You’ve heard the term used in a YouTube video from your favourite internet marketer, or have seen it pop-up in a few articles about digital marketing, but you’re not really sure what SEM is.
And does it have anything to do with SEO?
In this blog post, we’ll cover these and other topics related to SEM. We’ll explore the relationship between SEM and PPC, explain the difference between SEM and SEO, and share how you can use this marketing method to grow your business.
What is SEM and can it Help Grow Your Business?:
What is SEM?
SEM (Search Engine Marketing) is the systematic process of attracting website traffic by purchasing advertisements on search engine advertising platforms.
Sounds like a mouthful, but it’s really easy to understand once you know how it all works.
Search engine marketing was born in the 90s. Search engines needed a way to monetise their platforms and so SEM business models were created.
Today, SEM is big business. In fact, a large chunk of Google’s USD 135.22 billion in revenue in 2018 was attributed to their search marketing business.
Image: Statista
What Does SEM Look Like?
There’s a good chance that you’ve been exposed to SEM. Actually, there’s an even better chance that you’ve interacted with SEM on numerous occasions.
How do you spot SEM?
Here’s are a few examples of SEM in action:
The Display Ad
In this example, Google serves up a collection of plumbing businesses each with ratings. The ratings are based on customer reviews. Note the word “Sponsored” highlighted in yellow.
A Pay-Per-Click Ad
This is the most common type of SEM ad. It is text-based and also highly-targeted. Businesses use these to attract customers looking for their services.
Note the word “Ad” that appears before each URL.
When an advert from a business appears in search engine results and is clicked on by a user, the business is then charged by the search engine platform. Hence the term “pay-per-click.”
How Does SEM Work
These, and many other ads like these, are used by businesses around the world. Google, like Bing, Yahoo! and other search engines offer brands the opportunity to bid for keywords that users type into their search engines.
Search engines have built sophisticated advertising platforms. They are powered by AI, algorithms and machine learning. These platforms are responsible for serving up adverts that brands want to use to generate more business.
Bids and Bidding for Ads
Search engines use bidding methodology to create a competitive landscape for businesses. This framework often includes the option to set a bid price for advertisements each business can run.
SEM vs PPC?
PPC or Pay-Per-Click advertising is a form of SEM. PPC allows businesses to pay for each click made on an ad they’ve created for a search engine. Using PPC, businesses are able to create various adverts (ad groups) a collection of keywords that search engine users would use to find businesses services.
Advertising Budgets
Search engine marketing platforms also allow businesses to set limits on their daily, weekly and monthly spending. This is helpful, especially if your business has a fixed budget or is testing an ad group to find the highest converting ad.
Budgets can range from $10/day upward. As you’d imagine, the greater your budget, the easier it will be to reach more potential buyers and test ad group for the best possible results.
SEM vs SEO? What’s the Difference?
To recap, SEM is used to attract website traffic by buying ads on search engine advertising platforms.
Search engine optimisation or SEO is also used to generate traffic for a website. Unlike SEM, SEO is used to rank website content organically (without paid advertising). SEO also takes longer to generate results (often between 3 to 6 months), where SEM can can take hours and days.
SEO is broken into two parts, on-page and off-page SEO. Here’s what each involves:
On-page SEO
On-page SEO is concerned with the optimisation of all elements that appear on a website page. This includes optimising page titles, headlines, ensuring that web pages include the right volume of keyword usage and that images are also optimised with search terms.
Off-page SEO
Off-page SEO is all about creating the right connection of relevance for search engines. This involves securing backlinks from relevant and high profile websites, incorporating social sharing signals (links from social media) and a host of other factors.
SEO is growing and constantly evolving field. To date, there are an estimated 200+ ranking factors that Google reportedly considers when ranking one website above another.
While they go by different names and involve different tactics, SEM and SEO are geared toward the same goal: helping businesses generate more awareness, leads and sales.
Is SEM Expensive?
The cost of SEM is determined by the market. For search engines like Google, Bing and Yahoo!, creating a competitive market is at the heart of their business models. This means that the brand with the most money should win, right?
Well, not exactly.
Over the years, search engines have evolved their algorithms to help businesses optimise their ad spend. For example, one of the most covered topics in the SEM world is Googles Quality Score.
The Quality Score rating that Google assigns to your keywords and PPC ads. This is an important metric because it ultimately influences how much each click will cost your business.
Your Quality Score is also assigned once multiple factors have been considered by Google.
These factors include:
-
- Your click-through rate (CTR). This the amount of people who click on your ad after seeing it in search engine results.
- The relevance of each keyword to its ad group. Keywords that are less relevant to an ad group can lead to a lower score, while highly relevant terms can boost a score.
- Landing page quality and relevance. While choosing the right terms is essential, where you direct traffic to is equally important. Your landing page must include ad scent elements. These elements help visitors quickly identify or see the relation between the advert and the landing page. This includes the messaging and imagery you use.
- The relevance of your ad text. The right messaging goes a long way. Text relevance, therefore, influences how effective your ad is at helping users find the information they need.
- Your historical Google Ads account performance. This includes how well previous campaigns have performed.
Why does all of this matter?
Google and other search engines have one goal: to provide their users with the most accurate information or any topic they are interested in. Therefore, if your advert is less than helpful, Google won’t want to create a poor user experience and will rather return a more optimised and relevant result.
How can you use SEM for Your Business?
SEM should form part of a larger digital marketing strategy. It can be used in various ways, but most importantly, it should always be tied to business goals (think creating awareness, generating leads and sales).
Here are four tips to bear in mind as you create your SEM strategy:
Know Your Goals
Like all marketing, SEM must be linked to business goals. Do you need to generate more leads or sales? Or are you focused on creating more awareness for a new product you’ve just launched?
Whatever the cause, SEM is based on intent and is, therefore, one of the most powerful marketing avenues available. But to generate results, you must know what you’re gunning for and why.
Maximise Your Budget
While access to an unlimited budget would be every marketer’s dream, it’s just not feasible. Maximising your budget becomes essential. There are various ways to accomplish this, from removing negative keywords from ad groups to performing conversion rate optimisation to improve return on ad spend.
Perfect Ad Scent
Ad scent is likely one of the more neglected aspects of SEM. This is because marketers often dedicate most of their time to creating the most powerful ads possible. And while some focus on landing pages and delivering attractive and user-friendly experiences, they somehow miss the opportunity to convert visitors.
When creating your landing pages and ads, create a clear correlation between both. As mentioned earlier, search engines want to create the most pleasurable experiences for their users. If your ad and landing page don’t provide what visitors is after, you’ll lose money and generate poor results.
When optimising your ads and landing pages, here are a few elements to pay attention to:
- Use landing page messaging that relates to the ad the visitor just clicked on
- Use images that are relevant to the messaging on your landing page
- Include trust symbols where necessary (think SSL security site seals)
- Use social proof to build credibility
Image: Instapage
Use Split Testing to Generate Better Results
Split testing is used to compare ads and landing pages with different designs and messaging. The goal is to determine which works best and then to scale your marketing by channelling more funds to the more successful option.
You should split test every ad and landing page. This will help you produce conclusive data to support future ad spend and campaigns.
Which Metrics Matter When Using SEM?
There are a host of metrics you can track when using SEM. Most marketers, however, would argue that return on ad spend or ROAS is the most important.
What is ROAS?
ROAS is a way to determine the average return for your advertising spend on a digital channel (think Google PPC).
For example, let’s say you own an e-commerce store. You spend $200 on ads monthly and generate $800 in sales.
To calculate how efficient your marketing is, you would use the following ROAS formula:
Revenue / ad spend = ROAS
800 / 200 = 4.
This means that for every dollar you spend, you generate $4.
Why not use ROI?
Unlike ROAS, ROI accounts for the margin a business makes on its products and service. ROI is also typically used for measuring the success of all marketing. Using the same figures from above, and a margin of 20%, here’s what an ROI calculation looks like:
(((Turnover x Margin Rate) - Expenses) / Expenses) x 100 = ROI
(((800 x .2) - 200) / 200) x 100 = -20
ROI appears to be negative. This means your campaign is not worth the investment according to the ROI it generates.
As you can tell, ROI and ROAS are applied in different capacities (ROAS to track how PPC ads are performing and ROI to measure your overall marketing success).
This means you should use them together, but apply them in the correct context.
Conclusion
SEM is the process of using paid advertisings to generate traffic for a website. As part of a larger digital marketing strategy, it’s a great way to capture quick results. While SEM is ideal for businesses looking to attract new customers and grow revenue, they should be mindful of the intricacies of using SEM.
Knowing which metrics influence their spend and how to track and improve them is crucial. With a firm grip on these and other important elements, brands will be able to systematically produce better results, save more money on SEM, and scale their growth.
