While the Internet has opened the field of marketing to all manner of creative advertising, pay-per-click, or paid search, advertising is one of the most singularly targeted advertising mediums in existence. It sounds simple: you write an ad, select the keywords, and then you pay each time a user clicks on your ad and is linked to your website. Extrapolate this concept to thousands of keywords, hundreds of ads, and make changes based on a variety of data factors, and you have yourself a paid search campaign. This is very easy to do, but very hard to do well.
The Basics Of Paid Search – Pay-per-click advertising ensures that your ads – otherwise known as sponsored links – will show up on the search results pages of the major search engines, including Google, Yahoo, and Bing. Sponsored links are the paid ads that show up in the top of the page as well as down the right side of the page. Organic results are listed down the main body of the page, and are chosen and ranked by the search engines’ complex algorithms. While managing sponsored link campaigns is known as paid search management, improving results in the organic rankings is known as search engine optimization.
Google, Yahoo, and Bing all take into consideration a variety of factors to determine your sponsored ad's positioning in the search results. In their respective advertising platforms, the two primary determining factors are the maximum you are willing to pay for each click (the "cost-per-click" or "CPC") and the past performance of the keyword, primarily measured by the clickthrough rate (or CTR). CTR is the percentage of people that click on your ad versus the total impressions of your ad.
Extremely Profitable Advertising – In terms of overall cost, paid search campaigns are exactly as expensive as you want them to be; you set your budget. The more you spend, the more results you will get, but this can be at the expense of higher cost-per-conversion. Ideally, you spend up until the point that the next dollar of spending would result in a negative ROI. Unfortunately, this exact point is very hard to identify. Most successful campaigns begin with a comfortable test budget, and then expand based on keyword research and analysis, custom conversion and ROI tracking, and ad copy analysis and testing, all of which provide crucial results needed to justify allocating more budget to your paid search campaigns.
Seventy percent of respondents increased paid search spend this year and nearly three quarters (seventy-two percent) planned to increase paid search spend in 2014.
Updated #s for 2014 ad spend – http://marketingland.com/digital-ad-spend-2014-iab-126020
Paid search advertising is the most revolutionary, targeted, and powerful advertising medium available. By definition, you only show ads to people who have already expressed interest in what you sell, and you only pay when they choose to learn more. It is a completely fluid marketplace.