How does Search Engine Marketing (SEM) work?

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So you’ve established the difference between SEM and SEO, and you’re ready to start on your online advertising campaign. Where should you begin? As Search Engine Optimization (SEO) returns results over the longer term, Search Engine Marketing (SEM) is a good starting point for new entrants to begin with.

One of the most common forms of SEM is Pay Per Click (PPC) advertising, which are the ads you see at the top of search engine result pages (SERPs). Unlike traditional advertising where you pay a lump sum for ad placements, the draw of PPC advertising is that you are charged only when someone clicks on your ad. Imagine serving your ad to hundreds of thousands of users and not having to pay a single cent until someone clicks on your ad!

Ready to start PPC advertising? We will use Google Adwords for the purposes of this explanation.

An Introduction

There are multiple advertisers looking to reach audiences at any one given time, and they make known their target audiences to Google by providing keywords they anticipate users will search for. Advertisers then bid on these keywords, stipulating the maximum price they are willing to pay per click for their ads to be shown to users searching for the identified keywords and its variants. When a user performs a Google search, all ads that match the search query are entered into an ad auction to determine which ads are shown to the user.

The Ad Auction

Contrary to common belief, ads that win the auction do not do so solely due to a high bid. This is so because Google takes into account other factors as ad relevance, expected clickthrough rate, and landing page experience, together with bids placed by advertisers to determine which ads win the auction. Ad relevancy In order to determine ad relevance, Google looks at how well your ad’s message relates to a user’s search query. Ensure that your ad’s message closely matches the keywords you bid for to nail this component.

Expected clickthrough rate (CTR)

Google predicts the number of people who will click on your ad based on historical data to obtain your CTR. There are three possible statuses your ad may get: below average, average, and above average. If you get a below average status, consider editing your ad’s copy to be more relevant to your top keywords.

Landing Page Experience

Landing page experience has to do with the page users land on when they click on your ad. It describes how useful and relevant your landing page is to users. Can information relating to the user’s search terms be easily found? Does your landing page lead to where your ad says it will lead?

Quality Score + Bid = Ad Rank

How does it all come together? Consider our example in this illustration: the highest bid of $5 takes the last position while the lowest bid of $3 is instead awarded the top position. This is so because ad relevancy, expected clickthrough rate, and landing page experience are aggregated, and a resulting quality score is assigned to each ad. This is computed with your bid to derive your Ad Rank, and ads with the highest Ad Rank in each auction are shown to users. Thus, a high bid alone is not a sure guarantee that your ad will be shown to users.

Sum it up

Ensure that your ad message is tailored closely to your keywords and your landing page is well-organized to allow users to easily find the information they need, allowing you to maximize your ad spend and achieve improved rankings.

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