Everything You Need to Know About Paid Advertising

Many well-known platforms are monetising the data they collect through paid advertising. From the established Google and Bing, the disrupters Facebook and LinkedIn to the newbies like Tik Tok, there is a lot of choice out there. These platforms have realised they can make a lot of money out of biddable media and they’ve been increasing space for ads over the past few years.

While the opportunities are increasing, it also means that the market is getting increasingly competitive and it is becoming very difficult to solely rely on organic (non-paid for) channels to deliver the traffic you want. Businesses are enticed to buy ads and if they want to compete in a busy landscape, businesses are under pressure to comply. After all, the number one slot on Google search results is not always an organic result and so competing often now means paying to compete.

Since this is the reality of the market, your business needs to embrace it, but it doesn’t mean you have to spend every penny of your budget on paid ads. This page will help you understand how paid advertising works and how best to benefit from it to achieve your business goals. As with everything in digital marketing, you can achieve great success if you understand how it works and consistently test and optimise. Great paid advertising is never complete.

What is Paid Advertising?

Paid advertising is an online advertising model where advertisers bid to participate in real-time auctions in order to show their ads within slots on a specific platform or network. For example, in this search on patio furniture you can see both shopping ads and text ads.

image of google search engine results page

It is also sometimes called biddable media or PPC advertising. PPC stands for Pay-Per-Click advertising as you usually pay every time someone clicks on your ads.

This model is usually opposed to earned or owned advertising where you can use a platform to push your content for free i.e. Facebook or LinkedIn posts.

How PPC Advertising Works

Most platforms offering paid advertising services use algorithms to run real-time auctions. The algorithms decide which ad to place within an available slot online. The criteria are often a mix between the bid amount and the quality of the ads but can vary depending on the platform used. Platforms don’t always make the criteria transparent however, and there are a variety of other variables to consider.

Ads come in many shapes and formats such as text, images, videos and more. Many platforms now offer to automatically favour ads that are performing well based on your goals. Their algorithms pick up on a huge number of signals than humans can process, making it more efficient to let them decide which ads to push.

There are many targeting options to choose from but most of them fit into two main categories:

Search ads – triggered by someone actively searching for specific keywords; the ads usually show on a Search Engine Results Page (SERP) and answer a specific question.
Display ads – triggered by someone fitting specific targeting criteria such as demographics or interests; the ads usually show when someone is browsing the web or an app and can be regarded as disruptive.

These two categories can sometimes be mixed and matched depending on the platform you’re using. However, we recommend analysing their performance separately if you can. This is because search ads tend to perform better than display ads since they’re less disruptive.

The History of Online Paid Advertising

Online paid advertising started in 1994 when the first banner ad appeared on the digital publication HotWired, part of Wired magazine. They needed a way to generate revenue and used the traditional method of selling ad slots within their magazine pages. This model was literally transposed to online and publishers would ask for an upfront fee to place ads within specific slots for a given amount of time.

Banner ads took over the internet and in 1996, Doubleclick, now part of Google, emerged to give advertisers more data about their performance. This revolutionised the market as you could see the data live and optimise accordingly instead of having to wait for the campaign to be over to make changes.

This new tool led to a new pricing model based on cost per impression (CPM) instead of paying a flat fee for the ad space.

In 1999, the emerging search engine GoTo.com decided to monetise their search results by creating an auction system where advertisers could bid on keywords to show their ads in search results. Paid Search Advertising was born! This quickly deteriorated the quality of search results though as some advertisers were willing to pay to show on irrelevant searches.

That’s when Google introduced AdWords in 2000 with an auction system based on bid amount and quality score to ensure that their search results would stay relevant and provide high quality responses to users whilst making them money. This system is still in place today although much more sophisticated.

In 2006, Facebook joined the party to increase their profitability and launched hyper targeted ads based on the plethora of data they were collecting on users. This opened up a lot of targeting possibilities for advertisers and other platforms like Twitter and LinkedIn soon followed.

Today, the world of online advertising has been taken over by machine learning to help advertisers focus on strategy and creativity whilst the machine takes care of data collection, analysis and optimisation. Ads can be hyper targeted and super relevant; however, people tend to use ad and cookie blocker tools which make reaching your audience online more challenging. This shows there’s an increased need for helpful and sincere content rather than intrusive ads.

Read more about the history of online advertising and paid search advertising.

The Business Benefits of Paid Advertising

Biddable Media, Fast-track to Increased Traffic

Paid advertising is a great way to increase traffic – and in turn conversions – quickly. In comparison, investment in Search Engine Optimisation (SEO) tactics takes longer and you’ll usually see results months after you’ve made changes to your site.

This doesn’t mean that PPC advertising is easier to set up and run than SEO or that you should only focus on PPC. Paid advertising is a great short-term tactic whereas SEO should be seen as a long-term investment for a business with exponential growth. Therefore, you should keep budget for both channels if you can. It’s like investing in the stock market, you need to vary your options to get the return you’re after.

Here are a couple of scenarios where PPC can be useful:

Online starters – Paid Advertising can be a great ally to a business that is starting online and isn’t ranking very well organically for relevant terms. You can set up a campaign targeting the terms you want to show for and start seeing results pretty fast. In the meantime, you should invest on SEO for these same terms to build their organic strength. Then, you can shift your PPC budget towards other terms where you might be lacking organic presence.

Competitive search results – Paid media can also complement your SEO strategy for terms where the search engine results are very competitive which is bringing organic results down the page. This usually happens for highly commercial terms which can be key to your business. Showing ads for these terms means you’re multiplying your chances of getting clicks as you’re appearing twice in the search results.

Expanding your reach – Biddable media is a great way to expand your reach towards people who don’t know you. With so many targeting options, you can reach new audiences that might not have heard about you otherwise and pique their interest.

Retarget existing visitors – Retargeting means showing ads to visitors who have previously interacted with your ads or website, days or even months after they searched. Many online advertising platforms allow you to retarget people based on different criteria. This is great to move people down the buying funnel by showing them ads that correspond to what they need. You can retarget people who visited your site, people in your CRM, people who engaged with an ad without clicking on it, etc.

(Almost) Everything is Measurable With Online Advertising

The appeal of PPC advertising is that you can pretty much measure everything online. When you compare it to traditional advertising like TV or billboards, it is very difficult to actually attribute Return On Investment (ROI) to these channels as you cannot track people who saw your ads, or those who subsequently bought what you were advertising as a result of your ad.

There are many tools that allow you to track what people do on your website which can integrate with the tracking from your advertising platform. Once you have your foundations properly in place then, you can easily see if someone purchased on your site after they clicked on an ad and, from there, calculate the ROI of your paid activity.

Advertising platforms also give you access to a goldmine of information about your audience(s). Most platforms like Google, Facebook or LinkedIn will give you demographic information as a minimum for people who saw your ads. You can also get information about people’s interests, their jobs and other personal data – all anonymised of course! This data can help you understand your audience(s) better and so maximise your budget by more specifically targeting people who are more likely to be interested in your products or services.

Reach Your Audience Where They Are Online

People spend a lot of their time online and traditional media such as TV or print magazines aren’t as popular as they used to be. Plus, you can give your audience much more personalised ads online than when reaching out via a national TV ad. You end up being more useful to them and can target people more likely to be interested in you, which usually means a better ROI for your business.

Advertising platforms know this and can help you reach the right people at the right time where they like to hang out online. You’ll need to do some research and a bit of trial and error before finding the perfect platform(s) to advertise on. Remember, things change so something that didn’t work a year ago shouldn’t always be discarded as it might be relevant now. In the same way, once you find the mix that works for your business, don’t forget to keep testing, it might not always be the most effective solution.

Paid Advertising Channels

There are many online advertising channels out there but here is an overview of the main ones.

Google Ads

Google Ads, previously called AdWords, is the best known and longest standing advertising platform on the internet. Its sophisticated platform allows you to advertise on the Google search engine, YouTube as well as millions of websites and apps that are part of its network. Using machine learning and the data it collects on users, Google matches keywords and people with your ads and they’re quite good at it!

The platform mainly uses a Pay-Per-Click model based on how much you’re willing to bid and your quality score – how good your ads and landing pages are.

Microsoft Advertising

Microsoft Advertising, previously called Bing Ads, works in a very similar way to Google Ads. In fact, you can even import your ads from Google into Microsoft Advertising. Your ads can appear on Bing, Yahoo and MSN search results as well as other partner sites or platforms such as Cortana or Amazon devices.

The platform also uses a Pay-Per-Click model which combines your bid amount and quality score. The bids tend to be a bit cheaper than Google as it’s usually less used by advertisers. However, you should expect less volume than Google since Bing has a smaller market share but this can vary depending on the country and industry you’re targeting.

LinkedIn Ads

LinkedIn Ads offers advertising across its platform and is very much focused on professionals. You can target users based on their job title, the industry or company they work for or their interests, combined with geographic and demographic data. The platform mainly uses a Pay-Per-Click model.

Facebook Ads

Facebook Ads provides advertising capabilities on its platforms including Facebook, Messenger and Instagram. You can target users based on a lot of criteria such as their interests, the pages they like and even characteristics about their friends. As other platforms, they mainly use a Pay-Per-Click model based on real-time auctions.

Twitter Ads

Twitter Ads provides advertising capabilities within its platform. You can target people based on keywords, the conversations they take part in, their interests and whether they’ve engaged with your tweets in the past. They’re also based on an auction model with Pay-Per-Click charges.

eBay Advertising

eBay Advertising has a programme where you can bid to show on banner slots across the site based on keywords people are searching for or categories they’re visiting. They also use a Pay-Per-Click & auction model.

How to Develop Your Paid Advertising Strategy

There’s a lot that goes into PPC advertising and you shouldn’t start your campaigns without having a strategy in place, else you could end up wasting a lot of money!

Identify Your Goals

As with everything in marketing, you need to have goals in mind before you start anything else. Who are you trying to reach? What exactly are you trying to achieve and what do you want this audience to do? What is the end result?

Different goals and audiences will need different campaign and ad types as well as different platforms. The platforms we mentioned are usually quite helpful with this as they’ll tie in specific campaigns with goals. This means that you usually start your campaign with a goal and choose the relevant options they offer you.

Goals can be categorised based on your buyer’s journey as people will need different things depending on which stage they’re at.

buyer journey graphic on hubspot

Source: https://blog.hubspot.com/sales/what-is-the-buyers-journey

Awareness – this is when someone is still researching and is aware that they have a problem or a need but don’t know much about it yet. The goal attached to this will be to reach more people to make them aware of your products or services. This can usually be measured by impressions – how many people saw your ads – as well as clicks – how many people were interested and clicked through to learn more. It can also be measured by engagement metrics – how many people engaged with your ad by liking a post or watching a video, etc.

Consideration – this is when someone has clearly identified their problem or need and are now in the phase of considering the options they have to solve or fulfil it. To measure this, you might still look at clicks to your website as well as what actions people took once on your site. Did they fill in a form to download a guide or navigated to other pages to learn more?

Decision – this is when someone has identified how they’ll solve their problem or fulfil their need and they’re looking for the organisation that will do just that for them. This is usually measured in terms of conversions – did they contact you or purchase from you?

Know Your Audience

It’s great to know your goal but it’s even better to know who you’re targeting. You should do some research to understand who your potential customers are. This can be done by creating personas which are semi-fictional characters that correspond to your ideal customer. You define them by understanding who they are as well as the challenges and pain points that will trigger them to buy products or services like yours.

Knowing your audience is essential to build efficient ads. It will help you understand which platforms to advertise on and which to avoid. It will also help you choose the best targeting options to reach them and you’ll be able to craft great ads that will appeal to them.

Calculate Your Budget

Now that you’ve identified your goal and your audience, you need to know how much you can spend. You might already have a specific budget that has been given to you, but you’ll need to decide where to spend it. We know most businesses don’t have endless pockets and their budgets need to be maximised for return.

The biggest mistake that most businesses make is spreading their budget too thin between platforms or campaigns. They end up being limited by their budget and don’t see any positive results. That’s why it’s best to focus on one platform or one type of targeting rather than trying everything at once. This way, you can fully commit to maximise performance. If the results end up being bad, you can move on to the next. Marketing is all about trial and error.

There are many tools out there that can give you estimates of Cost per Click (CPC) and search volumes to calculate how much advertising on specific terms might cost you. Advertising platforms will also sometimes give you an idea of the budget you’d need when you’re setting up your campaign and choosing targeting options. Although these are usually pretty vague, do pay attention to them and it will give you a broad estimate of what you can expect. However, you’ll only know how much it will cost you exactly until you start advertising.

Which Paid Media Channel to Invest in?

There are many online advertising channels out there, so which one should your business invest in? To answer this question, you need to have thought about your goals, identified your audience and calculated your budget as mentioned in the previous section. These steps will help you determine which channel is best for you.

Meet Your Audience Where They Are

There’s no point advertising on a channel if your audience doesn’t use it. It sounds pretty obvious but sometimes businesses focus on a channel because of the hype or novelty rather than figuring out if their audience actually uses it.

If your target audience is made of HR professionals, LinkedIn is probably a good bet because you’ll be able to target them easily and they’ll definitely be using the platform on a regular basis. However, if you’re targeting middle-aged mums, Facebook might be a better bet as they probably hang out more on the platform. Both groups could also be targeted on Google as this platform casts a much wider net.

Keep Focused on Your Objective

Although most online advertising platforms cater for the various stages of the buyer’s journey, some might work better for certain objectives. Once you’ve identified the platform your audience uses online, look into the types of campaigns they offer to see if it will fit your objectives.

If you’re looking to reach as many people as possible for an awareness campaign, Google is usually a good bet because their network covers over 2 million sites and reaches over 90% of people on the internet. However, if you’re more interested in pinpointing specific audiences, LinkedIn, Twitter or Facebook can work really well.

If your goal is to sell products, Google Shopping and Facebook offer great campaign types. If you’re looking to gather leads though, LinkedIn and Google are usually the best places to go.

Reach Your Ideal Cost Per Acquisition

Once you know where your audience goes and what your goals are, you need to consider how much money you’re ready to spend to acquire leads or customers. Some platforms might be more expensive than others although it’s always difficult to determine this beforehand because most of them work on an auction basis so there aren’t any fixed prices to review.

Depending on the industry, Google can be quite cost effective, but you’ll need to do some keyword research to see how competitive your sector is. Microsoft Advertising, formerly known as Bing Ads, is a good alternative as they tend to be slightly cheaper although their reach can be much smaller than Google depending on the industry and geography you’re targeting.

Although we’ve seen an increase in prices in the past few years, the Google Display network is a cheap way to reach a vast audience where you might pay under £1 per click. However, bear in mind that the less you pay, the lower the quality of your placements will be. YouTube is still very cheap, and you can pay as little as a few pennies per view.

Compared to the Google Display and Video networks, LinkedIn and Facebook tend to be much more expensive, but you can usually target more specific audiences. Do your research but remember that you won’t know exactly how much it costs until you give it a go. You’ll have to test the networks you’re interested in until you find the right combinations.

Before jumping into a platform, you should determine how much your average lifetime customer value is worth to understand if your cost per acquisition is too high or if you can afford to spend more to acquire new customers.

Getting Started with Paid Advertising

The world of biddable media can be daunting with all its platforms, campaign types and rules. Here’s a list summarising what we’ve explained in the previous sections to help you get started.

Define your strategy

Platforms - Identify which platforms your target audience likes to focus your efforts where it matters.
Objectives - Define SMART goals (Specific, Measurable, Achievable, Realistic and Timely) to focus your marketing efforts. From these goals, you can define specific objectives and decide which online advertising platforms and campaign types are best to reach these objectives.
Budget - Identify your available budget and decide how to distribute it between platforms and/or campaigns. Don’t spread your budget too thin else you won’t see any results. Instead be strategic on what you focus your budget, making sure that the platforms you choose are the right ones for your audience.

You’ll need to calculate how much you can afford to pay for a lead or a customer to get a positive ROI out of your ads. This will help you understand how much you can afford to bid and if a campaign is profitable or not.

Build campaigns following best practices

Once’ you’ve identified the platform(s) that will best fit your audience, objectives and budget, you can start building your campaigns. Depending on the platform, there can be a lot of variables and options. Ensure you know what you’re doing or get experts to do it for you. You want to maximise your budget and getting just one setting wrong can waste a lot of money!

Test and analyse

Review performance regularly – every two weeks is usually best practice – to optimise your campaigns. Remember every campaign is a test. You’re testing hypotheses and seeing what works best for your business. If something doesn’t work, move on to the next test. Also, a campaign might work beautifully for a while, but things change. Keeping on top of your campaigns means you can make sure you change with them.

Measuring Performance of Your Paid Campaigns

Tracking

If you’re not tracking engagement and conversions from your paid campaigns, you might as well throw money out of the window! Most PPC advertising platforms provide you with some form of tracking, usually a tag or a pixel that you need to add to your site. This allows the advertising platform to gather data about the person who clicked your ad once they’re on your site and present this data within their analytics report.

It’s important to install this tracking correctly and fully, as it will give you invaluable data about the performance of your campaigns. Some platforms like Google will even start optimising the campaigns for you; if they see a particular keyword gets more conversions, Google’s machine will push your ads more often for this keyword to increase the number of conversions. It’s in their interest to show you that their platform brings you value!

You should also ensure that you’ve configured your main analytics platform to track traffic from your various advertising platforms. Most businesses use Google Analytics but there are other platforms on the market such as Adobe or HubSpot. Ensure you’re using the right UTM codes on your ads and link your analytics platform with your advertising platform if available. This will ensure that both platforms understand each other and paint the overall picture of a user’s journey without any gaps.

Be sceptical about the number of conversions some advertising platforms record as it’s in their interest to attribute conversions to their platforms. Remember the buyer journey is complex and one conversion might be the result of various platforms put together. We usually prefer to use Google Analytics to review performance as it provides a holistic view of the channels you’re using. Tools like HubSpot can also give you a better idea of how your campaigns are performing.

Key Performance Indicators

Remember the goals and objectives you had to set up earlier? Make sure you keep them in mind when analysing the performance of your campaigns. It’s easy to get overwhelmed by the number of metrics your advertising platform is showing you. Focus your attention on the metrics that matter to reach your objectives – your Key Performance Indicators or KPIs.

If you’re looking to get conversions (not necessarily just sales but sign ups, downloads, etc as well), you shouldn’t worry too much about how many likes a post received but rather look at the clickthrough rate and the conversion rate. Are people enticed to click through to your website and, once they’re on your site, are they enticed to buy? You can then decide which metric you should improve. If your clickthrough rate is low, try changing your ads. If your conversion rate is low, you’ll need to review your landing page.

Alternatives to Paid Advertising

Paid advertising is a fast way to get more visits to your site and, in turn, more conversions. It can also complement your Inbound Marketing and SEO strategies on competitive terms as well as expand your reach to various audiences. However, not every business has a big budget to spend on ads and sometimes, you’ll need to find alternatives to running paid campaigns to achieve your goals.

SEO

Search Engine Optimisation is a great way to increase traffic to your site by targeting relevant keywords for your business. Although you don’t have to pay to show in search results, SEO is not free as you need to invest time and resources into optimising your site and content for search engines. Bear in mind that SEO is a long-term game and it will take some time for search engines to react to the changes you make on your site.

Organic Social Media

Posting on social media organically – without paying – can be another way of reaching larger audiences. You’ll need to invest the time in creating engaging content that people will want to share and interact with and keep promoting it regularly. As social media is all about conversations, you’ll also need to take active part in discussions online if you want this strategy to work. This is also a long-term game.

Email

Although you might not reach new people with email – please don’t buy lists of contacts, it’s spammy and never works – you can nurture your existing contacts with email. Email marketing is usually seen as an old-fashioned channel, but it has amazing ROI. You’re talking to people who have agreed to hear from you so keep them interested! If you send them useful information, they’ll likely move down the marketing funnel and could become a valuable customer.

Events

Organising or taking part in events such as conferences and exhibitions can also be a good way to expand your targeting. It will highly depend on your industry and the people you’re trying to reach, but it’s a great way to create more personal relationships with people. However, it can be very expensive and the reach might be limited.

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