Paid Search Advertising: An Introduction

In the past two decades the way we search for and find the things we want to buy has changed dramatically. The amount of time it takes to find the perfect product has shrunk and the amount of products available at competitive prices has grown. And this is all because of search engine marketing (SEM) and its two daughters: organic (SEO) and paid search (aka pay-per-click aka PPC).


The goals for your SEO and PPC traffic are the same: draw customers into your website and persuade them to convert in one way or another. That could either mean downloading an ebook or paying for a product. The main difference between SEO and PPC is control and insight. While you can certainly plan a strategy for SEO in order to improve how high your pages display for natural search results, it is difficult to determine exactly what changes lead to what results.

But with paid search, companies have more control over their efforts and results, which creates better insight into what factors lead to success. It is also, therefore, easier to test the effectiveness of your paid search efforts. That’s why it is important to focus your resources on PPC campaigns.

The Power of Paid Search

Paid search is big business and smart companies are making sure they are competing in this space. In 2013, roughly 91 percent of Google’s $55 billion of revenue came from Internet advertising. According to the Interactive Advertising Bureau, in 2013, advertising revenues in the U.S. were up 17 percent from the previous year – with paid search being the dominant form of Internet advertising.

Paid search is the top advertising format;<br />Source: IAB Internet advertising revenue report 2013
Paid search is the top advertising format;
Source: IAB Internet advertising revenue report 2013

So, what do you need to know in order to start directing Internet traffic your way? At this juncture, we’re going to focus on providing some best practice tips around getting started with AdWords by explaining the structure of an AdWords account and what affects an advertiser’s Quality Score.

Understanding the Structure of AdWords

These are the fundamental units for using AdWords:

  • Campaign – Your first step is to create “campaigns” that focus on your targeted audiences. The main things to decide at the campaign level are your budget, the network display settings (search network, display network, etc.), regions of the world, and on what type of device the ad displays. Define your campaigns around your business goals, e.g., one campaign for selling your product and one for providing customer service.
  • Group – What mothers are to daughters, campaigns are to groups, and every group should relate back to its parent campaign. The more granular you organize your groups, the more effective your reporting will be. So if one of your campaigns is centered around selling products as opposed to providing customer support, each group in that campaign should focus on a single product in your catalogue.
  • Keyword – After creating campaigns and groups, you want to assign each group a list of keywords. These are the words and phrases your potential audience might use when searching the Internet. They should correspond to the business objectives as your defined in the campaign and group stages.
  • Ad – The ad is what the Internet searcher sees when they use your defined keywords. Best practice: Use the keywords that bring up the ad in the ad itself.
  • Landing Page – The landing page is the destination of the ad. It is the webpage someone who clicks on the ad will arrive at. Make sure that the copy on your landing page has a strong connection to the copy in the ad that your visitor just saw. In an ideal world, you should be sending all paid search traffic to a landing page where you want the visitor to complete one specific action like filling out a form or purchasing a product.
AdWords structure
AdWords structure
Source: Google

Understanding Ranking Factors

OK. So you’ve set up your campaigns, groups, keywords, ads and landing pages. But will your ad display for these keywords? This is not at all certain. A lot of things can affect when and where your ad displays. One of the main factors affecting the success of your AdWords campaign is your budget.

Your budget impacts what kind of keywords you can bid for and how often they will be served to users. If your company makes and sells antivirus software programs, naturally, you’d target keywords like “antivirus software.” But there is a lot of competition in this market and you can be sure that your competitors are also bidding for this keyword. And when many people are bidding for the same keyword, that drives the price of the keyword up. If you limit your budget at a much lower point than your competition, Google may decide you don’t have enough juice to get you through the day, and will shut your ad off.

How much you are willing to bid is not the only factor in whether your ad is served. Google uses a Quality Score that not only affects the placement of your ad on the search engine results page (SERP), but also the amount you pay per click. The Quality Score factors include things like historical performance which may overpower your bidding price.

Let’s say you’re willing to pay a little more than your competitor for the ad serve, but traditionally, your competitor’s ads for that keyword has a high click-thru-rate (CTR). Google may be willing to serve your competitor’s ad knowing that its past performance is stronger than yours, even though right now you’re willing to pay a little more for a click. On the other hand, even if your ad has a high CTR, if those visits are mostly bounces then Google may lower your rank for that keyword.


Paid search is a powerful tool for bringing in visitors to your site and converting them into leads and customers. Make sure you understand how to properly set up an AdWords account and the factors that affect the amount you pay per click and the positioning of your ad.

Jessie Kleino contributed to this article

Do you have any tips and best practices for setting up an AdWords campaign? Tell us your story in the comment section below.