Last year, $9.6 billion dollars was spent by companies advertising online – and that number is only growing. 2005 saw spending for online advertising jump another 4.3%, to $2.8 billion dollars for the first quarter alone. With nearly 70% of the American population online, the fight for the eyes of the online consumer is heating up at a record pace. And it's starting at the most common Internet site, the search engine.
Search Engine Marketing
Search Engine Marketing, commonly known as 'paid search' or 'pay-per-click', is the purchasing of small text ads displayed on the side or top of search results. Unlike the rest of the search results, companies must pay to be shown here, even though their ads look and act like the rest of the results. Companies are then charged a fee for this advertising by how many people click on their ad, hence the common 'pay-per-click' name.
With Google now indexing over 8 billion different sites around the globe, online visitors find the search engine to be a necessity in sorting through websites to find the exact information they are looking for in a timely manner. Unknowingly, they are also becoming your target audience.
How Google AdWords Work
When an advertiser purchases a Google AdWords ad, the technical name of the text ads that run on the side of search results, they define a set of keywords. These keywords can be single words or full phrases. If a visitor searches for one or more of these keywords, the advertiser's ad is then displayed. If a visitor's search is completely unrelated to the advertiser's ad, the ad is never seen. One of the largest advantages to Search Engine Marketing is that it provides this targeted audience. Everything worthwhile, however, comes at a cost.
Because many companies are vying for the same keywords, Google ranks their AdWords ads in the order of who is willing to pay the most for each click. Ads can be purchased for a minimum of five cents per click, but the ad will likely end up on page ten (or worse) of the search results. Increase the amount spent per click to $20, and the ad will jump much closer to the first page of search results – or even number one – though at $20 a click it'd be easy to price yourself right out of business. That's why Google institutes several price controlling measures.
Competing While Controlling Costs
By pricing ads on a pay-per-click basis, Search Engine Marketing creates one of the least costly lead generation means available. Paying by the number of people who click an ad provides a guaranteed return on investment. Costs are controlled first by the fact that the purchase is for direct leads (persons who actually go to your website), not advertising space.
Advertisers then have the ability to set the price that they are willing to pay for each click. Though this does also control the ad order, setting a lower cost per click can allow businesses to advertise over a longer time period while maintaining the same overall budget.
To control the overall cost of the campaign, Google then allows a maximum amount of money spent per day to be set. When an ad has been clicked by visitors enough times to accrue a charge equal to the maximum amount, the ad is simply not shown again for that day. These pricing controls make the same advertising space affordable to all, allowing both local and national companies to compete for consumer dollars on the same playing field.
Advertising Locally in a Worldwide Medium
Search for any term on Google and you'll find both local and national companies competing on the same page through Search Engine Marketing. Along with price control features, this is facilitated through a location qualification system that Google offers during the buying process.
National companies still have the ability for their ads to display on any search coming from inside the entire country, or any search period. But if a business finds it hard to accommodate customers from Belize, Google also allows ad display to be limited by area in three additional ways: metropolitan area, radius, and drawn map.
The metropolitan area option limits ads to showing only on searches originating from a specified large city area, like Detroit or Chicago. But this may not satisfy the business market, as Detroit and Lansing are available options, but Jackson and Ann Arbor are not. So to further quantify the market, a radius option is available that allows an ad to be shown to anyone searching within a defined radius of a location. For even more detail, Google also allows a specific area to be drawn on a map based upon longitude and latitude coordinates for every point on the map.
These location options allow advertisers to geographically target their campaigns across a worldwide medium just as they would through traditional media such as outdoor or radio – and in many cases, even better. Advertiser's gain the advantage of having to pay for only the people that the advertising brought directly to them, as well as the ability target the exact area that they provide goods and services to.
So, Does It Work?
Next month we will share the results of a real Google ad buy currently under way. What did the advertiser get for their money? How many leads were generated? Did any new business result?