What is Paid Search and How Does It Work?

Shelly Gable
Published: Nov 23, 2021
Last Updated:
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Paid search is a digital marketing strategy that is rapidly growing in popularity. In 2020 alone, businesses spent more than 59 billion dollars on paid search. That’s up 5 percent from the previous year.

Why is paid search so popular? It’s a great way for businesses to get their names in front of consumers who are looking for exactly the kinds of products and services that they provide. If you’re wondering how you can get started using it, keep reading. This article will explain exactly how paid search strategy works and why it’s such an effective marketing tool.

An image of someone pointing to stats at a computer screen

What Is Paid Search?

Paid search, also known as search engine advertising, allows you to place ads directly on a search engine results page (SERP). You create an advertisement and choose a few long-tail keywords to go with it. Whenever a consumer search matches your keyword phrase, they’ll see your ad at the top of the list of results.

Your ad will be marked because search engines don’t want to mislead consumers. However, paid search ads still get plenty of clicks. Research shows that as long as your ad is relevant to consumers’ searches, they are likely to click on it. A survey by Clutch found that 75% of consumers said paid search ads made it easy to find the information they were seeking.

Paid search advertising is a straightforward way to give consumers the information they need while educating them about your brand and your services. It’s also a great way to drive new traffic to your website and build up your following.

Is Paid Search an Expensive Option?

Popular search engines like Google, Yahoo, and Bing all sell paid search ads. The pricing will vary depending on exactly what kind of ad you need, but in general, search engine advertising is a low-cost way to promote your business to a wide group of consumers.

Paid marketing, also known as PPC, or pay per click. That’s a reference to the way companies pay search engines for advertising. The average cost per click on a Google ad is between $1 and $2. Bing ads start at under a dollar per click. When you take out the ad, you won’t pay any money. Instead, you’ll pay the search engine every time users click on your ad.

What’s the Return on Investment for Paid Search?

Google estimates that for every dollar you spend buying Google Ads, you will realize $8 in profit. Of course, Google arrived at that figure without building in the cost of labor involved in creating ads or choosing potential keywords.

You can make a tidy profit through paid search ads, but you’ll be more likely to succeed if you can automate the creative process. We’ll get into strategy in more depth further down.

Why Is Paid Search Effective?

It’s no secret that most consumers spend time doing online research before they make a purchase. Of course, the first step in their online research involves using a search engine like Google or Bing. If you want your business to succeed, you need to make sure that your company’s name comes up at the top of the search results. And that’s exactly what paid search can do for you.

What Are the Benefits of Paid Search?

Paid search has several built-in benefits that set it apart from other forms of digital marketing. Here are a few of the biggest pros of paid search.

  • It generates top-quality leads. When you use paid search, you are targeting consumers who may already be in the final stages of the buyer’s journey. These consumers are already interested in the kinds of products or services you offer. When they click on your ad, they’ll learn more about your business and, hopefully, they will move closer to making a purchase. There is also a chance that they will become return customers.
  • It’s low-cost and makes it easy to track return on investment (ROI). We’ve already seen that paid search is a relatively low-cost investment. It’s also easy to keep track of your expenses and your ROI when you use it. Unlike social media marketing, paid search doesn’t involve a lot of different costs. You’ll be able to track how many times consumers clicked on your ads. Then, an analytics program like Google Analytics can tell you how many people visited your website through the ads. From there, you can look at metrics like bounce rate (BR) and conversion rate (CR) to assess the ads’ success.
  • It’s easy to combine with organic search engine strategies. No one digital marketing strategy will succeed on its own; it’s always a best practice to combine several approaches. It makes sense to build a strategy that uses both paid search and organic search engine optimization. The two methods complement each other. You can build a strong SEO strategy by putting together a great blog about your field and performing search engine optimization on your posts. If you’re not sure what that means, Composely’s strategists can talk you through it. Meanwhile, you can use paid search to begin bringing more interested consumers to your website as you work on increasing your organic traffic.
  • Paid search strategies work on all the popular search engines. If you get started using Google ads, you can later apply the strategies you learned to Bing and Yahoo ads. In other words, you won’t have to deal with a large learning curve to use paid search effectively across multiple platforms.

What Are the Downsides to Using Paid Search?

Every marketing approach has some negatives, and paid search is no exception. Here are a few of the downsides you may discover if you try it.

It limits your creativity. There are a few tried-and-true ad types that work very well on paid search. We’ll get into that more below. But if you want to try a more creative, outside-the-box approach, then this isn’t for you. The ads that work best on paid search tend to be text-based or rely on a single, static photo, which is a downside to those marketers who like to use video.

Your keywords might not come up in searches. Choosing the right search query can be tricky. Consumers may not type your keywords exactly into the search box, and that means they may never see your ad. Paid search limits the number of keywords you can introduce, unlike when you optimize your website’s SEO or craft a compelling blog.

Many people will avoid clicking on your ad, simply because it’s an ad. Research shows that 70 – 80% of search engine users deliberately avoid clicking on search engine ads. This means that your ad won’t ever generate a flood of business the way a viral tweet might. At the same time, bear in mind that the 20 – 30% of users who do click on search engine ads are already primed to make a purchase — and they are valuable leads.

What Should a Search Engine Ad Contain?

Before you compose your ad, decide whether you’d like to have a text-based ad or a shopping one.

Text-based ads are exactly what they sound like — all text with no images. Shopping ads incorporate images. Both options have their benefits — it depends on your needs and goals. It's a good idea to look at some paid search examples before you create your own ad so that you can get a sense of what's out there.

Text-based Ads

There are a few key components that regular text ads should contain. We’ll start by looking at one common type of ad, the text-based paid search ad. These will typically have:

  • A headline, which should be an attention-getting title that tells consumers exactly what you're offering. For example, if you're selling men’s sweaters, your headline might read, “Men’s wool sweaters. Order online. Free delivery & free returns.”
  • A meta description. This is a short, usually 90 character rundown of the product or service you're offering in your ad. It's optimized for an exact keyword and usually consists of a few very short phrases. In our sweater example, the description might say, “Shop online. Men’s sweaters in wool, cotton, angora. All colors. Free delivery & returns.”
  • Ad extensions (optional). You can purchase extensions to stretch out your ad a bit. This is useful because it makes your ad a little more eye-catching, and it also allows you to add more information about your products and services. However, it's not essential.

Shopping Ads

Google shopping ads are very similar to text-based search ads. However, the focus is different. Instead of advertising your whole business, shopping ads publicize a specific product and typically use one or two images to highlight it.

Let’s return to the example of men’s sweaters. If you were creating a shopping ad around your line of men’s sweaters, you might pick one popular sweater to highlight in the ad. Your ad would then feature one photo of, say, a black cashmere sweater.

Shopping ads have a short  headline — something like “Luxury Cashmere Sweater.” They also include the item’s price and the company’s website address. At times, the ads also include one more line, like a link to reviews of the item or information about a sale.

The immediate goal of a shopping ad is to raise awareness of one key item being sold. But it can serve a broader purpose by attracting new customers to your website and getting them interested in your brand.

Shopping ads are direct, immediate, and eye-catching. They attract customers with the promise of a great product right away. This can be an excellent way to expand your customer base and build up brand loyalty with new customers.

Creating a Paid Search Success Strategy

It’s easy to track your success when you’re using paid search. You can measure it in the number of clicks you’re getting on your ads and the number of conversions you’re seeing. You can also look for an uptick in website traffic.

Your paid search marketing campaign should also be designed to be as affordable as possible in terms of labor costs, the cost of online advertising, and the effort expended. That’s why it’s a good idea to buy search engine ads on multiple search platforms, as long as it falls within your advertising budget. If you started out by buying a few Google ads, you can cross over to Bing and buy ads using the same formatting without having to tweak or redesign.

Keyword Selection

It’s a good idea to carefully tailor your search ad campaigns so that they are accompanied by the right keywords. Bear in mind that the more traffic you can drive to your website through your ads, the better. It doesn’t even matter whether every website visitor makes a purchase — part of the goal of each search campaign is to increase brand awareness and build up new followers. Below are the different keyword match types you can use for search:

  • Broad and Modified Broad Match: This keyword match type applies to keywords that include your target phrase and variants of it. For example, if your keyword is "running shoes", a broad match would also include "cheap running shoes" or "blue running shoes."
  • Phrase Match: Phrase match is used when you want your ads to display for search terms your exact phrase with words appearing before and after it. If your exact phrase is "shoes," phrase match would have your ads appear for "running shoes" and "shoes on sale."
  • Exact Match: These keywords mean your ads on search results will only appear for the exact match keyword. The ad also applies to plural versions of the keyword or common spelling errors.
  • Negative Keyword Match: This match type is for keywords that aren't relevant to your search advertising campaigns. Use this match type to stop your ads from running for a specific search term.

Ideally, you should be using at least a few broad relevant keywords with a high monthly search volume to pull in new website visitors. The goal is to educate your target audience about your products and build them up to long-term customers.

You can supplement that by adding in some exact phrase match keywords to push for more immediate conversions. Use exact match keywords to target consumers who will most likely purchase a product in the near future.

Final Thoughts: Broadening Your Strategy

As we’ve mentioned already, it’s always a good idea to have a broad and diverse digital marketing strategy.

Using paid search is very effective, but it’s not enough on its own. It’s a good idea to also pursue a strong organic search engine marketing strategy.

You can do that by optimizing your website so that it organically ranks high on searches. It helps to create well-written web copy that incorporates keywords effectively. It’s also a good idea to create a compelling blog that will position you as an expert in your field.

Ultimately, your goal is to create as many channels as possible for consumers to learn about your business. If you can rank high in organic searches and also place search engine ads on the page, then you’ll have twice as many chances for consumers to click on your links and visit your website. And that means twice as many chances for conversions and new, loyal customers.


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