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Understanding Paid Search

Understanding Paid Search

Google and Bing both allow advertisers to take advantage of paid search, wherein they show advertisements on the search engine result pages. Essentially, you set up a listing and pay-per-click for each person who clicks on that listing. Marketers have the option to decide on the bid amountwhat keywords they want the ad to show for, and what location they’ prefer to show the ad in. There are many other settings. However, these are just the basics. A combination of factors, such as the quality of the ad and the bid amount, will determine which paid advertisement shows in any given relevant query.

Paid Search, in the context of our digital marketing portfolio, is, for the most part, is a direct response medium. In other words, you are usually running campaigns to elicit a response, not spread awareness. Paid search is built to capitalize on search intent. When someone conducts a search via a search engine, they are usually looking for entertainment, information, product, service, or place.

Google Ads Auction System

Google Ads is powered by an auction bidding market. This system can be a bit difficult to grasp. Many elements are working together in real-time when it comes to serving ads. This makes it difficult to isolate each component and consistently point to a single cause and effect relationship.

For example, the factors that are taken into account IF your ad is shown are separate from the factors that determine how your ad is ranked. There are also distinct factors that influence how often your ad is shown as well. We will break down each component individually and then explain how they work together. All of these concepts require a separate understanding that, in the end, will come together to produce a good picture of how the Google search ecosystem functions in real-time.

Your bidthe quality of the ads, and the expected impact of your ads determine if your ads will be shown on the search engine results page.

You can think of Google’s ad auction system as a live auction. The auction starts with a fast-talking auctioneer placing an up for sale with a starting price and begins calling for bids. In Google’s Ad auction, the items being bid on are the placement of display ads on the display networks and search ads for searches conducted on Google.com. As an advertiser, you are a part of the audience holding up the paddles to bid the placement of your ad on either the display or the search network.

Now that your ad is showing up, how often it shows up, it’s position on the page and how much it costs depend on many different factors. These factors include your bid and budget relative to your competitionthe quality of the ads in context of the user’s search query, and what Google calls “the expected impact of your ads.”

Your bid is the maximum amount of money you are willing to pay for a click on your ad. Your bid is also known as your max CPC bid. “CPC” stands for cost-per-click. Going back to our auction bidding illustration, your max CPC should reflect how much you think that particular placement corresponding to the user’s search query is worth to you.

You should also keep in mind that other advertisers, your competitors, have to make the same decision. The amount you actually pay per click is your CPC, as seen within your Google Ads account. This is because the Google Ads auction is what we refer to as a “second-price auction system.” This means that the winner of the auction pays the second-highest price plus a penny more to beat the bid of the ad in the second position.

Unlike most auctions, there are additional factors that could help you outmaneuver your competitors. Your bid is not everything. Ad quality is one other factor. Google prides itself on showing people exactly what they want to see when they conduct a search. This differentiates them from lesser search engines such as Bing or Yahoo. Therefore, there is an emphasis on quality results that directly addresses user intent, helping them to find what they need when they need it and where they need it.

With this in mind, Google incentivizes quality ads by giving them a discount. But this is not referring to the quality of grammar of your ad. Ad quality consists of your expected click-through rate, your ad’s relevance to the user’s search query, and the user’s landing page experience. This ecosystem of quality is represented in the quality score metric. Although there is a quality score metric, this metric is a crucial indicator of past performance and is not used as apart of future auction calculations. Your ad quality is accessed each and every time the ad enters the auction. If your ads are of low quality score, you have to pay a lot more for ad placement.

The last factor is the what we call the expected impact of your ad. This is Google’s measurement of your ad’s impact in the context of ad extensions, and other ad formats such as text, responsive, call-only, dynamic or shopping ads. Ad extensions are extensions of your ad in the form of additional text that give users more information about your products, services, or offerings. Some extensions include site links, callout, and location extensions. The beauty of ad extensions is that they typically increase your ad’s click-through-rate. An ads click-through rate is your ads clicks divided by its impressions. The metric is a percentage of how many people who see your ad act click on your ad. The expected impact of a call ad may be higher for a user conducting a search for a nearby restaurant and has shown a propensity to make phone calls in the past.

Your ad’s bid, quality score, and the expected impact of your ad are the key factors that determine how your ad will fair within Google’s suction system. Most industry experts like to talk of Ad Rank as a separate concept when it comes to an understanding of the auction system. 

This confuses things as Ad Rank uses the same fundamental factors to rank your ad. The only difference is that there are a few more factors that have an impact on how your ads are ranked. These factors include the competitiveness of the auction, the context of the person’s search, i.e., device, time, location, interest and intent, and the nature of the search engine results page. Remember the user searching for a nearby restaurant? The nature of such a search query on their phone near a popular restaurant are signals the user is ready to make a decision.

Components of Google Ads

Google Ad campaigns are the highest level in the hierarchy of your account. Budgets, locations, and bidding strategies are determined at the campaign level. There are a few other ways marketers divide up their campaigns. These include dividing up campaigns by products and services, locations, major keyword groups, or by brand and non-brand campaigns. There are advantages and disadvantages to each campaign strategy.

My recommendation is to align your campaign strategy with a combination of your financial and marketing goals. For example, instead of aligning campaigns along the lines of simple product offerings, it may be a good idea to align campaigns to products and serves that need to generate a specific CPA or ROAS. This doesn’t mean you shouldn’t align campaigns to products or services, but you always want to keep in mind the costs and revenue of your campaigns. The major campaign bidding strategies include: Target CPA, Target ROAS, maximize clicks, maximize conversions, maximize conversion value, target impression share, and manual CPC. We will discuss this later.

Lastly, separating your campaigns by brand, non-brand, and competitor terms is an easy way to make sure you are maximizing your budget. Your branded campaigns will always perform differently from your non-brand campaigns. Targeting competitor terms is an expensive venture. Remember, when discussed ad quality within Google’s Ad auction? Generally speaking, ad quality is a reflection on how your keywords, ads, and landing pages communicate a consistent message. In most cases, you can not and should not display competitor brand messaging within your ads. Therefore, if you target competitor terms messaging your products and services with your ads, your message will not be consistent, thereby decreasing your quality scores and driving up your CPC’s.

Non-brand campaigns will typically have increased competition and will require added management from budget adjustments to ad scheduling. Budget allocation becomes much more efficient when your campaigns are structured this way.

One new way of structuring campaigns delves deep into keyword match types. With Google’s recent announcement that the exact match keyword type will no longer be as “exact” as it previously was, broad match modified keywords are becoming the rave of paid search. Because broad match modified keywords spend significantly more than exact match keywords, this may be a setup to test. However, accounts targeting a large number of keywords will prove to be a challenge to manage when using this strategy.

Ad Groups
A more proper name for ad groups should be keyword groups. Ad groups should be organized by keyword themes. The ads in each ad group should directly correlate with keywords within each ad group. Best practices of ad groups are to have no more than 10 ad groups per campaign, have no more than 20 keywords per ad group, and to have 2 to 3 ads per ad group. By doing this, you can more easily identify keyword sets that aren’t being engaged with by your audience as well and make the necessary adjustments to improve in these areas.

Having your keywords organized into tightly knit ad groups will also help improve the Quality Score of your keywords. You’ll want your ad copy to be as closely related to your keywords as possible to generate high click-through-rates and enhance the ad relevance of your creative. When keywords are in tight clusters, your ad copy will reflect a highly relevant message to your audience and boost the performance of your campaigns. On the topic of Quality Score, there is another method of setting up your campaigns at the ad group level.

One popular ad group strategy is the use of Single Keyword Ad Groups. SKAG’s can be extremely helpful in situations in-which keywords are in hyper-competitive ad auctions, or their average cost-per-click is extraneously high. In these circumstances, Quality Score can pay huge dividends to the amount you pay per click and pay per acquisition.

When each keyword is in its ad group, your ad group will (at least it should) contain ad copy that has the keywords directly placed into it. Matching ad copy to your keywords improves CTR (try resisting clicking on an ad that has what you searched on Google displayed right in front of you) because your copy will be highly relevant.

It is important to note that this type of structure does require added maintenance in the long run. Each time a new keyword is added to a campaign, a new ad group and set of ads must be created as opposed to bucketing new keywords into an ad group theme in the first strategy mentioned. While some extra hours may be put in down the road, benefits will be reaped with a strong performance.

Every ad consists of several components, the headline text, description text, a URL, and ad extensions. Google will usually only optimize 2-3 ads per ad group unless you are rotating your ads evenly…which is not recommended. Keeping 2-3 ads per ad group also allows you to test different variations of your copy to see what resonates best with your target audience.

As of 2019, Google has introduced dynamic and responsive ads into the mix. I have just these ads with shinning success. Responsive ads work by allowing you to create an ad by giving Google numerous headlines and description text choices. Google ads test various combinations of these headlines and description text learning over time, which combination works best.

Dynamic ads use your website content to dynamically generate headlines and landing pages based on the user’s search query. I have seen great results with these ads as well. Over 14% of searches conducted on Google’s search engines are new. Dynamic ads fill in the gaps by serving highly relevant, dynamic ads to those users. It’s a good idea to make sure your website is well developed with good architecture before running dynamic ads.

Keywords and Search Queries
Paid search campaigns are all about your keywords to the user’s search queries. Queries are the words typed into the search box, whereas keywords are what marketers use to target consumers based on what they’re searching for. When you’re setting up a paid search campaign, you can control how closely you want to match search queries to your keywords. Each keyword has a max CPC, match type, and quality score associated with it.

Landing Pages
One huge component of paid search is your landing pages, the destination where each ad will direct the searcher. You should always make sure that each ad leads to an extremely relevant landing page. Your landing page should reflect not only the keywords you’re bidding on within that ad group but also the ad text displayed on the search engine results page. Landing page relevancy and optimization are critical to see success with paid search.

A lot of advertisers direct paid search traffic to there website’s homepage. This may not be the optimum experience, especially if you have specific conversion goals. You’ll want to get into the habit of always being very intentional about where you send online traffic. The more targeted you become, the more effective your digital marketing efforts will be. The best practice is the create specific landing pages that correlate with particular keywords and ads, usually in a particular ad group.

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