Paid Media
6 min

The Power of Paid Search: A Guide to SEM for Startups

Soso Sazesh Vice President | Growth & Innovation

SEM (paid search engine marketing) is an extremely important (and perhaps the most effective) paid marketing channel. Advertisers can bid on exactly what potential customers are looking for via keywords that represent specific intent. For example, if a company offers online payroll software they can get in front of people searching for “best online payroll software” and have a good chance of converting those people into customers.

The opportunity to reach huge volumes of customers when they are ready to buy means a lot of competition on the paid search advertising networks – Google Ads and Bing Ads. That can be both a blessing and a curse for startups, depending on their ability to understand and manage SEM.

For startups that get it right, paid search can be one of the most effective distribution channels.

The Challenges and Advantages of Paid Search for Startups

Managing SEM for startups can be very challenging because they’re often competing with well-established, well-funded companies with well-understood unit economics – so they are disadvantaged from the get-go because they have less operating history, fewer resources, and less data to work with.

On the flip side, startups can move much faster and thus learn very quickly. They can also prioritize growth over profitability in the short-term, allowing them to better compete with established companies from an ad auction standpoint. Lastly and most importantly, they typically have better product offerings compared to established companies so they have the opportunity to steal both current and would-be customers away if they can get in front of them.

Diving Into SEM

The trick to making SEM a scalable and profitable channel for high-growth companies is not so much a trick as it is a comprehensive strategy that overcomes the challenges outlined above while exploiting the unique benefits of being a startup.

Let’s walk through the process step by step.

Define your goals

As with any marketing strategy, defining your goals upfront is critical to setting yourself up for success with SEM. Start by asking yourself what you’re trying to get out of SEM. Is it leads? Trials? Subscriptions? Transactions? This will vary based on your product and industry so spend time thinking through what your conversion funnel looks like and what key steps are important.

Once you know your conversion funnel inside and out and defined the most important touchpoints, assign a value that you are willing to pay for each step. Those values are your CPA (cost per acquisition) targets and they will determine how well you can compete against other advertisers who are trying to reach the same audiences.

Track your performance

Once you know what your conversion goals are and how much you can afford to pay for each goal, you need to make sure you can actually track these goals. If you can’t track the goals you’ve decided on, you won’t know if you’re successful or not. This happens far more often than you’d think – I’ve seen Google Ads accounts spending hundreds of thousands of dollars per month that did not have tracking properly configured.

Make sure you have conversion tracking set up correctly and save yourself an awkward board meeting. The native conversion tracking with Google Ads and Bing Ads is sufficient for most companies, but if you have a complicated conversion funnel you may need to use a more customized tracking solution as well.

Select your keywords

When it comes to choosing which keywords to add to your account, it’s typically best to start broad since you ultimately want to learn what’s working and what’s not. If you have a strong understanding of your target customer’s search behavior, a very limited budget, or very low CPA targets, it might make sense to tighten things up out of the gate.

Use Google’s Keyword Planner tool and third-party tools like SEMrush and SpyFu for keyword research. Don’t forget to bid on your competitors’ brand terms as this can be a good way to capture very high intent traffic that’s ready to convert. You cannot use other companies’ trademarks in your ad copy but bidding on their keywords and showing an ad that mentions your own brand is fair game.

SEM Account Structure

Account structure is the most important aspect of your SEM account. If you have a good account structure in place, you can see a very clear path to scale and efficiency. Building an overly simplistic account might get you up and running quickly but that’s not going to help you turn SEM into a meaningful channel.

If you plan on taking SEM seriously, it’s best to use a granular account structure that allows for the deepest level of optimization and budget allocation.

Start by mapping out the different keywords you want to use, then create overall themes for similar keywords. Each theme should have its own campaign. Within each campaign, use one-keyword ad groups to maximize control and make adding new keywords easier in the future. Duplicate this campaign structure for each relevant keyword match type so you can ensure each search query triggers the right keyword. Most companies should only ever need broad modified and exact match types.

Optimizing your paid search campaigns

The majority of your time should be spent optimizing your paid search campaigns once you have built out your account structure. As you begin to understand which keyword, ad, and landing page combinations get you the lowest CPA, you will be able to more efficiently allocate budget to the top-performing combinations and maximize their volume. Optimization is the key to scaling.

The four core focus areas for optimization are keywords (selection and match type), bids, ads, and landing pages.

Balancing Efficiency and Scale

If you are optimizing your account as efficiently as possible, you’ll be maximizing your budget by squeezing as many conversions out as possible. It takes time and data to see what CPAs can be achieved with a given budget and it requires frequent optimization to keep things dialed in, but once you have an optimization cadence down you’ll be able to iteratively test and maximize your budget.

As your budget starts to grow, you’ll inevitably hit a point where you cannot acquire additional customers at the same CPAs you were getting when your budget/account was smaller. That’s due to fairly complicated ad auction dynamics but the simple explanation is that there are only so many people you can reach who are relevant to your business. When these people “run out”, there is an added cost to find more of them, so you’ll need to determine if you can afford the added cost. This is when intelligent expansion and rigorous optimization really kick in since you are now faced with the age-old marketer’s challenge of finding more volume at the same marginal cost.

Want to learn more about how we can support your startup scale through marketing channels? Set up a time to talk to our Growth and Innovation team.

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