New to Paid search? At 54 Digital we believe in a culture of sharing and educating, so we’ve created this paid search 101 guide.

It’s a long read so we decided to split into 3 parts. They will cover the very basics from what makes up Google Search results, the dynamics behind bidding through to match types and ad copy.

This guide is designed for anyone either new to paid search or who would like a bit more info on the basics

We’ll keep creating paid search content and guides and start getting more technical as we go.

Overview Of Series Of Posts

In this Introduction To Paid Search we are going to cover;

• Summary of how paid search marketing works
• Why would you run paid search marketing
• A quick at the difference between paid and organic listings
• How you are charged/what you pay for when running a paid search campaign
• Some dynamics of how the amount you pay per click is calculated
• How you show your ads to the right people, including an overview on keyword match types and the difference between them
• Writing relevant and high quality ad copy
• An example of account structure and again why match types are important
• A brief look at Google shopping and the differences with text ads
• And finally, a look at some strategies to help you get the most out of advertising on Google or Bing

For the purpose of this guide, we’ll reference advertising on Google but advertising on Bing follows in its footsteps.

The guide covers text ads and Google Shopping ads on the search results page.

2 points of terminology before we begin:

Search Query – The text that a user types into Google or Bing when searching

Keyword – Static text that you add into your Adwords/Bing account to match your adverts to the users search queries

What Is Paid Search And How Does It Work?

Paid Search, also know as pay-per-click (PPC) is a way to advertise your products and services on Google’s search engine results page.

Think of it as a store front where you can reach potential customers. Instead of having a physical store where the customer must walk past, your store front is located at http://google.com

And, you can put your product in front of those customers without leaving your seat.

That is the key why advertisers use paid search, and why it can work. Millions of potential customers, all in one place.

What does it look like?

Google’s search results page (SERP) is divided into sections, with different types of content in different areas.

The paid search adverts, highlighted in red in the image, typically appear above the organic listings, highlighted in the image with a green box.

The organic listings do not form part of paid search and as such don’t cost when a user clicks.

However, with the paid listings, every time a user clicks on one of the adverts highlighted in the red box, it costs that advertiser a certain amount of money. This cost is known as the CPC (cost-per-click).

That money is paid directly to Google, and it’s a large part of how Google generates its revenue.

The good part is that each one of those clicks brings a potential customer to your site, and you can develop a strategy to minimise wastage and maximise efficiency.

Again, think of the search results as a store front, where just about any advertiser can put their shop in-front of relevant customers.

What are you charged for?

Advertisers are only charged when a user clicks on an advert.

When a user searches for a product or service, several adverts, as in the example above are usually displayed.

This is what is called an ad impression, each one of the adverts in the screenshot will receive one ad impression every time their advert is shown to a user. “Impressions” or “ad impressions” do not cost.

When your advert is only displayed, there is no change by Google.

The cost only occurs when a user clicks on an advert.

How much does a single click cost?

Competition

This varies massively between different industries, different devices, different times of day and a multitude of other factors.

Google uses a real-time auction based system to determine the cost of a click.

At the most basic level, with an auction system, the more bidders you have, theoretically the more expensive something can become.

Looking at the example above again, there are 6 adverts shown 6 different advertisers.

As you can imagine, there aren’t only 6 companies which are selling Sony TV’s.

The cost per click on your advert, in part, will be determined by how many other advertisers are trying to occupy that space in the paid search results.

Limited advertising space + lots of companies trying to show their products (may)= competition.

Increased competition in this case can lead to increased prices.

This is only one very basic element and just one thing to consider. A much more important factor is Ad Rank and the way Google determines relevancy.

There are lots and lots of clever strategies which you can employ to target the right user, at the right time to optimise the cost that you pay per click and your performance. You don’t have to try and show your advert for every single search.

And that is one of the beauties about paid search. Because it is so data driven, you can see the cost of individual keywords, and devices, and hours of day, and then the subsequent revenue/leads generated from that cost. You can optimise your paid search account in an extremely granular way to take advantage because we get such granular insights.

This is where the advantage comes in, creating a clever but uncomplex strategy to optimise for the peaks and troughs.

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RELEVANCY And QUALITY.

Relevancy and quality are things which Google takes very seriously. So much so that a click may be cheaper for an advertiser who appears higher than another advertiser, if Google determines that the relevancy of their ad, and quality of the experience is greater than other advertisers.

Relevancy and Quality are something which Google classifies as Ad Rank. The better your ad rank, the greater the chance your adverts have to show, and possibly show in higher positions.

Ad Rank is a background calculation by Google (which you don’t fully get a view of) and at a basic level takes the quality and relevance of your advert to the search result, and the subsequent landing page that a user is directed to.

This relevancy factor is known as quality score, and every keyword you chose to show your adverts against has its own quality score, related directly to your account.

On a rank of 1-10. The higher the quality score, theoretically the higher your ad rank.

Ad rank is a calculation of how much you are willing to pay per click, multiplied by your quality score.

Ad rank/quality score, among other things takes into account;

• How much you are willing to pay per click on an advert
• How relevant the advert displayed is to the users search query
• Expected click through rate (see note on click through rate below *)
• The impact of other extensions such as sitelinks and call-out extensions (see note below)
• Landing page performance and relevancy

The better your ad rank, the better your foundation for performing against the competition.

* Clickthrough rate is a standard calculation by Google based on your performance. It takes the amount of clicks your advert receives, divided by the amount of times your advert was shown. If 100 people see you ad, and 10 of those people click your ad, you have a click through rate of 10%.

Why is Ad Rank so important?

If you think about relevancy and quality, it makes total sense. By delivering highly relevant adverts to a user’s search query, this results in a better experience for the user (they don’t see irrelevant things) and in turn results in a better perception of Google, i.e. delivering relevant results.

Just as important, it also delivers benefits to the advertisers too, the more relevant your ad, then theoretically the more chance you have for it to be displayed, and the higher chance you have for a user to click on it.

This is a very simplistic view on the price you might pay per ad click and there are a lot more factors involved, a lot of which we will probably never know as they are part of Google’s algorithms.

But from a very basic point of view, just try and think that the more relevant and quality experience you can deliver when a user searches, technically the better it will be for all concerned including your performance.

Read more in Part 2 and Part 3.