What is Paid Search?

A guide to getting you started

Want to be at the top of Google for any search term within 15 minutes? Well you can, if you are willing to pay the price.

Paid search refers to the sponsored adverts that surround the natural search results on the Search Engine Results Pages (SERPs) of a search engine. They will often appear above and to the right of the natural search results. The advertisers that are displayed for a search aren’t actually paying to appear on these listings. The reason for this is due to the paid search auction model.

Paid Search Auction Model

The basic payment model for paid search is easy to understand:

You tell the search engines the maximum you are willing to pay every time when someone clicks on your advert. This is referred to as your Maximum Cost Per Click (Max CPC).

This will determine at what position your advert will appear on the listings. The more you are prepared pay the higher you sit. Once someone clicks on your advert you will be charged an amount, referred to as Cost Per Click (CPC). This will never go above you Max CPC (the limit set by you) but may be lower than what you set. This is because the search engines adopt a discounting scheme to ensure you only pay 1 pence/cent to beat the advertiser below you.

Quality Score

To help ensure only relevant advertisers appears, a “quality scoring” system is used to determine how relevant an advertiser is to the keyword they bid on. The higher your quality score then the higher your adverts will appear. The added bonus is that the search engines will reward you but reducing the amount you pay. You could be appearing in number 1 position but be paying less than advertisers in position 2.

This makes the listings more relevant to the user; the user is happy with the experience and come back again and again. This is great for the search engine! Everyone wins!

Calculating Quality Score

The algorithm that determines quality score looks at a number of factors. For the purposes of this example we’ll just concentrate on the click through rate (CTR).

The click through rate is determined by the number of people who saw the advert (we refer to this as the impressions) divided by the number who actually clicked on it, expressed as a percentage:

100 impression / 10 clicks = 10% CTR

The higher the CTR, the more people clicked, meaning the advert is more relevant to searchers.

What does this mean?

Search engines will reward advertiser with higher click through rates by listing them higher for less cost per click (CPC). This is what makes having a well optimised paid search campaign more cost efficient. It is important to make sure your campaigns, adverts and keywords are optimised to maximise performance.