Search Engine Advertising | What You Need To Know

How Much Should I Spend On Search Engine Advertising?

How much does search advertising cost?”, and honestly, that is a reasonable question that we get from almost every customer. Unfortunately, we’ll tell you as we tell them because there isn’t a one size fits all equation, “it depends”. The amount you should spend should be based on your long-term customer value (LTCV) and short-term customer value (STCV). Base this on your target cost per customer acquisition or cost per sale.

• Short-Term Customer Value. This can be the value of a customer based on what the average one-time transaction is or the monthly transaction of the customer.
• Long-Term Customer Value. This is what the lifetime value of the customer is, and what the referral value is to your business. In essence, it’s what the customer contributes to your business over the course of a lifetime. If 50% of your business comes from previous client referral, then your long-term customer value will be much higher. You also need to take into consideration that the customer you acquired from a search engine campaign is also going to refer someone to you later. This presents more value for that first new customer acquisition.

To determine your daily and monthly budget, Google has budget and traffic estimator tools. They focus on the keywords you want to target as well as the geographic areas you want to target. These tools will give you a general idea of how much search inventory there is for you to buy. It also shows what your possible budget should start out with. Here are a few takeaways we’ve learned when it comes to Google search engine advertising budgets:

• Search ads are based on an auction system. Normally you’re going to pay more for words that typically bring more value. You’re going to pay more for a steak keyword than you would a chop beef keyword.
• You can control how much you spend and exactly where the money is spent. The more you target your audience, the less money you’ll waste and the more opportunity you’ll have for conversions.
• The average spend of a small business on search engine advertising per month is anywhere from 5,000-10,000, depending on the industry.

Who Should Use Search Engine Advertising?

A successful search engine advertising campaign does not depend on the size of the business. Businesses with a larger budget for paid search can explore more growth opportunities quicker. This will, of course, provide them with a competitive advantage.

The location, products, and advertising budget are the big factors that determine the success of a paid search campaign. Smaller companies should only use search engine advertising when they are sure they will generate a profit from it. Some experiments can teach valuable lessons that help drive sales in other areas.

Small business owners who invest in search engine marketing campaigns should think about how much their search engine marketing strategy will help to gain new clients and be as specific as you can when bidding on keyword data. For example, a local personal injury law firm might use the keywords “personal injury lawyer in city name” or “injury attorney near me.” These paid search campaigns will receive clicks from searchers who aren’t shopping by other specifics or niches.

Businesses of every size should also consider search engine optimization as part of your long-term growth strategy, as well. Since advertising with a search engine should aim to generate leads, it’s ideal to first target and answer specific search queries. Your customers will be more likely to buy from your company if they are able to find valuable content also readily available on your website. If you want to jump ahead of the learning curve, then hire a company experienced in PPC management services who can demonstrate previous success.

Internet users will still favor the organic results of their web search on Google and Bing. According to SearchEngineWatch, only 6% of search engine users are likely to click on paid search ads. Search engine advertising can’t be a substitute for a natural ranking system. Like we say for every single form of marketing we talk about, this is why businesses should use paid search to be only one aspect of their digital marketing strategy.

For more information on how to improve your SEO priority, check out our blog post, here!

Search engine advertising is helpful for generating traffic using common keywords. This is especially true when the market is over-saturated with competition in the organic search results, as that makes it difficult to rank. Search engine advertising is also a great strategy to employ when there are short-term events such as sales and offers that could use instant exposure.

Localized Ad Copy & Extensions

The more niche your company, product, or service is, the less expensive it will be to advertise using search engine advertising. With that being said, you will face competition regardless, and you will likely see national companies buying ads on search engines. For both cases to counteract this, make sure that you include geographic terms in your text ads. You can also use location extensions so potential searchers know you’re actually a local business.

More common or competitive industries may experience a larger cost-per-click over main keywords. You can also advertise cheaper if you set up your campaigns aligned to long-tail search terms. Seek lower search volumes in a “low-hanging fruit first” strategy.

There are several tactics we employ at Digital Logic to drop costs and raise the opportunities for conversions for our clients. The list literally continues to grow with each new client. You actually can teach an old dog new tricks!

This is an example of a few extensions for my business for the localized campaigns I’m running:

What Are The Primary Targeting Options For Local Search Engine Advertising?

Ads displayed in the search engine results pages (SERPs) match with keyword searches. If a user is searching for the keyword “attorney,” they will find a few ads that focus on law firms or attorneys. There are some other factors you’ll want to consider when using displaying advertising. These features are also likely to increase or decrease an advertiser’s bid price. The most important targeting factors include:

• • • Location: Advertisements will cost more or less depending on which country, state, or city they’re shown to. A small business owner can offer more for their ad campaigns if they want the ads to appear more often. Ads are more visible in searches within the geographic location the searcher is in. Geofencing or Location Targeting options can include a city, state, zip code, radius. It could be miles around a physical location or even a kilometer around a physical location. You’ll also want to pay attention to the location exclusions so you don’t get out of area traffic. Read our comprehensive post on Geofencing and location targeting.
    • Daily & Weekly Hours: Google can display search ads more or less often, on certain days, or at certain times of the day or night, depending on your preferences. This will influence an advertiser’s bidding behavior. Allocating your budget toward the best buying times for your customers will keep your ads performing well.
    • Language: Google takes the searcher’s language into account. Only displays ads in the local language are shown to each user. You should create advertisements for each language based on your potential customers. Or limit your ad exposure to only certain languages.
    • Remarketing lists: ads display for users depending on what they viewed in the past. This means that a user who has visited your site already. They will have a different display experience compared to a user who’s never visited the site. They might be shown things that could influence a visitor to buy or act in a different way.
    • Google Phone Call Only Campaigns: With phone call only campaigns, advertisements are set to run on mobile devices only. A bid price will be set to the max cost per call that the user is willing to pay. These campaigns bypass having to click through to a website. They direct users to make a phone call from the advertisement on the search engine results page. The highest cost-per-call setting is like the max CPC setting. The cost-per-call will be higher than the max CPC setting. That’s because the value of a phone call is higher than the value of a website click.

How Does Google’s Quality Score Work?

Google has a “quality score” as part of its rating system. Quality score is how Google ranks your ad with respect to how well it is able to answer the question or meet the need of the person who used the search term at hand. This stops low-quality ads with higher bids from landing at the top of the search results. This method helps create a positive experience for all users.

Google has studied and implemented a system to understand what makes searchers click on ads. This system earns them increased ad revenues. A well-planned search engine advertising campaign with high-quality content will always rank higher in the search engines. This is because it’s the most helpful and personalized to the user’s search intent. A high CPC bid is not the only factor in creating a successful advertisement. Google’s quality score rates the following factors as essential for an effective advertising campaign:

Graphic by Digital Logic

• Expected Click-Through Rate (CTR): This metric is based on how often the advertisement displays (impressions), along with the number of clicks that each ad receives. Ads that have a high click-through rate (CTR) are more relevant and shown more often.
• Click-Through Rate For The Display URL: If the URL used in the ad has already achieved a large number of clicks, then an ad’s quality score will also be higher. The display URL does not have to match the link target to earn clicks to it. But it should at least be related to earning a high-quality score.
• Landing Page Quality: Users click on links because they’re featured for its relevance, transparency, and user-friendliness. That ad’s search engine ranking will continue to improve.
• Relevance Of The Ad Copy: Ads that get the top spots on search engines have titles and copy that align with the related search query. The more relevant an ad’s copy is, then the higher the ranking will be.

All search engine ads are evaluated by their CPC bid and quality score. The value of any advertisement can be found with the following equation: Highest Ranked Ads = Highest CPC Bid x Quality Score

How Do You Find The Right Keywords To Bid On?

Keywords are the foundation of search engine marketing. Users are entering keywords (as part of search queries) into search engines to find what they’re looking for. It should come as no surprise that keywords form the basis of search engine marketing.

SEM Keywords

First, you’ll need to identify specific keywords that are most relevant to your business. Include the ones that prospective customers are most likely to use when searching for products and services that you provide. One of the best ways to perform keyword research is by using Google AdWords’ Keyword Planner. Enter a keyword that’s relevant to your products or services. Then you’ll see related keyword suggestion ideas. Those can form the basis of various search engine advertising campaigns. You want to also make sure that when you’re bidding on keywords, that you’re bidding on keywords that are intent driven. You want the audience who are posing these questions to be at the right stage in their buyer’s journey to want to click your ad and be ready to purchase. The more you know about how your target audience behaves, the more your ads will be able to help you convert your audience.

SEM Negative Keywords

When you’re searching for keywords that your company can bid on, thorough research can also help you identify what is known as negative keywords. Or locate search terms that you should exclude from your ad campaigns. Negative keywords are irrelevant terms that are unlikely to result in conversions. You’ll want to include some of these to protect your budget from wasteful expenses. If your business sells ice cream, then you would want to exclude the keyword “recipes.” Users who are searching for “ice cream recipes” are not likely wanting to buy ice cream from your business.

SEM Keyword Groups

Practical keyword groups and account structure can help you achieve higher click-through rates (CTR), lower costs-per-click (CPC). This usually results in stronger performance. Keyword research can help you think about how to best structure your advertising account to achieve high performance.

Rotate Ad Groups

Your search engine advertising campaigns should focus on similar products or services. Use different ads and keywords for each specific category of products or services within your company’s wider offerings. If you own a hardware store, one ad campaign might focus on seasonal products such as leaf blowers, rakes, and lawnmowers. Another search campaign could focus on industrial-use power tools.

Ad groups sub categorize each campaign for high or “niche” relevance. In the hardware store example, one ad group might be for different types of rakes, or models of leaf blowers. For power tools, one ad group could focus on power drills, while yet another might focus on circular saws. This level of advanced organization will take longer to set up in the beginning. The rewards, like higher CTR at a lower cost, make this effort worthwhile in the long run.

Tracking And Measurement for Search Engine Advertising Campaigns

You’ll want to set up a Google Analytics account. Then set up a call reporting tool like Call Rail. Now, you can receive specific metrics on-demand related your local search campaigns:

Or, you can use a custom reporting platform like the one our agency sets up for our search engine advertising clients:

To better provide you with professional digital marketing help on your local search engine advertising campaigns, Digital Logic maintains a Google Partner status. We’ll be happy to give you a free quote along with a free initial consultation.

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