When Google launched AdWords on October 23, 2000, it changed everything for marketers. Brands spent millions convincing someone to want something. With AdWords’ search-based ads, they didn’t have to—they could just serve their ads to people already searching for products like theirs. If you sold tennis shoes, you could simply serve ads to people looking for tennis shoes, and only pay when someone clicks your ad. Search Engine Marketing (SEM) was born.
SEM has come a long way since the year 2000 (and it’s now Google Ads instead of AdWords), but the fundamentals are the same. It remains an incredible marketing channel for many brands.
What is Search Engine Marketing?
Like many terms in digital marketing, the term search engine marketing (often abbreviated as SEM) can be a little confusing to the uninitiated. Put simply, SEM refers to paying for advertising on search engines.
The most important distinction is that SEM is different from search engine optimization (SEO). There are two ways to reach your customers in search engines (we’ll use Google as an example, but it could be any search engine, like Bing):
- SEM refers to advertising on Google.
- SEO refers to updating your website to show up in Google search results naturally, or “organically”—meaning you didn’t pay for that placement.
Example Google search: results in the green box are ads (from SEM), and the result below is organic (from SEO).
SEM can show your ads in results instantly, as you are essentially paying for placement on the Google search results page. SEO efforts, by contrast, can take months or years before you show up in your targeted searches.
It is a common misconception that SEO and SEM overlap each other. Running SEM campaigns has no bearing on your SEO and vice versa.
Key SEM terminology
Search engine marketing is based on a few key principles:
- Search Engine Results Page (SERP). This is the page of search results that shows up when you Google something. The SERP includes both the paid (SEM) and organic (SEO) search results.
- Keywords (KWs). Keywords are how you tell Google which search terms (what someone actually types into Google) should trigger your ads. In SEM, keywords can be highly specific exact match keywords (show my ad only if someone types “athletic green size 12 tennis shoes”) or more general broad match keywords (show my ad when someone types any phrase that includes “tennis shoes”). While “regular” keywords target search terms, negative keywords exclude search terms. For example, many advertisers add free to their ad campaigns as a negative keyword, which would mean their ads wouldn’t show up on searches for “free tennis shoes.”
- Pay Per Click (PPC). Pay per click is the foundational business model for most search ads. This was part of Google’s compelling unique value proposition when launching AdWords—you only pay when someone clicks your ad. Modern SEM campaigns aren’t always billed per click, but it remains an important industry concept, and some people still refer to search engine marketing as PPC advertising or PPC marketing.
SERP, Keyword, and PPC ad examples
How does search engine marketing work?
Google’s AdWords product actually created two revolutions in marketing: search intent targeting and auction-based advertising. To understand how SEM works, you need to understand these two frameworks:
Search intent targeting
When marketers build SEM campaigns, their starting point is search intent. This means defining two important things:
- What are our potential customers/users searching for?
- How close are they to buying something?
For example, a search such as “fun ways to exercise outside” indicates that a user might eventually buy tennis shoes but isn’t necessarily in the market for them at the time of their search. The search intent here is to exercise and potentially use tennis shoes, but not to buy them. However, a search such as “best tennis shoes for narrow feet size 10” indicates that the user is much closer to making a purchase because of the specificity of their search. This is considered a “high search intent” search for buying tennis shoes.
SEM marketers typically build their campaigns to target the highest possible search intents by creating ad groups targeting either “branded” terms (their own brand or their competitors’, such as “Nike tennis shoes”) or highly specific “unbranded” (sometimes called “nonbranded”) searches for their products or services (e.g., “athletic tennis shoes”).
Google’s second revolution was its auction-based bidding system. In regular advertising, the company sets a rate card for its ad space (for example, $10,000 to run a 30-second ad on a TV show), and advertisers buy that ad space. With Google, there are billions of different ad spaces (Google processes over 5 billion searches per day), each with its own intent and number of users searching it per month, so they couldn’t just set a single rate for a search result.
Instead, Google created an auction-based system. Every single time a search happens in Google, they run a real-time ad auction and “award” each ad space on that search to an advertiser based on the auction results.
Unlike a regular auction, it’s not just awarded to the highest bidder, however. It’s awarded to a combination of the highest per-click bid and the ad’s “Quality Score,” Google’s proprietary metric for evaluating ad quality (other search engines have similar metrics).
An ad’s Quality Score is determined by a variety of factors:
- Estimated click-through rate (CTR): Will the user click the ad when shown?
- Relevance: How closely does your ad match the intent of the specific search?
- Ad landing page: How useful is your landing page once the user clicks through your ad?
In short, Google judges the “fit” your ad has for the user, like a painting auctioneer deciding to award the painting to the bidder in whose home they think it’ll look best. Much of the job of an SEM marketer is to achieve a high Quality Score (and low cost- per-click) on their high-intent keywords, by creating compelling ad copy and landing pages that match the keywords.
When is SEM right for your business?
There are two factors to help you understand if SEM is right for your business:
- When you’ve found your product/market/messaging fit. Your Quality Score determines how much you pay per click. A good score depends on ad copy that resonates with your target searchers. To be successful with SEM, you need to understand who your market is (product/market fit) and what resonates with them (market/messaging fit). If you haven’t accurately determined this, Google may assign you a low Quality Score, meaning you will be charged more for ads, and it will be difficult to succeed.
- When you are capturing a category instead of creating it. SEM relies on high-intent searches, which means people need to be searching for your type of product or service. If you sell tennis shoes, that’s no problem—in the US, there are 135,000 searches for “tennis shoes” every month. If your product is creating a new category, such as a hybrid tennis shoe/cozy slipper, people aren’t yet searching for it, so it will be much more difficult to determine the right keywords to target. You can create category awareness through other types of marketing, then run search engine marketing campaigns once the market is more aware of your product. You can do your own research on search queries in your industry using Google’s Keyword Planner.
Search engine marketing is one of the most powerful types of performance marketing—there’s a reason advertisers spend nearly $150 billion per year with Google. But it’s not just keyword targeting that makes it powerful—it’s the combination of the innovative pay-per-click model, high search intent, and auction-based bidding. By understanding these principles, marketers and business owners can start reaching their potential customers right when they’re ready to buy.