What Is Paid Advertising and How Does It Work?
So, you’ve got a great brand, and you want the world to know it. Time to put your money where your mouth is — and nothing speaks quite as loud as paid advertising.
What Is Paid Advertising?
In broad terms, paid ads are pretty much any media space you purchase (as opposed to earned or owned media). Within the realm of digital marketing, paid advertising typically refers to pay-per-click (PPC), pay-per-impression (PPI), or display ads. Here, we’ll explore these types of ads — and more — so you can decide if paid advertising is the right fit to amplify your brand’s voice.
How Does Paid Advertising Work?
So you open your wallet and the clicks and leads start pouring in — easy peasy, right? Not so fast. Paid advertising is a highly effective marketing tool for sure, but it’s a little more complicated than the name lets on.
Most paid ad platforms use a bidding methodology in which you input your max bid per ad and the platform’s algorithm works to place it in open slots. Algorithms vary widely from platform to platform, but most will take into account the amount of your bid and the quality of your ad.
How you currently rank in search — and how the competition ranks — is also an important component of your paid ad strategy. Especially considering that all of these factors will contribute to your cost-per-click (CPC).
The end goal? Get the most clicks at the lowest CPC to maximize your budget.
Once your ads are placed, there are two ways they can be served up, depending on the ad type. Search ads are triggered when a user enters a specific keyword that matches your ad, while display ads are triggered when a user meets your targeting criteria when browsing other sites.
A Brief History of Paid Advertising
The internet as we know it was still in its youth when online publications began to realize they could earn advertising dollars by selling space on their site, similar to their print versions.
1994: Wired magazine’s online publication begins selling banner ads to advertisers for an upfront cost.
1996: Doubleclick (now under the Google umbrella) starts compiling data based on paid ad performance, allowing advertisers to optimize ads mid-campaign. Cost-per-impression (CPM) became the standard payment method.
1999: GoTo.com creates the first bidding and auction system for paid search ads. It faced backlash as it clogged up SERPs and users began receiving ads not relevant to their search.
2000: Google introduces AdWords, which quickly dominated the market in paid search.
2006: Facebook launches the first social paid ads, using its deep data stores to create exceptionally targeted ads.
And this all brings us to today. Paid ad platforms are more sophisticated than ever, but so are users. Many rely on ad blockers to turn off the noise, and it helps if you understand the dos and don’ts of paid advertising before you try to be heard. To be effective, ads must be highly targeted to buyer personas and aligned with user intent. Low-quality, intrusive ads will do little more than drain your bank account.
Do Paid Ads Work?
You bet they do! At FPS, we’re pretty devoted to organic, inbound, and SEO, but we can’t deny the power of paid. With ad spend projected to top $88 billion this year, it’s a fast-growing, high-dollar industry, and if you want quick, measurable results, it’s a surefire way to get them.
SEO still holds the top spot in our hearts, but the fact is, you can’t guarantee a top spot on Google with organic search. And since the top-ranked result is nearly always an ad placement and receives close to an 8 percent click-through rate, you can’t beat the visibility and results paid ads deliver.
Benefits of Paid Advertising
Not sure the 200 percent ROAS is enough to persuade you? Consider this: Search ads increase brand awareness by 80 percent, and 50 percent of all visitors who find your site via a paid ad are more likely to make a purchase. Need more proof that paid ads will bring value to your brand? We’ve got you covered.
Faster way to drive traffic and revenue
It is a truth universally acknowledged that SEO is a long game. While highly effective at generating long-term, sustainable growth, it isn’t the go-to for making fast bank. Paid advertising, on the other hand, can kick-start your growth quickly and efficiently so you’re still bringing in revenue while you wait for your SEO strategy to take off.
Look at it not as a replacement for SEO but as a powerful complement to it. SEO will get you the results you want tomorrow, but paid ads will help you jump-start your performance today.
Measurable tactics to improve strategy and results
Data-driven marketing is a crucial piece of overall growth marketing. Mining, analyzing, and interpreting data allows you to make informed decisions and pivot quickly when a particular tactic isn’t working.
Paid ads offer twofold benefits in this regard. First, you get real-time insights into how your ads are performing, so you know exactly what moves the needle and when you need to make adjustments. Second, you get access to in-depth information on your audience, which can help you nail down your buyer persona and tailor your other marketing initiatives accordingly.
Reach your audience where they hang out
Paid ads can reach a very broad audience, but they can also target extremely specific niches. Unlike traditional broadcast media (like TV and radio), you aren’t sending out your message in the hopes that the right audience just happens to catch your commercial. Instead, you’re using data, keywords, and custom messaging to hit the right audience when and where it counts.
This may involve some trial and error as you work to understand where your audience is spending time online. You might need to try several social media platforms or tweak keywords for paid search. But once you’ve found them, you’re golden.
Retargeting or remarketing ads are some of the most effective because they are the most relevant to your audience. Retargeting ads are delivered to users who have already visited your website, whether it’s your homepage or a specific landing page.
Once they’ve shown an interest, you can create customized ads to woo them back, where they’ll be much more likely to convert on follow-up visits. Retarget them across multiple platforms for maximum impact.
4 Paid Advertising Channels to Know
Now you have a good handle on some of the specific terminology around paid ads, and you know when and how they should be used. Time for the big question — where do you use them? That answer will vary based on your audience, your budget, and your goals, but you have plenty of options to test and experiment with.
1. Search Ads
Of course, we all know that Google is the heavy hitter here, with over 92 percent of total search engine market share.
But other search engines also present opportunities to advertise to your target audience.Google Ads
Yes, there are other search engines, but no, none of them pack the same punch as Google. No matter what is searched, from pizza and hot yoga to (as in the example below) earrings, your first result — and sometimes your first 3-5 results — will be ads.
You can see in the example, Google ads are always marked clearly with the bold “Ad” notation. Ads may pop up in a carousel or in a sidebar.Bing Ads
Bing is a very distant second in the search engine game, but it still does a lot of business in paid search. Much like Google, Bing ads appear in the top position(s) and sometimes in a sidebar. While Google ads are marked on the left, Bing’s ad designation appears on the right.
2. Social Media Ads
As we mentioned previously, one of the keys to paid advertising is hanging out where your audience is. There’s no better place to do that than finding a comfy spot in the place they’re sure to spend a lot of their time — social media.
Revenue has grown tremendously over the last few years for social media ads on both desktop and mobile platforms.
To choose the best social platform, you’ll need to have an in-depth understanding of your buyer persona, and you’ll need to make sure your brand is ready to create interactive, highly sharable content, and engage with followers.Facebook Ads
Facebook ads are incredibly robust and allow deep targeting for almost any audience. It also allows for a wide variety of formats, from static images and video ads to the ad carousels as seen below.
In general, LinkedIn is a great place to go if you’re targeting professionals within a specific industry. LinkedIn is especially valuable for B2B and SaaS brands who truly understand their niche and what their audience wants and needs.
Another Meta product, Instagram allows you to manage ads alongside Facebook ads so you can keep your content consistent across platforms. Alternately, Meta also allows you to run them separately if you want to tweak the design or test messaging for different audiences.
Twitter ads are a fantastic way to gain new followers. Why does that matter? Because 93 percent of users who follow brands on Twitter say they plan to purchase from them.
3. Display Advertising
Display advertising is one of the oldest forms of digital paid advertising, and it’s persisted this long because it works. And when it comes to display ads, bigger is usually better. Large banner ads are typically the most effective, as are square ads in the top half of the screen. Smaller, lower positioned ads still perform but not as well.
A type of display ad, native ads are generally less intrusive and follow the user experience on a particular website. They match the branding and layout of the site, and often don’t stand out as paid advertising at all.
4. Influencer Marketing
When searching for influencers, it’s important to know exactly what you want and — more importantly — what you can afford. Celebrity influencers command the big bucks and drive serious revenue, but they don’t come cheap. For many brands, it’s more cost-efficient to look for micro influencers — those with 10,000 followers or less — in your specific industry.
18 Best Practices for Paid Ads
Ready to get started growing your brand with paid ads? But which to choose? In our mind, paid search is a fantastic place to start — it will get you clicks, traffic, and — hopefully — conversions. And you can use keywords to tailor your messaging to reach the right audience. Here’s how to do it:
Partner with a Paid Ad Specialist to Maximize Your Ad Budget
We know — it’s a lot to take in. But with a little research and planning, you can absolutely create a paid ad campaign that delivers measurable results. A lot of paid ad platforms tout their ease of use and DIY capabilities.
And yes, you certainly can plan, implement, and manage a paid ad campaign on your own. But if you want to maximize your results and make your budget stretch as far as possible, it helps to have support from a trusted expert.
At FPS, we can help you set a budget that will get results and plan a strategy that works. We can also help create visually stunning ads and customized messaging that increase conversion. Want to find out more? Get in touch today!