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Paid search marketing has many names, wears many guises and works alongside many other nebulous terms.

Search engine marketing (SEM), search engine optimisation (SEO), pay-per-click (PPC), cost-per-click (CPC), cost-per-impression (CPM) search engine advertising, sponsored listings, paid for placement, and that’s before you get to services provided by the search engines themselves – Google AdWords, Yahoo Bing Network. 

It’s a lot to wade through.

As a relative newcomer to the digital marketing world, I've decided to begin a series of 'beginner's guides' to uncover what is meant by certain terms, trends and technological advances in digital; being both a travel guide and a personal investigation.

Last week I covered Native Advertising, this time I’m going to take a look at paid search. If you’re an expert in the field, this article may not be for you, however please feel free to leave any advice or guidance in the comments below.

The basics

According to Econsultancy’s own Paid Search Best Practice Guide:  

Paid search marketing means you advertise within the sponsored listings of a search engine or a partner site by paying either each time your ad is clicked (pay-per-click - PPC) or less commonly, when your ad is displayed (cost-per-impression - CPM).

So, when a user searches for ‘chocolate fountain’ on a search engine, the search engine results page (SERP: I feel this may be an acronym heavy article) reveals the following: 

As you can see from the screen grab, the paid for search results are in the cream box at the top. This is a fairly standard sponsored results page.

Amazon paid the most for the search term ‘chocolate fountain’ and therefore Amazon appears at the top of this results box. It will cost Amazon more than the other listed companies if the user clicks on its link.

The other companies in the search box would have paid slightly less for the same terms.

The same applies to the Bing SERP:


Although this one’s green, and it features different companies from the Google SERP, Amazon is still at the top, but notably it doesn’t have top rank in the organic search results (the ones that haven’t been paid for).


Cost-per-click (CPC) means that you as an advertiser appearing on a SERP, pay the search engine for each user’s individual click on your ad.

Cost-per-impression (CPM) means that you as an advertiser appearing on a SERP, pays the search engine for every 1,000 times your ad appears on the page The user doesn’t have to click-through, it’s just about page impressions. If you’ve learnt nothing new from this, then the knowledge that the M in CPM means 1,000 is still a decent fact.

CPM is perhaps best for companies who want to raise brand awareness. CPC is best for sales.

Google AdWords

AdWords is Google’s own advertising product. It offers PPC and CPM advertising as well as site targeted banner, text and rich media ads.

AdWords is also Google’s main source of revenue.

If you use its service you will be able show your ads on one or both of Google’s advertising networks:

  • The Google Search Network, featuring the standard Google Search, Google Shopping, Maps and its various search partners. 
  • Google Display Network, which is any website that partners with Google, and other Google sites such as Gmail, YouTube and Blogger.

With AdWords, if you choose CPC, you can set your bid (the amount you’re willing to pay for each click) to manual or automatic. With manual you choose your bid amounts, with automatic Google chooses the bid amount for you within your budget.) With CPC and CPM you can set your maximum bid amount.

What are the drawbacks with using Google AdWords?

AdWords works so well that one study found that 40% of consumers are unaware that Google Adwords are adverts. The faint cream of the paid search box means that users may easily ignore organic search results further down, depending on the quality of their screen (or eyesight).

Google updated AdWords in February with Enhanced Campaigns. This means advertisers can now target people based on time of day, location and the device they’re using. 

The positives of this are that if you know you have higher traffic at certain times of the day,  an ecommerce site whose conversion rate increases between 6pm-9pm, that site can increase its maximum bid amount specifically for those hours. 

Unfortunately advertisers can no longer run tablet only campaigns, as Google 'believes' tablets perform exactly the same as desktop devices. You can increase or decrease separate bids for mobile and desktop, but no longer for tablets.

Does this reflect the true nature of conversion on tablets? Not really, being as conversion rates from tablets are four times higher than smartphones. Surely this is a massive oversight on behalf of Google?

Yahoo Bing Network

Adwords’ nearest rival is the Yahoo Bing Network (YBN). It claims to be a ‘combined advertising marketplace’ made up of Yahoo, Bing and many syndicated partners such as Facebook, Amazon and Monster.

In the US, this network accounts for 29% of online search, and according to its own data, searchers on the YBN spend 23% more in the same sites found on other search engines.

Worldwide there are 489m unique searchers on the YBN, 94m of who don't use Google. These searchers spend 137% more than the average searcher and 76% more than Google searchers worldwide. YBN isn’t suggesting you need to run campaigns on Google AND its own network, its suggesting that you run your campaigns solely on its network because users spend more money there.

According to AdGooroo, AdWords dominated most areas in Q3 2012 (shopping, travel, education, computing and B2B) in terms of impressions, however YBN displayed more impressions for financial services.

In fact 9.5% of the financial service companies who used both AdWords and YBN achieved higher click-through-rates (CTRs) on YBN. 5.7% of companies in the shopping category who used both search engines also had higher CTRs.

These aren’t exactly mind-blowing stats, but it does prove that there is justification in weighing up whether to advertise on either or both.

CPCs are generally lower on YBN than AdWords. Advertisers pay a premium to take advantage of AdWords’ higher traffic and CTRs. There’s also less competition on YBN, in fact there’s 36% fewer advertisers on YBN to bid against.

Why should you use paid search?

The most important positive here is your company’s appearance at the top of the SERPs. With organic results decreasing rapidly further down the screen, it’s vital that your company appears within the top five results in order to stand a chance of click-through.

If you have enough investment, PPC is the fastest way to get to the top.

If you know your way around the platform, you can set up a PPC campaign in less than an hour, and appear immediately in the sponsored results.

Tracking is a lot easier using SEM. You no longer have to take a gamble on ads you’ve paid for in advance in other media, with little way to measure how successful they are. With SEM every ad, keyword and penny spent can be tracked, allowing for a more accurate ROI. This also means it’s a lot easier for an advertiser to test campaigns too.

All of this, along with access to the respective search engine’s network sites and platforms included in its packages, and the ability to schedule ads and target them to specific locations and times, means that paid search is an almost essential part of your marketing strategy.

The alternative

You can do things organically. If you run a small business, that either has a tight marketing budget or if you just don’t want to jump into bed with the major search engines, you can still do many things to raise your profile and compete with the big brands.

Make sure you have the very best product or service available, use social media, create evergreen content, engage, personalise and be relevant to your consumers. It does work.

Check out this success story involving the London restaurant Hawksmoor and the future of small business.

Things that I still don’t know…

Here’s a few questions raised by the above research that I’m still unclear on, that maybe you could help me out with:

How transparent is the bidding process? How do companies know that the money they’re spending is worth their while? Is this just done with trial and error, with companies raising their maximum bids incrementally than checking the SERP to see how they’re doing?

What about non-ecommerce sites? Is there anything stopping me from spending loads of money trying to raise the profile of my own music blog by bidding on ‘new music reviews’? Does this seem perhaps underhanded, is the integrity of my non-ecommerce site more important than traffic?

How prevalent is click-fraud? (Where a competitor artificially clicks through on your link, therefore raising your costs, eating into your revenue and pricing you out of competition.) Can search engines monitor against this?

I’ll be writing more posts around this topic so any guidance or opinion would be greatly appreciated.

For a much deeper analysis download our Paid Search Marketing PPC Best Practice Guide.

Further reading for beginners

During my first year at Econsultancy I’ve been making a point of writing beginner’s guides to any new terms or phrases I find particularly baffling, or that I might suspect other people may find baffling too. 

The following related articles should help clear up a few things… 

Christopher Ratcliff

Published 13 November, 2013 by Christopher Ratcliff

Christopher Ratcliff is the editor of Methods Unsound. He was the Deputy Editor of Econsultancy. You can follow him on Twitter or connect via Google+ and LinkedIn

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Comments (6)

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Digital Marketing Courses

Good summary :)
I think that PPC is never enough, unless you have a big budget to destinate to aim. But even in this case is no so easy to have a good Roi.
Therefore work by yourself. Ppc could be a little help but it's never been the core of your business strategy

almost 3 years ago



One major mistake in your article- which further was a nice read- is that the top ad in the SERPs doesn't automatically pay the most. Depending on the quality of your campaigns (and website) you could end up paying less than the person below you.

almost 3 years ago


Paul Withers

Great summary.

As mentioned above, the actual CPC an advertiser pays depends very much on the relevance and peformance of the page being linked to. The 'qality score' of a page is a good indicator as to how well the page you are linking to could help in this.

GDN also offers a remarketing option where you can serve follow-up ads to people who have already visited your website; a great way to stretch the marketing budget further and keep the campaign efficient. A huge number of visitors are highlly unlikely to make a purchase/action based on one visit.

almost 3 years ago

Darren Smith

Darren Smith, Business Development Manager at Fresh Egg Ltd

Nice article for beginners just entering into the world of PPC.

As mentioned above: the top advertiser does not pay the most necessarily. Adrank (the formula Google uses to decide which ad appears where) is based on a combination of your maximum bid, the quality and relevance of your ad and landing page, and more recently whether you are using sitelinks and their expected impact.

More from Adwords Help here: https://support.google.com/adwords/answer/6300

almost 3 years ago

Christopher Ratcliff

Christopher Ratcliff, Editor at Methods Unsound / Search Engine Watch

Thank you all. Yep I've just looked at that, and you're totally right. Cheers for correcting me there.

It's good to know that things like relevancy and usefulness are still important factors in the PPC search ranking; not just 'who spends the most'.

almost 3 years ago


Lavina Advani, Marketing Manager at Argus Media Limited

That was a really good read Christopher.

I think a good follow-up to this article would be on Google ad words reporting. So, for instance, what is best practice when it comes to:

a) Extracting data from GA? So, for example, what reports should we extract on how well our campaigns are doing.
b) In terms of presenting key stats to senior management, what is the best way to report these findings?

That would be truly helpful!

Many Thanks,

over 2 years ago

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