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Paid Search: Is It Right For Your Business?

By Townes Haas   |    May 30, 2014   |    1:40 PM

What Is Paid Search and How Can It Help Your Business

Paid search goes by a number of different names and acronyms, including cost-per-click (CPC) and pay-per-click (PPC) advertising. The reason for these terms is that most ads are sold on a CPC or PPC basis. While many business people have heard these terms, they still may not know exactly what PPC is and how they can leverage it for business.

What is Paid Search?

Search Engine Land defines paid search as “the process of gaining traffic by purchasing ads on search engines”. Basically, any time that an ad is shown on a search engine results page (SERP) or clicked, the advertiser has to pay.

There are two main ways to pay for paid search: CPC and cost-per-impression (CPM). With CPC, businesses only pay when the ad is clicked upon. With CPM, advertisers pay the search engine for every 1,000 times that the ad appears in the SERPS. Users don’t have to click the ad for the advertiser to be charged. For the most part, CPM is the best for gaining impressions and building brand awareness while CPC is the best for driving conversions or sales.

Paid search can be run on any of the major search engines, including Google (Google Search Network or Google Display Network), Bing and Yahoo.

How Paid Search Works

PPC is kind of like eBay. Advertisers provide their max bid (total amount their willing to pay for 1,000 impressions or clicks) on a particular search term, i.e. keywords like “Philadelphia dentist” or “cork wood flooring”. This max bid can either be handled manually or automatically. For example, businesses can allow Google AdWords to choose the bid amounts for CPC as long as it stays within their budget.

Just like with eBay, the advertiser with the highest bid “wins” the top spot on the SERPs. Other “next highest” bids will be listed under the top bidder. Generally, the SERPs will show five or fewer ads at the top of the organic results and then four or five ads on the side.

What Businesses Should Use Paid Search?

Any business can experiment with paid search, but certain types of businesses will always see more value from PPC over others. WordStream recommends that the following types of businesses would receive the most benefit from PPC:

  • High Customer Lifetime Values, i.e. universities, cable/Internet providers, dentists, doctors and utilities
  • High Margins on a Single Purchase, i.e. computer equipment, appliances, lawsuits, cars, etc.
  • Hard-to-find Products
  • Retailers with Large Inventory
  • Seasonal or Event-based Products/Services, i.e. florists, costumes, wedding registries, etc.

What Are the Benefits?

According to research by Bunnyfoot, 40% of consumers have no idea that Google AdWords listings were advertisings. Basically, they didn’t notice the difference between the paid and organic search results. However, over 80% of users clicked these paid listings because they appeared before the organic results.

PPC is the fastest way to get a company to the top of the SERPs for certain keywords if you’re willing to pay. It’s also a great way to drive immediate and consistent traffic to your website, increase overall reach via impressions, start building brand awareness and increase conversions and sales.

With targeted ads, advertisers can direct their ads to their target audience by only running ads in certain geographic areas or to people with certain interests (known as contextual targeting).

Additionally, these ads are trackable, allowing advertisers to show ROI for digital marketing efforts.

What Are the Potential Risks?

While PPC can be relatively inexpensive, the cost of PPC has actually gone up over the years. This means that if a business is not tightly controlling their budget, then they can quickly blow through it. Plus, advertisers need to pay attention to keywords. If their keywords are too broad, they may show up on SERPs for keywords that are similar, but have nothing to do with their actual ad. For example, someone using the search term “Cherokee” may actually be looking for the Cherokee Nation, but may still get ads for Jeep Grand Cherokee.

The major issue with PPC is fraud. This can come in the form of spam bots or even unscrupulous website owners that get paid for how often the ads on their sites are clicked. The latter may just keep clicking the ad to get some extra money. If an advertiser has suspicious activity from a particular website (i.e. a lot of clicks and no conversions or high bounce rate), they should blacklist the site.

PPC is an effective way to increase brand awareness, site traffic and conversions. It is recommended that businesses pay close attention to their budgets and always have a cap on overall and bid spend.