that the company appears on the top of the SERP to remind people of its relevance.

How bidding works

The placement of your ad in the SERP isn’t just determined by how much you’re willing to pay (bid amount). Search engines like Google employ a combination of factors:

  • Bid amount – this is the highest amount you’re willing to pay for a click on the ad.
  • Quality score – this gauges the relevance and quality of your ad and landing page to the keyword. A higher quality score can lead to lower costs and better ad positions.
  • Ad rank – this determines your ad’s position in the SERP and is calculated as (Bid Amount X Quality Score). Even if you bid less than a competitor, a stronger landing page could position your ad above theirs.

Cost-per-click (CPC) is the actual amount you end up paying each time someone clicks on your ad. There’s a formula to determine it, but if your ad gets clicked, the cost for the click is always the smallest possible amount ($0.01) required to outbid the next listing in the ad list. 

Good ad copy helps with the click-through rate (CTR)

Once your ad shows up for a given search query, you’ll want to make sure (in most cases) that the search engine user actually clicks your ad.

Writing good ad copy is more than just coming up with a cool slogan Mad Men style. Instead, it’s about tailoring the ad copy to match the keyword and the landing page the ad leads to.

Example

Ad copy needs to be relevant to the search query you’re bidding on. If a user searches for “restaurants in Boston”, your ad should have something about restaurants in Boston rather than just restaurants in general.

Persuasion tactics are useful when writing ad copy, too. You’ll want the ad to offer a unique selling proposition (USP), a clear call-to-action (CTA), and, if possible, it should be emotionally compelling.

An example of bad ad copy

As with keywords, it’s important to constantly learn from your data and update the ad copy for your campaigns. If your CTR is consistently low, you’ll need to figure out whether you are bidding on the wrong keywords or whether your ad copy is just too general and irrelevant.

But writing a Pulitzer-prize winning ad isn’t enough, because you don’t want to over-promise and under-deliver with your landing page. If the user clicks an ad with a certain expectation, the landing page needs to either fulfill that expectation or give the user a clear signal how to achieve what they set out to do.

Otherwise, the user will quickly return to the SERP (“bounce”), and the quality score of your landing page will decrease.

Ready for a quick break?

Take a moment to improve your quality scores. Give your brain a chance to adjust to all the information you’ve consumed.

Create fulfilling landing pages

When the user clicks your ad, they’ll expect the landing page to correspond to what they expected when they saw the ad and clicked it.

This is difficult to do. How can you predict the user’s intent? What if you have many different ads for the same landing page – how can you make sure the landing page responds to all the possible intents users might have for clicking your ads?

A well-designed landing page can improve the conversion rate of your ads and thus increase the return on investment. The goal is ultimately to keep the promise made in the ad and to recommend subsequent actions to the visitor.

Remember that you can’t be clear enough with your landing page. Don’t treat the visitor like a child, but don’t hesitate to make it absolutely, painfully clear what you want them to do. 

If it’s not possible to determine what you’re offering at a glance, your landing page isn’t doing its job. You have other pages on the website that can provide the user with supporting information – your landing page needs to be strong and determined in ushering the visitor into the conversion funnel.

Deep Dive

Elements of a good landing page

While landing page design is as much an art form as any other aspect of digital marketing, there are certain principles to keep in mind when designing the visuals and the copy.

Remember that a landing page is for many visitors the first touchpoint with your brand. What emotions you manage to invoke might linger with the visitor for a long time.

  • Clear call-to-action (CTA) – make it absolutely, blazingly obvious what you want the visitor to do. Make sure the CTA is prominently displayed in more than one place on the page.
  • Great performance – the page needs to load fast on both desktop and mobile. Visitors will not forgive a slow experience, as they’ll just quickly return to the SERP to choose some other, faster competitor page.
  • Use trust signals and social proof – testimonies from current customers are a powerful way of building trust. Quoting user counts (e.g. “100,000 happy customers”) and endorsements are good tactics, too.
  • Focus on benefits, and eliminate distractions – make the landing page copy pop with a focus on the visitor. What do they get if they buy your product or service? How does your brand make the visitor happier? Remove all content that doesn’t support these approaches. A landing page is not the correct place to go on tangents about your company history or your philosophy.

There are companies and agencies out there that focus solely on creating compelling landing pages. Researching their case studies and references is a good way to get an understanding of what a good landing page should do.

Don’t miss this fact!

The purpose of a landing page is to liaise between the ad (or other inbound messaging) and your business goals. A good landing page welcomes the user, identifies and reinforces their intent, and offers them a path forward – usually towards a conversion.

Benefits and challenges of search advertising

Search advertising is a tempting digital marketing channel because users reveal a lot about their search intent with the queries they input. Search ads respond to this intent, and this often leads to good conversion rates.

Furthermore, since you only pay when someone actually clicks on your ad, you can optimize your advertising for a high return on investment. By experimenting with different ad copy and bid strategies, you can tailor the CPC curve for your ads.

Search engines offer many tools for optimizing your ad campaigns. It’s absolutely imperative that you familiarize yourself with them, because managing digital advertising is a process.

Example

In the heat of your seasonal campaigns, it’s important to make quick adjustments to your keywords, your ad copy, and your budget, based on observed and collected data both from the search engine and from your websites.

The main challenges with search advertising rise from competition. You’re rarely the only one bidding on search terms. 

The most popular keywords (think “insurance”, “black friday”) might be very costly and risky to participate in.

Adjustment and optimization can also be challenging for a company that doesn’t have enough resources to properly manage their advertising. To maximize the return on your investment, you’ll need to add proper analytics to your site, and you’ll need to do regular monitoring and optimization. 

You can’t just leave your ads alone and hope for the best – in most cases that’s a sure way to deplete your budget with poor results.

Key takeaway #1: Research the keywords to bid on

Figuring out which keywords to bid on is instrumental in making sure your ads pop up for the right queries without breaking your bank. There are many strategies to keyword research, and there are lots of tools available to assist you in picking the right terms. Ideally, you’d pick keywords that have a clear and direct ROI from clicks and conversions. But sometimes you might want to expose your content to queries where there’s no discernible conversion goal. In other words, you bid for exposure and views.

Key takeaway #2: Click-through rate measures your ad effectiveness

The click-through rate is calculated as the ratio of clicks to impressions (or views) of your ads. An ad that gets a lot of clicks might still have a low CTR if it is also displayed often with popular queries. If you’re bidding for conversions and visits to your site, you’ll want to make sure that you have a high CTR for your ads. This can be done by making sure the ad shows up for relevant queries, but writing the ad copy so that it invites people to click through to your site is another important tactic.

Key takeaway #3: Advertising is a process

It’s tempting to think of digital advertising as a set-and-forget way of getting quick wins. After all, you’ll just need to figure out the best keywords, bid on them, and watch the conversions come in. Right? Well, that would work in a world where you’re the only competitor, but remember that almost every possible market niche is saturated with competition. You’ll need to constantly monitor and nurture your search advertising process to make sure that it’s worth the effort and that it has a positive impact on your brand.

Quiz: How Does Search Advertising Work?

Ready to test what you've learned? Dive into the quiz below!

1. What are the key elements of a search ad?

2. What would a long-tail bidding strategy involve?

3. Why is it sometimes useful to bid on your own company name?

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