What Is Paid Search Marketing?

Paid search marketing is an online advertising method where brands pay for their ads to appear prominently on the search engine results page. Learn how it works in this guide.

Whether you’re a savvy business owner or a budding marketing manager, paid search marketing is a tool you need in your proverbial toolbox.

A type of pay-per-click (PPC) advertising, paid search boasts an average 200% return on ad spend (ROI).

Here’s what you need to know to get started.

(Image: Adobe Stock)

 What is paid search marketing?

Paid search marketing is a form of advertising where businesses pay to have their ads appear prominently on a search engine’s results page (SERP).

These “sponsored” results are displayed when a user enters a “keyword,” or specific phrase relevant to the brand’s product or service into the search engine.

Like other forms of PPC advertising, businesses only pay if a user clicks on their ad.

These ads appear in the search results when a user enters a search query into their browser.

 How does paid search marketing work?

Paid search ads are categorized by keywords. After a business determines which search terms are most relevant to their product or service, they build an inventory of text ads for each keyword. Then:

1. Businesses bid on the keywords they want their ad to rank for.
2. When people enter that keyword into the search engine, the ads that are most relevant, highest quality, with the highest bid appear prominently in the search results.
3. Once the user clicks on the ad, the advertiser pays the search engine.

 What are the paid search networks?

Globally, paid search advertising runs on two leading platforms, Google and Microsoft, with other more niche platforms dominating regions such as China.

As Google and Microsoft dominate in the U.S., we’ll focus on them.

(Image: Google screenshot)

Google Ads

Advertisers have the power to advertise across many networks and not just Google Search.

Google Ads (formerly Google Adwords) is the most popular paid search advertising platform in the US and across the globe. Its reach is the main reason for this. As of January 2022, Google had nearly 92% of the market share, and more than 8.5 billion searches a day are processed.

Through the Google Ads network, advertisers have the power to advertise across many networks — and not just Google Search.

Advertisers also have access to YouTube, which happens to be the world’s second most visited site, Gmail, Google Play, Google Maps, Google Shopping, and Google Display as well as Google’s Search Partners and publishers. This gives your ads incredible reach.

(Image: Bing)

Microsoft Advertising

Microsoft also uses data from LinkedIn to supercharge your B2B marketing campaigns.

While the Microsoft Advertising network has a smaller reach than Google, it still boasts a reach of 686 million unique PC users worldwide and 109 million unique PC users in the U.S. The Microsoft audience has a higher-than-average buying power, tends to be more educated, and contains more decision-makers.

These features make Microsoft Advertising perfect for high-end products and services and B2B businesses. Microsoft also uses data from LinkedIn to supercharge your B2B marketing campaigns. You can target LinkedIn profiles by company, job function, and industry.

The network serves ads on the Bing search engine, DuckDuckGo, AOL, Yahoo, and syndicated search partner sites.

(Image: Yahoo)

Yahoo Gemini

This platform offers more of a branding strategy than a conversion-focused strategy, with primarily image and video ads.

Yahoo focuses on native advertising rather than search. Ads appear on owned and operated sites as well as publishing partners. Some of these partners include ABC, ESPN, and Apple News. Yahoo Gemini reaches approximately 60+ billion global impressions monthly.

This platform offers more of a branding strategy than a conversion-focused strategy, with primarily image and video ads. The available ad formats are:

• App installs
• Video ads
• Image ads
• Carousel ads
• Moments ads
• Yahoo Mail ads

Unfortunately, you can’t just open an account and start advertising. Instead, you’ll need to reach out for more information.

 Campaign structure: How paid search ads are built

Because it is the largest and most popular ad platform, we’ll use Google Ads as our example.

First up, create a free Google Ads account.

Campaigns

Campaigns are organized by keyword themes. For example, a law firm may create a campaign based on the term “family lawyer.”

Within this campaign, we can then also create subcategories that would fall under ad groups. These ad groups may include divorce lawyers, child custody lawyers, and adoption law.

Your ad groups should be organized by keyword variations because this helps you to break down your target focus to specific products you offer.

Once you select the keywords you would like to rank for, you can create a list and include match type.

Match types come in several categories.

• Exact: These are formed by putting brackets around the keyword phrase. The keyword must be typed in word-for-word to be displayed. What to watch for
• Broad: No symbols are used with this match type. The keyword can be typed in several different variations, and your ad will have the potential to be displayed.
• Phrase: Phase match keywords are wrapped in quotation marks and the keyword can be typed in different variations but has to include all keywords in the actual query.

While Google uses the above results to match keywords to queries, there are some “gotchas” you’ll need to watch out for. These are close variants. You might see the following in your search query report.

• Exact (close variant): The keyword must be typed in word-for-word but can be misspelled.
• Broad (session-based): The algorithm takes into account other keywords searched from the user’s search session.
• Phrase (close variant): The keyword must be entered in a specific order, but the search phrase may include misspellings.

Another type of keyword to consider using is negative keywords.

These can be used to remove unqualified traffic from clicking on your ads.

For example, if a user searches for “alimony lawyer,” but this is not a service you offer, you can add it to your negative keywords list.

Audience

Another part of your Google Ads account structure to consider is your audiences. You can build audiences around specific actions that visitors take on your website.

For example, you can create segments based on specific page views, how much time a user has spent on your site, and more.

You can also bid on your audiences based on relevance. Google Ads gives you hundreds of different targeting options for audiences so you can create audiences based on what best suits the needs of your business and what is most likely to drive relevant traffic.

Bonus: Other campaign types

With PPC, you aren’t limited to the search engine results page. Within the Google Ads platform, you can build the following campaigns:

• Search
• Display
• Video
• Shopping
• Mobile apps

Choosing the right campaign type is an essential first step to building an effective long-term ad strategy.

Luckily, the structure of Microsoft Advertising is essentially the same as Google Ads. In fact, the platforms are so close, Microsoft allows you to import campaigns from Google Ads, and has essentially the same ad types.

They call their “display ads” multimedia ads, and even offer video ads (and ad extensions) now.

To learn more about each of the Google Ads types, check out our guide. 

 Important paid search terms

Here are some of the most common terms you will see pop up in relation to paid search.

Quality Score

In recent years, automated bidding has improved and consistently delivered good results for many advertisers. As such, it’s a popular bidding strategy for many businesses.

Google’s Quality Score ties into bidding automation. Essentially, it is a measure of how relevant a keyword is to your ad based on past ad auctions.

As soon as Google has collected enough data, keywords on your Google Ads account are assigned a QS number between one and 10, with 10 as the highest.

Your QS is not used by Google for ranking your ads, but it is meant as a guide to the advertiser to help you target the most relevant terms for your ads.

The scoring system helps you understand how relevant your keywords are to your ads, how likely a user is to click these ads, and if your landing pages are appropriate based on your keywords and ad copy.

As a user of paid search, you should care about your QS because it is a factor that helps to determine the following:

• Which ads can enter the ad auction
• Ad rank
• What your average cost per click will be

Click-through rate (CTR)

CTR is another common term you will start to see a lot of. In simple terms, CTR is the percentage of impressions that result in a click.

To break that down, if 1,000 people saw your ad and 10 of them clicked on it, then you have a CTR of 1%.

CTR can be another helpful metric for establishing how relevant search engine users find your ad to be.

Cost-per-click (CPC)

CPC stands for cost per click. It measures the number of clicks you have on an ad. We often roll these statistics up by ad group or campaign to understand how they contribute to cost per acquisition and budget usage.

Cost-per-mille (CPM)

CPM stands for cost per mille (thousand). This type of bidding model tracks the number of people who see your ad (impressions) regardless of whether they click on it or not.

CPM models usually work best for campaigns that focus on building brand awareness rather than generating sales.

Call to action (CTA)

A call to action is a phrase that tells your audience what you’d like them to do. We see them every day. Some examples are “get a quote,” “call now,” and “shop now.” A CTA is important in all types of ads from text ads to social media ads.

Conversion rate (CR)

Conversion rate measures how many clicks become conversions. It’s calculated by taking the number of conversions and dividing it by the total number of ad clicks. Typically, this KPI is used to evaluate the success or failure of ad campaigns.

Return on ad spend (ROAS)

If you’re an ecommerce advertiser trying to get your products in front of potential customers, this term will be important to you. ROAS is the metric that allows you to calculate the revenue you’ve made from your ad spend. You can find it by dividing your ad revenue by how much you’ve spent on your ads.

 Advanced paid search marketing tips and tools

Once you get the hang of the platforms and terminology, you’ll want to grow and scale your campaigns. You can automate, analyze, optimize, and scale in numerous ways.

Scaling your account

In the beginning, it makes sense to start out small. You do your keyword research, choose the ones with the most traffic, and begin building your campaign. You allocate a budget to test and set it live. As you see success, you’ll want to scale it. This involves adding campaigns, keywords, and budgets.

We asked one of our PPC experts, Katherine Kiraly, for advice on scaling accounts.

“If you’re ready to scale your account by increasing your advertising budget, you can check the bid simulator for your campaign and see what budget tiers you can jump into and the estimated conversions you will get for increasing to those tiers,” she explains.

“Always look at historical search volume (so you aren’t increasing spending in lower search volume months) and past performance to determine the best times to increase your spending.”

Kiraly adds that you always want to see how much Impression Share you are currently receiving. If it’s less than 10%, you have plenty of room to increase budgets.

Lastly, “Be sure to keep an eye on the search query report for irrelevant terms.”

Optimization tools

Optimization tools help you to be more efficient while finding optimizations that might involve advanced Excel skills for analysis.

For instance, it could take you hours to find the duplicate search terms triggering ads across several ad groups and then add negative keywords to reduce the overlap.

That’s where tools like our ConversionIQ will help you quickly find the weak parts of your campaigns and help you improve them.

Automation and efficiency

You’ll quickly learn that automation and efficiency are important to maintaining your campaign. Automated rules and scripts are built-in tools that Google and Microsoft both offer to help you work smarter and not harder.

For example,  you can turn campaigns off when they hit budget or send yourself an alert when your ads get disapproved.

According to Kiraly, “You can use automated rules to automatically update your budgets for certain time frames (like a Black Friday sale that starts at midnight Thursday night) or to up your bids when you fall off the first page of results. You can also set up automated rules to email you an alert when certain events.”

She explains scripts can help you automate changes to your account. “You can upload several scripts to your account to automatically make changes on your behalf or download specific data (we lean on the N-grams script a lot here at Hawk). If you Google ‘Google Ads Scripts,’ you can find several and learn what they do and how to implement them.”

Reporting tools

At the end of the day, most of us have to report our ads’ progress to clients or stakeholders within our organization. You can create a PowerPoint presentation or use a spreadsheet, but reporting tools present your data visually.

Your results come to life when you add charts, graphs, pie charts, and maps. You can tell a story rather than report a series of numbers that may mean little to a non-marketer.

“For beginners and small businesses, I recommend free reporting tools within the Google Ads platform,” Kiraly says.

“There are several premade reports that pull directly from your Google Ads data in the ‘Reports’ dropdown on the top right. You can also use your Google Analytics data to pull reports.”

Another free and easy-to-use reporting tool is Google Data Studio (now called Looker Studio).

Kiraly says, “You can connect your Google Ads and Analytics accounts to this platform and build out several reports. It’s a little more intermediate since you need to know how to use the platform to build your reports, but they do have a few templates to work from.”

For experts and larger companies with a robust CRM, Kiraly recommends incorporating reports made in Salesforce and HubSpot into a spreadsheet and then import that spreadsheet data into Google Data Studio (Looker Studio).

 What are the benefits of a paid search campaign?

The benefits of a paid search campaign are numerous. One major benefit of paid search ads is that your business can start to appear at the top of the search engine results page (SERPs).

1. Appear above organic search results

Being at the top of the SERPs for relevant keywords will drive more website traffic and lead to more conversions. Yes, it’s possible to move up in the rankings on the SERPs by improving your organic search strategy, but those efforts need longer to see results and are not guaranteed.

2. More control

Another benefit is the ability to control your message. SEO allows you to rank for your high-value keywords, but you don’t have control over precisely what message shows for each keyword. Paid search lets you bridge that gap. You can list your current promos, key benefits, and more. You control everything from keywords to ad copy to a landing page.

3. Gain increased visibility

It can be difficult to rank organically for the most competitive keywords. Paid search can be coupled with your SEO strategy to ensure you’re seen for your most essential keywords.

4. Capture micro-moments

When people are on-the-go or navigating their everyday life, they experience needs that they want to be met in the moment. For instance, they might decide they want to order food at mealtime.

While cooking, they might realize the food processor is broken and want to order a new one. Capturing these micro-moments is essential to winning more business, and paid ads can ensure you’re there.

5. Target a specific audience

One of the unique parts of PPC is that you can guarantee you’ll reach your target audience. You can choose to show your ads to searchers who are in-market for a new roof or a luxury vacation.

You can reach just about anyone using the power of in-market, affinity, and retargeting audiences coupled with advanced demographics and keywords.

 What is paid search marketing vs. SEM?

PAs we just explained, paid search is advertising on the two major search engines: Google and Bing. (Though paid search can appear on other platforms, such as Facebook.)

SEM, or search engine marketing, encompasses all search engine-related marketing tactics, though there’s no one single definition. At HawkSEM, we consider search engine optimization (SEO) part of SEM as well.

HubSpot defines SEM as “using paid advertising to ensure that your business’s products or services are visible in search engine results pages (SERPs). When a user types in a certain keyword, SEM enables your business to appear as a result for that search query.”

The most common types of PPC ads come from Google, as it has an immense network. According to Google, its Display Network penetrates 90% of internet users. But there are also other platforms to consider when setting your paid search marketing strategy.

The takeaway 

There you have it! You have now learned all the fundamentals of paid search management and marketing.

From understanding what paid search is to how to structure your Google Ad account, you now have a good foundation of knowledge to continue improving your paid search campaigns.

Looking to up your game when it comes to paid search? We’re here to help.

This article has been updated and was originally published in April 2023.