Keyword advertising is paid advertising that occurs in search engines. In addition to Google, other search engines include Bing and Yahoo. In Finland alone, there are 30 million Google searches conducted every day, so keyword advertising is a great way to increase visibility for a company. Visibility is also proven to be profitable, as the return on investment for keyword advertising is the highest of all marketing channels. The high return is based on the logic of keyword advertising: no other channel can reach a ready-to-buy target audience actively searching for a specific product or service.
When a user searches for something in a search engine, ads appear at the top of the page before organic search results. Depending on the level of competition, there can be 0-7 ads on one search results page. Keyword ads are distinguished from organic search results by the 'Ad' text next to the ad.
How does keyword advertising differ from search engine optimization?
Search engine marketing (SEM) consists of keyword advertising (Search Engine Advertising, SEA) and search engine optimization (Search Engine Optimization, SEO). Search engine marketing is the umbrella term, encompassing both paid and unpaid methods aimed at improving website visibility in search engines. However, the boundary between these terms is not always clear, and often the above-mentioned terms are used interchangeably. Keyword advertising and search engine optimization complement each other, and often the best results are achieved by investing in both simultaneously.
Keyword advertising is paid advertising that occurs in search engines. Ads are activated when a specific keyword is searched, and Google is paid for each ad click. It is advisable to start keyword advertising by conducting a comprehensive keyword analysis. Keyword analysis helps identify the most important keywords that a company should be visible for to potential customers conducting searches. It is important to understand the searcher's intent, i.e., the underlying reason why the search is being made. Nowadays, keyword advertising is the most important part of digital advertising for companies, as according to a study by IAB Europe, 43% of European digital marketing investments are directed towards search advertising.
Search engine optimization allows for influencing a website's organic visibility in search engines. Through search engine optimization, a website's ranking in search engines can be significantly improved. Search engine optimization is often divided into technical and content-focused optimization. On the other hand, search engine optimization can also be divided into internal and external optimization. Internal optimization of the site refers to modifying the site's structure, meta-data, and content to be search engine-friendly. External optimization, on the other hand, involves obtaining and building links from other sites to the company's website. Technical optimization includes, for example, improving the usability and speed of the site.
Search engine optimization is relatively slow, and often results are visible only after months. Therefore, it is advisable to start search engine marketing with keyword advertising, as it is possible to see the effectiveness of search engine marketing in a fairly short timeframe. The collected data can also be utilized in search engine optimization, knowing in advance which keywords work particularly well in the company's advertising.
5 reasons why keyword advertising is worthwhile:
The customer's buying journey starts from the search engine. Nowadays, most consumers start their information search on a search engine, such as Google. It is beneficial for a company to be present where the ready-to-buy audience is.
Precise targeting. In addition to keywords, keyword advertising can be targeted based on factors such as geographical location, language, gender, age, interests, or the device used.
Precise measurability of results. With data, it is easy to measure the effectiveness of advertising. However, this is often not done correctly, as advertising performance is tracked based on secondary metrics such as clicks and impressions. Our operation focuses solely on achieving real results, i.e., we aim to maximize contacts for service sector companies and transactions for online stores. Our service includes transparent reporting, so as our client, you always know what you are paying for. Read more about the service via the link.
Results of advertising are quickly visible. Results can be seen within a few days or weeks of starting keyword advertising.
No need for a large investment to start advertising. Keyword advertising can be started with a relatively small daily budget. The optimal size of the daily budget for your company should be planned together with a Google Ads advertising expert.
The cost of keyword advertising
The cost of keyword advertising is often thought to consist of two parts: the media budget paid to Google and the fee paid to the advertising agency for optimizing the Google account. The cost per individual click is influenced, for example, by the level of competition prevailing in the industry.
The cost of keyword advertising thus varies and is influenced by many factors. The following factors significantly affect the cost of keyword advertising:
Industry
The most competition is in industries that offer expert services, such as banking and financial services. Typically, service prices are high, and one new customer can be worth thousands to a company. The cost per click is determined by auction principles, so high competition is reflected in higher click prices. Due to higher click prices, the advertising budget becomes larger than usual.
Search volumes
In Google advertising, the size of the ad budget can be defined by the advertiser. The more products or services the company sells are searched for on Google, the larger the budget can be for advertising. However, an unlimited budget cannot be used, as search volumes set their own limitations on budgets. It is not advisable to randomly set the budget, as by finding the optimal level, advertising return can be maximized. A common pitfall for companies is setting the budget too low: the size of the budget and the results achieved through advertising often go hand in hand, so if the results show that advertising is very profitable, it is worth increasing the budget.
Investments in advertising development. Significant improvements in advertising results can be achieved through high-quality development work. (You can read more about improvements from our references.) The temptation for those comparing advertising agencies may be to choose the cheapest offer. However, the fact is that development work requires time and expertise. High quality and low price never go hand in hand - not when buying advertising agency services either.
How much does one click cost (CPC)?
Competition determines the price of a click, as click prices are determined in a real-time auction. The price is paid only for a click, so the display of the ad itself is free. In Finland, there is usually less competition than in many larger countries, which is why click prices in Finland often remain reasonable. The advertiser can determine the price they are willing to pay for one click.
High-quality scores lower the keyword-specific price and further the cost of keyword advertising. Additionally, high-quality scores can improve the position of ads. Quality scores indicate the quality of your ads compared to other advertisers and their ads. The display of ads with low quality scores costs more, and Google also limits the visibility of these ads.
The following three things affect the quality score of an ad:
Expected click-through rate. Indicates how likely a consumer who has seen the ad is to click on it. Google has not revealed the formula for calculating the expected click-through rate. The previous success of ads likely affects the expected click-through rate.
Ad relevance. Indicates how well the ad matches the search intent of the keyword used. Ads and ad groups should be closely targeted to the keyword used.
Landing page experience and relevance. The landing page is the page to which the consumer who clicked on the ad is directed. The landing page can also be called the starting page. The quality of the landing page depends on how well the content of the page matches the keyword and the ad. User experience is influenced by ease of navigation, page speed, and mobile-friendliness.
Each keyword is assigned a quality score based on the three factors mentioned above, on a scale of 1-10. The advertiser conducting keyword advertising can see the quality score level in the Google Ads management panel on a scale of "above average," "average," or "below average." This evaluation is based on a comparison to other advertisers whose ads have been displayed using the exact same keyword in the last 90 days. If any of the components receive quality scores below average, it may be worthwhile to try to improve the quality scores. Quality scores should be monitored systematically.
AdRank determines ad placements
AdRank is a scoring system used by Google that determines how Google ad slots are distributed. The better the AdRank, the higher the ad position that can be achieved. AdRank's main components include the quality scores mentioned in the previous section, as well as the bid (bid = the amount you are willing to pay at most for one click).
Advertising is highly profitable for Google, but it must ensure that search results are of high quality. For this reason, high-quality scores can allow an advertiser to surpass one who is willing to pay more per click but has lower quality scores.
In conclusion
Keyword advertising is highly profitable advertising that almost every company should consider implementing. The only exceptions are situations where a company exclusively engages in B2B commerce, and the product has no natural demand. Such situations are extremely rare. The effectiveness of keyword advertising is based on the fact that it allows advertising to be targeted to a ready-to-buy audience. Advertising is highly technical, so with a competent partner, it can provide a clear advantage in competition.
Book a free audit of your advertising account if you feel there is room for improvement in your company's advertising. We can also discuss your situation in general if you haven't tried keyword advertising before.
