Today, the term SEM is widely understood as the way we use paid ads on the search engines, although that wasn't always the case. Sometimes, people will refer to PPC (pay-per-click or even pay-per-call, just to confuse things) or CPC (cost-per-call) or even CPM (cost-per-thousand-impressions) when referring to search engine marketing, but really we're just talking about paid ads -- however you want to phrase it.
I will default to discussing Google and Google Adwords for the most part here, but it's important that we don't forget about Bing and Yahoo.
The system can be difficult to explain, but essentially, there are factors that Google uses to decide on your ad rank and click price. Users want to see relevant ads, and businesses want relevant customers to click -- so this means that Google has their own formula that determines how your ads will rank, and how much you will have to pay for a click. Their formula considers your keyword bid, your expected click-through-rate, the quality of your landing page, the relevance of your ad based on the query, and any ad formats you've added (phone number, etc.). There are a huge numbers of customers competing for the exact same ad space, so you need to have your campaign in line with what Google wants.
Given that you're reading this, you likely understand the concept. But, just in case, for a very clear and easy to understand explanation on how the bidding and placement system works, watch this video from Google Adwords.
In my own experience working in the digital marketing field, I've seen a shift over the years in how consumers perceive paid ads. Once thought to be nothing but spam, the significant changes that Google has made over the years have achieved a change in opinion, and people seem to trust the paid ads more than ever. It's an effective way for many businesses to promote themselves and gain new customers, whether it's an e-commerce business or a local plumber.
Reasons To Do Paid Ads
It's no secret that a higher percentage of people will click-through to organic listings. But, for highly transactional searches, SEM works because that smaller percentage of people represent the shoppers. You may only reach a small segment of online users with your paid ads, but they're the exact ones you want. They are the ones who are ready to buy.
It gives you an opportunity to create the exact experience you want your customers to have. I mentioned the importance of having a good quality landing page at the beginning of this post. Once someone clicks through, the landing page is what they see. This is your shot at conversion, and you're in control of the content they see. Make sure it's 100% relevant to the search term. This isn't where you send them to your blog, it's where you send them to complete their purchase.
It allows you to be in control of the queries you're targeting. This may seem obvious, but there's a larger opportunity here to be extremely strategic with your plan. Maybe you're a retailer and you sell clothes, accessories, bags and shoes. But the real money for you is in the bags. Everything else has a small margin, but those bags are what keep you going. This is the perfect item to run your paid-ad campaign for. You have the control to focus on what makes you money.
You only have to pay when someone clicks. Unlike paying a flat rate to show an online advertisement in a directory, or running banner ads where you're purchasing impressions, paid-ads give you the assurance that the people who click have consciously decided to do so, and are going to be targeted, relevant potential customers. You aren't paying unless someone actually takes action on your advertisement.
You can control the budget. Rather than someone giving you a price on your advertisement, you are in complete control of how much you spend. Google's Traffic Estimator Tool can help you to find keywords and also calculate what the optimal budget is. One important thing to know with paid-ads is that volume and budget is important -- if you don't invest enough, you won't be able to gain much traction, but this is still going to fall within whatever parameters you decide on yourself. If you want to spend $100/month, you can -- if you want to spend $10,000/month, you can do that too.
You can manage it yourself. Depending on your level of expertise and comprehension of this technology, it may or may not be a good idea. But, the choice is yours. You can hire it out, or do it yourself, which is another way this type of advertising allows you to maintain control.
So what industries do the best with paid ads?
There doesn't seem to be a lot of concrete evidence to answer this question. There are so many variables, including location, but one thing that we can generate educated assumptions from would be Google's most expensive keywords. We know that competition drives up the price, so we can assume that the keywords are this competitive because the businesses understand the value and sheer volume of new customers they can generate from being found on the major search engines, when consumers are ready to buy.
So, according to WordStream, the top 10 most expensive keywords are:
Now this is very interesting, as these words aren't necessarily industry specific, rather a representation of what consumers are looking for.
But, we can easily see that insurance, loans, mortgages, and lawyers have massive opportunities through paid ads. The budget required to be competitive would be astronomical, but it's safe bet that if you sell any kind of insurance, provide any type of financial loans, are any type of lawyer, or provide mortgages, you should be investing in search engine marketing.