Paid search explained

When a person types in a word or phrase on a search engine, a list of results appears with links to web pages and other content related to the search. This results page is organised into different sections; this video covers the adverts. You’ll learn:

  • a bit about advertising on search engines
  • why advertising on search engines is so effective
  • how advertisers compete for an opportunity to show ads on the search results page.

The next time you search, take a moment to study the results page. Do you notice any ads? Can you see the correlation between your search and the ads you see on the page?

View Transcript

Hey there, ready to learn a bit about advertising on search engines? We’ll cover how advertising on search engines works—that’s called SEM, or search engine marketing. We’ll explain why it’s so effective, and how businesses compete to show ads.

Imagine you live in the Cotswolds, you’re out running errands and are desperate for a coffee. You pull out your mobile and search for ‘coffee shop Cotswolds’.

Now you have a page full of options to consider. Every section on the page —the map, the ads, and the search results — presents options. Who knew there would be so many?

Some of these results are selected by the search engine’s organic formula. These pages are considered the most relevant web pages the search engine can find for this search. The other sections are ads.

If you take a moment to compare the ads you see to those in a print magazine, you might notice one big difference – every ad is for a coffee shop.

You don’t see ads for unrelated things, and interestingly enough, the adverts seem quite similar to the organic results.

This is by design, and it’s what makes paid search advertising so effective. A search engine’s most important job is to show people the results they are looking for, and this extends to the ads. The ads you see complement the search results page, with the ultimate goal of helping a searcher find what they’re looking for. So how exactly does search engine advertising work? There are several models. Let’s take a look at one popular option, the text ads you see on search engine results pages.

Every time someone searches advertisers compete for the opportunity to display ads. It happens in milliseconds and the searcher won’t see the details, only the winners: the ads that appear on the page.

So, how do search engines decide who wins? The primary components are the bid and the quality.

The bid is the maximum amount an advertiser is willing to pay for a click on an ad. If someone clicks the ad, the advertiser is charged an amount equal to—or sometimes less than—the bid.

So, if an advertiser bids £2 for a keyword, that’s the most they would pay for a single ad click. If an ad shows on the page but no one clicks, it doesn’t cost the advertiser anything at all.

Ideally, bids correspond to the value of the keywords to the business but the amount is up to each advertiser. Some advertisers may be willing to bid 50p for a keyword; others may be willing to bid £10.

Bid averages vary industry-by-industry, and keyword-by-keyword. Bids are important, but so is quality.

Winning the auction doesn’t always hinge on having the highest bid. Search engines reward ads and keywords with strong relevance to the search. In fact, it’s possible that relevant ads can “win” higher spots on the search results page, even with lower bids. In some cases, no matter how high a bid, a search engine will not display the ad if it’s irrelevant. To summarise, paid ads offer another way to promote your products and services on search engine results pages.

With a well-constructed search advertising campaign you can reach customers at the very moment they’re looking for what you offer.


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