Introduction to Paid Search

"Paid Search", or paying search engines for premium placement, can be an effective component in an online marketing strategy. According to the Search Engine Marketing Professional Organization (SEMPO), advertisers in the U.S. and Canada spent $5.75 billion on Search Engine Marketing (SEM) in 2005, with paid search placement accounting for $4.7 billion (83%).

How paid search placements work

The most common business model for paying for search placements is the "pay-per-click" (PPC) or "cost-per-click" (CPC) model, in which an advertiser pays a search engine or network each time one of the advertiser's links is clicked.

The price paid for each click is typically determined by an auction process where advertisers bid the amount they are willing to pay per click for placement on the search results page. The top position is generally given to the highest bidder (although Google has an algorithm which sometimes overrides this based upon click-through rates, with higher clickth-rough rates pushing the ad's position up).

Selecting a paid search vendor

When selecting a paid search provider, there are several factors which you should take into account:

• Business model -- do they charge on a pay-per-click basis, or some other basis?
• Budget -- do they have a program suitable for your budget? While many companies now have self-serve interfaces which allow for small-budget campaigns, some providers still require minimum business levels to participate in their network.
• Pricing -- what do they charge per click for the keywords you desire?
• Traffic quantity -- can they generate the amount of traffic you desire at your target cost per click?
• Traffic quality -- what is the conversion rate of the clicks generated?

Of these considerations, the last one -- traffic quality, is of paramount importance. Pricing is really meaningless without knowing traffic quality, and traffic quality can vary radically from one provider to the next. It is crucial that you test traffic quality when you are evaluating a new vendor to measure their true value. Traffic quality is covered in more detail in the article Paid Search Tips. Research on traffic quality by vendor is also available in our Paid Search Directory.

Keyword selection

When running a campaign, it is important to select keywords relevant to the product or service you are promoting. Most paid search vendors have keyword selection tools to assist in coming up with relevant keywords. Note that the most popular keywords are not often the best, as general phrases sometimes have lower response rates and higher prices. It is best to find a setsof keywords which strike a good balance between being specific enough to provide good conversion rates and lower prices, while at the same time generating enough traffic to make managing them practical.

Many vendors also have tools to do "fuzzy" matching. These allow your ads to show up in many more keyword combinations than those you have explicitly specified. While this short-cut to more traffic can be a time saver, be careful in using this feature that it doesn't start generating traffic for irrelevant search terms.

Set your expectations

Lastly, don't expect to achieve dramatic results immediately. An effective paid search strategy requires continuous learning and refinement, as each business is unique, and there are many variables which can be adjusted and optimized. Keep measuring your results, and keep refining your campaigns, and in time you will end up with an effective paid search program.