How to Create An Effective Paid Search Campaign

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Search engine marketing has revolutionized the way businesses and customers connect.

Using Internet search engines is the third most popular activity online, just behind e-mail and Web browsing, according to research by MarketingSherpa. The same study shows that approximately 63 percent of business-to-business buyers use search engines as the first source of information when making purchasing decisions. A Pew Internet study also shows that 61 percent of the total U.S. population uses search to find information.

This high level of search activity, both for BTB and business to consumer, creates a huge opportunity for marketers to reach potential customers. There are four main tactics under the SEM umbrella: organic search, search advertising, contextual ads and paid inclusion.

According to MarketingSherpa, search advertising, including pay-per-click (PPC) and pay-per-call, accounts for the majority of the total spend on SEM. JupiterResearch estimates that search advertising will reach nearly $9 billion by 2007, up from $7 billion in 2006.

As marketers continue to increase budgets for search advertising, the competition for top positions on search results is increasing and advertisers must learn tactics to increase the effectiveness of search campaigns. The art of search advertising starts with a few basic principles for creating effective campaigns to attract the right audience.

Selecting the Right Keywords

Selecting the right keywords is the most important part of any PPC campaign. When selecting keywords, consider the profile of your audience and use terms relevant to their personas and how they describe your business or product offering. Many search engines offer keyword tools that help identify which terms generate the most searches on the site. There are also outsourced keyword tools such as Wordtracker that provide insight into which terms searchers frequently use.

Research also shows that multi-word phrases generate better results because they increase the meaningfulness of the search. Internet intelligence firm Hitwise reports that 28 percent of U.S. searchers use two-word phases and that 22 percent use three-word phrases. This demonstrates that searchers are becoming more familiar with how to quickly produce the most relevant results.

Another tactic to consider when selecting keywords is to bid on niche terms. While these terms may not attract the highest number of clickers, they are more likely to attract leads that convert to immediate and long-term customers.

In addition, bidding on a high volume of keywords helps determine which words and phases convert the most traffic and qualified leads. Once you are familiar with how a broad range of terms converts for your campaign, you can begin to fine-tune your keyword selection to include the terms with the highest conversion.

Which Search Engine Should I Use?

Major search engines such as Google and Yahoo are the primary channels of PPC advertising because they bring in the largest number of search queries and clickthroughs and therefore help establish brand awareness to a broad audience.

However, most searchers are still in the window-shopping phase of their purchase, researching vendor and product options for later purchase decisions. While branding achieves long-term goals, immediate conversion rates from major search engines are often lower than from other channels.

Conversion rates tracked across multiple search engines show that searchers who are ready to spend most often connect to advertiser sites from niche, or vertical search engines. A vertical search engine is a site that specializes in a specific segment of a market and returns results only related to that segment.

These search engines have less traffic but provide higher relevancy of search results and lower PPC rates than major search engines. Consequently, vertical search engines are increasingly becoming a valuable resource for advertisers in specific industry sectors.

Setting a Budget

Establishing a budget for search advertising can be difficult and needs frequent monitoring to ensure that it allows for the desired number of clicks while still capturing an attractive return on investment (ROI).

One way to establish the budget is to allocate a test budget that will provide insight into the bid price per keyword versus the placement in search results.

MarketingSherpa reports that bidding on the top three positions in search result listings generates the highest ROI but is also the most expensive strategy. About 28 percent of marketers turn to an "Economy" approach that looks for "bargain" terms that have less competition among advertisers but still generate an average ROI.

Once you determine how much you want to spend on a daily or monthly basis, many search engines provide tools that allow you to control your spend. Examples include:

Automatic Bidding: Allows you to set a maximum bid amount per keyword and then automatically positions the keyword to deliver the optimum amount of traffic for the bid specified.

Daily Budget: Allows you to control spending by determining a maximum daily spend.

Maximum Traffic: Guarantees that your listings will always be active by automatically renewing your campaign to capture the maximum traffic without interruptions.

Is My Campaign Effective?

PPC advertising is the most transparent and trackable form of advertising, because you can see how many people clicked on your ad and where they came from in real time.

However, an important note to remember when assessing a PPC ad campaign is that you must know what you are trying to track. Often it is not the number of visitors that click on the ad (clickthrough rate), but rather the number of buying or returning visitors (conversion rate) that determines the effectiveness of a campaign. The advertiser using PPC campaigns must commit the resources to build effective Web sites in order to maximize the conversion of clickthroughs to actionable order flow.

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