Heard about paid advertising and think it might be useful for your business, but not sure how to dive in? This article is for you. We break down the two primary types of paid online advertising and define some of the most common terms you need to know to get started. Read this post and you’ll be speaking fluent ad-speak in no time.
The realm of paid online advertising can be an intimidating one to enter if you don’t know what you’re getting into. The different types of paid ads, the payment structures, the bidding process...it can all seem like another language to someone who doesn’t speak the lingo.
There are two basic types of digital paid advertising: search advertising and display advertising. Let’s define those terms first, and then we can start diving deeper.
Also known as banner ads, display ads are the visual ads you see on websites all over the internet. They come in different shapes and sizes, but common ones are the square box or the thinner vertical or horizontal rectangle. Display ads are best used for building brand awareness and promoting products for ecommerce. They populate in designated ad spaces that the website host has set up, and are filled by ad networks through a CPM or CPC bidding process (we’ll fill you in on what that means in a minute).
Search ads are the results that show up on the top of the page when you search for something. They’re the results that say “Ad” next to them. Google uses its famed algorithm to show your ads to users searching within a defined geographic scope for your target keywords. They are formatted just like a normal search result, but advertisers have paid for the opportunity to appear at the top.
Okay, now let’s define some additional terms that will help you really start to wrap your head around paid online advertising and start speaking the language.
Search engine marketing (SEM) is an umbrella term that covers the paid search and display advertising powered by search engines. It complements the organic (or unpaid) efforts of search engine optimization (SEO).
An ad network is a third party company that acts as a liaison between publishers and advertisers. The ad network secures ad space on websites that want to host advertisements, then sells and manages ad placements to advertisers. The most prominent ad network is Google AdWords, but there are hundreds out there. Some specialize in particular industries, have traffic requirements for publishers, or operate as an exclusive membership network. Social media networks serve as their own ad networks nowadays.
Google AdWords is Google’s paid online advertising platform. Through AdWords, you can create, customize, and manage digital ad campaigns, using keywords and the AdWords targeting tools to show your ads to the right potential customers. One of the best features of AdWords is that there are no spending minimums or traffic requirements in order to participate. Anyone can advertise through AdWords.
Social Media Ads:
AdWords is the primary ad network for display and search ads, but the realm of paid advertising is expanding ever more into social media. In 2016, Facebook made $26.2 billion in ad revenue and Instagram is growing steady with $2.81 billion (10% of Facebook’s global ad revenue). Social media networks tend to specialize in CPC or CPM display ads (defined below!), with video performing especially well.
Ad placements through AdWords (both display and search ads) operate on a bidding system. Essentially, every time Google has an ad space available, it runs an instantaneous auction. Placements are decided based on quality, competition, and bidding. When you set up a new campaign, your ads will receive a quality score based on the relevance of your targeted keywords to your ad content as well as the landing page your ads link to. Higher quality scores will help you outrank competitors with comparable bids and get the most of your budget.
Your bidding strategy refers to whether you want to focus your campaign on earning clicks, impressions, or conversions (aka CPC, CPM, or CPCon).
The max bid is the most you’re willing to pay per click or impression when ad space “goes to auction.” You will never be charged more than this amount for a single bid, and you will often pay less. However, if your bid is too low for a competitive space, you will often be out-bid and may have trouble securing placements.
Your budget is the maximum amount of money that you’re willing to spend on the campaign. Once the campaign goes live, it will run until your budget caps out (never spending more than your max bid on a single impression or click). So if your max bid was $2 and your budget was $5000, you could buy at least 2500 clicks or impressions depending on how expensive your search time ends up being. Setting budgets allows you to control your costs.
PPC stands for pay per click. The cost for a PPC campaign is calculated per click generated, as opposed to per impression. It is sometimes used interchangeably with CPC, but PPC more specifically refers to the pricing model of CPC ads.
CPC stands for cost per click. In a CPC campaign, you pay per click your ad receives, regardless of how many times it was viewed. The lower your CPC, the cheaper each click was to gain and the better your return on investment. CPC ads are ideal for driving traffic to your site.
The alternative to CPC is CPM, or cost per thousand impressions. Impressions are the number of times your ad has been viewed, regardless of whether viewers click on it or not. For a CPM ad, you pay based on the number of times your ad is shown, not how many clicks they receive. CPM ads are a good choice if you want to increase brand awareness, but aren’t as effective at driving traffic.
Search terms using only one or two words. For example, “Minneapolis restaurants.” Short-tail keywords have a larger volume of searches and generate less specific results. Leads gained from AdWords campaigns created around short-tail keywords are likely to be less qualified because the search term was too broad.
The longer, more specific keywords that people use to search for solutions online. For example, “Minneapolis vegetarian restaurants that deliver.” Long-tail keywords produce more specific results and are less competitive. When you purchase long-tail keywords for an Adwords campaign, the search volume may be smaller, but you will likely see a lower cost per click and higher click-through rates from more qualified leads.
Note: Understanding the difference between long- and short-tail keywords will help you make informed decisions about which keywords to use in your campaigns.
Geotargeting targets your ads based on geographic information, serving your ads to internet users in a particular city, state, or region.
Hopefully you understand paid online advertising a little bit better now than you did when you clicked on this blog post. If you want to learn even more about paid advertising, we recommend checking out Google’s AdWords Glossary.
Or if you’d feel more comfortable handing the whole paid advertising thing over to an expert, you can contact us to schedule a free digital marketing assessment.