We’ve written articles on pay-per-click advertising but we wanted to know how search advertising works on a deeper level so we did a dive. First, let’s define search advertising. We all search for things every day on Google. Do you know those sponsored ads that are placed at the top of your search results? Those are search ads. All search engines offer search advertising for advertisers. You’re probably wondering, “What other search engines are there besides Google?” Well, there are a few other than Google but they take the number one spot with 77.43% of the market. After that you have something called Baidu at 8.13%, Microsoft Bing with 7.31%, Yahoo with 5.6%, and lastly, Ask at a whopping 0.13%. As you can see they really dominate the market. So, how do these ads work? Let’s use Google since they’re the dominant search engine out there. They use a second-price auction system. This system uses an auction for advertisers to beat out others in order to get a higher spot on the search list. However, that is not the only factor. They also use the advertiser’s ad rank to keep out poor-quality paid ads that link to terrible landing pages. Not every Joe Shmo can just bid on search engine ranks. Here’s how it works:
1. Advertisers create ads that bid on keywords:
a. Let’s say you’re an ad agency like ours that focuses on user-generated content advertising. You might bid on keywords like UGC advertising agency, UGC ad agency, etc.
b. The agency will place their max bid that they’re willing to pay for the ad
2. Someone searches: keywords matter so choose wisely what your agency will use
3. Google looks for a match: this is called keyword matching. This is where Google searches to see if others in your industry are bidding on that word(s).
4. The auction starts: for each account bidding on keywords, Google will choose one keyword for each account to enter the auction.
The winners are not necessarily the highest bidders as we stated above. It will depend on the quality score of relevance, expected click-through rate, and user experience. Relevance is how relevant your ad is to the search intention. CTR is how likely your ad is to get clicked on if shown. UX is how relevant your landing page is to your ad as well as the usefulness of the experience to the user. Second, is the ad rank we talked about above. It is simply the max bid plus the quality score. Lastly, the cost per click is considered. This is determined by your ad rank of the ad below yours divided by your quality score plus $0.1.
Search ads can be a great way to get eyes on your business. Google ads have an ROI of 800% and receive 65% of clicks for buying keywords vs only 35% for organic search results. Since Google is the most trusted search engine in the world their credibility is high. Therefore, any sponsored ad will be viewed as credible. These search ads are incredibly effective and cost-efficient. They can help drive sales and traffic to your site.
