Paid advertising is the process of placing advertisements online on relevant platforms for which the advertiser pays. It works based on the bidding system. This is an auction where the advertiser who is willing to pay more money for ad space wins. Advertisers pay either for impressions or for clicks.
How PPC Advertising Works
Most of the platforms that provide paid advertising services use algorithms to conduct real-time auctions. Algorithms determine which advertisement will be placed in the slot available online. The criteria are often a combination of bid amount and ad quality but can vary depending on the platform used. Platforms don’t always make standards transparent, but there are a variety of other variables to consider.
Ads come in many shapes and forms such as text, images, videos, and more. Many platforms now offer to automatically favor ads that perform well based on your goals. Their algorithms pick up more signals than humans can process, making it more efficient for letting them to decide which ads to push.
There are many targeting options to choose from but most of them fall into two main categories:
Search ads – run by someone actively searching for specific keywords; Ads usually appear on a search engine results page (SERP) and answer a specific question.
Display ads – run by someone who fits certain targeting criteria such as demographics or interests; Ads usually appear when someone is browsing the web or an app and can be considered annoying.
These two categories can sometimes be mixed and matched depending on the platform you’re using. However, we recommend analyzing their performance separately if you can. This is because search ads tend to perform better than display ads because they are less disruptive.
How effective is paid advertising?
The efficiency of your company’s paid advertising depends on your industry, your type of business, and your goals. To make an informed decision, consider the stats below.
- Google Ads stats show that every dollar spent on paid ads generates an ROI of $2.
- The average click-through rate for paid search ads from the first position is 7.94%.
- General PPC statistics indicate that PPC is profitable for 79% of marketers.
- Pay-per-click (PPC) advertising allows businesses to increase their brand awareness by 80%.
- Google Ads brings in 65% of clicks from ads containing purchase keywords.
- The top 3 ads attract 41% of all clicks made by users on Google.
- Online users who follow PPC ads have a 50% greater likelihood of conversion than those who use organic search.
- 32% of brands invest in pay-per-click (PPC) advertising to sell their products rather than promoting the company.
Therefore, paying to advertise helps companies increase their brand awareness and increase revenue. Let’s take a closer look at the advantages of this type of advertising.
Why are paid ads important?
instant results
Compared to natural (organic) promotion, which takes months or even years to see results, paid advertising allows you to quickly assess its effectiveness right after launch. For example, if you promote your product via Instagram Stories, you’ll be able to see results right away.
Perfect choice for startups
Startups and new businesses that are not yet online need paid advertising to find their target audience, showcase their products to the public, and bring innovations to the market. Without ads, the new promotion process will be difficult and time-consuming for new businesses.
targeting options
While organic promotion does not provide targeting opportunities, platforms that offer paid advertising allow marketers to choose their demographics, gender, age, interests, and preferences. When all options are set, you will be able to speak to the right audience and blast your campaign results.
global spread
Paid advertising allows you to collaborate with companies from similar industries around the world because the main factor in ad placement is its relevance. Besides, you can easily find new audiences working with publishers from different fields. As a result, your audience grows.
An added advantage in a highly competitive market
Shopping, hospitality, travel, and logistics are some of the most competitive industries in the world. This means that it can be difficult to appear naturally on the first page of a SERP, especially if your market share is low. But paid advertising allows you to showcase your company in front of your potential customers.
Retargeting opportunities
With the help of paid advertising, you can bring users back to your website. If a large percentage of your site visitors add items to their carts without buying, view the same product from time to time, and navigate the site, you can launch retargeting campaigns according to their interests and generate more sales.
Analytics
All advertising platforms make it easy for their customers to measure the success of advertising campaigns. Where you can monitor the number of users who viewed your ads, clicked on them, and converted them into customers. This way, you will have a clear picture of your marketing efforts and change your strategy as you go.
Types of Paid Ads
Social Media Marketing
Search Engine Marketing
Advertising on the digital screen
Influencer Marketing