A Complete Guide to SEM (Paid Search)

In today’s digital age, businesses rely on SEM to drive their marketing efforts. However, if you’re new to digital marketing, you may wonder: What is SEM? What does SEM stand for? And what is SEM in digital marketing?

SEM stands for Search Engine Marketing, a strategy that aims to improve a website’s visibility on search engine result pages (SERPs) through paid advertising. With search engines playing a pivotal role in connecting consumers with products and services, harnessing the power of SEM has become essential for businesses to thrive in the digital marketplace.

If you want to learn more about SEM or search ads, you’ve come to the right place! This article will serve as your comprehensive SEM guide, providing invaluable insights and practical tips to help you navigate the intricacies of this digital marketing strategy. Feel free to use the links throughout this resource to dive deeper into specific sections or related resources. 

Jump to a section:

1. What is SEM?
2. Types of Search Engine Marketing
3. How does SEM work?
4. Search Engine Marketing Examples
5. SEM vs. SEO
6. 6 Benefits of SEM for Businesses
7. Brief History of Search Ads
8. Search Engine Marketing Statistics and Trends
9. Paid Search Platforms
10. Essential SEM Tools for Your Campaign
11. How to Build a Solid Search Advertising Strategy
12. How to Improve Your Quality Score and Ad Rank
13. SEM Mistakes to Avoid
14. PPC vs. SEO
15. Competing in the Search Advertising Market
16. Taking SEM to the Next Level
17. Always be Optimizing

What is SEM (Search Engine Marketing)? 

SEM involves purchasing ads on Search Engine Results Pages (SERPs) to drive website traffic. 

Originally, SEM included all marketing activities on search engines, such as Search Engine Optimization (SEO) and search ads. Nowadays, the industry primarily uses the term to refer solely to paid search engine marketing or advertising. 

SEM is different from display ads, which use third-party websites rather than search engines as ad delivery platforms.

Types of Search Engine Marketing

There are three types of search engine marketing: 

1. PPC

PPC in search engine marketing involves advertisers paying a fee for every click of their ad. It involves bidding on keywords relevant to their business and creating compelling ad copies. These ads are displayed prominently on SERPs above the organic search results, marked as “sponsored” or “ad.”

2. Local SEO

Local SEO focuses on optimizing a business’s online presence to improve visibility in local search results, helping customers who search for products or services within a specific geographic area.

It usually involves using location-specific keywords, creating and optimizing a Google My Business listing, acquiring online reviews, and ensuring consistent NAP (Name, Address, Phone number) information across online directories.

3. Organic search engine optimization

Organic SEO focuses on improving a website’s visibility in organic search engine results. It includes researching keywords, creating high-quality and relevant content, optimizing meta tags and headings, improving website speed and mobile-friendliness, building high-quality backlinks, and enhancing user experience. 

How Does SEM Work? 

When implemented right, an SEM strategy can help you reach new customers, increase revenue, and boost brand awareness. However, you must first understand that it involves various components and processes working together to drive targeted traffic to a website. 

Here’s an overview of how SEM usually works:

1. Search engine marketers pick relevant high-volume and low-competition “keywords” or “key phrases” they want their ads to appear for.
2. They then state how much they will bid per click. 
3. When consumer searches trigger any associated keywords or phrases, ads will get shown or ranked depending on who bids the most, along with several other variables.
4. If the consumer clicks on an ad, the search engine marketer is charged for the click.

Search Engine Marketing Examples

Some search engine marketing examples include the following:

1. Product listing ads (PLAs)

E-commerce businesses can utilize SEM to showcase their products directly in search results with detailed information, including images, prices, and reviews.

2. Ad extensions

SEM allows businesses to enhance their ads with additional information and features. Ad extensions can include call buttons, location information, site links, customer reviews, and more.

3. Mobile advertising

With the increasing use of mobile devices, businesses leverage SEM to target users on smartphones and tablets. Mobile ads can be optimized for location targeting, click-to-call functionality, and app downloads, allowing businesses to reach users on the go.

SEM vs. SEO

SEO and SEM marketing share the same goal of increasing website visibility. However, they differ in execution. SEO primarily focuses on obtaining organic search traffic, whereas SEM encompasses both organic and paid search avenues.

Moreover, when advertising using search engine marketing (SEM), you only pay when someone clicks your ad. Whereas with SEO, you don’t pay for every click your webpage receives.

Here are the other differences between SEM and SEO. 

6 Benefits of SEM for Businesses 

From expanding brand exposure to gaining valuable insights through tracking and analytics, SEM offers many advantages that can help you gain the upper hand in digital marketing. Here are the benefits of SEM you can enjoy.

1. Brand exposure

SEM can feature your business on SERPs, capturing the attention of your target audience and fostering brand awareness. For instance, when you learn how to improve your landing page experience on Google Ads, Google rewards you with better ad positions. It can increase your visibility and attract more clicks.

2. Consistent traffic

SEM strategically targets relevant keywords and runs optimized campaigns, providing a reliable stream of visitors without the fluctuations associated with organic search.

3. Comprehensive targeting capabilities

By defining specific geographic locations, demographics, interests, and optimal ad display times, you can focus your marketing strategies on your most relevant audience, boosting conversions and optimizing your advertising budget.

4. Large market coverage

Access to search engines’ extensive user base allows you to expand your customer reach and tap into local and global markets, effectively extending your market coverage.

5. Test-friendly features

SEM platforms offer test-friendly features that allow you to experiment and optimize your campaigns. You can easily create multiple ad variations, test keywords, ad copy, landing page designs, and calls to action.

6. Exhaustive tracking and analytics

Ad platforms offer robust tracking tools that allow you to monitor key metrics such as impressions, clicks, conversions, and cost per acquisition (CPA). Search engine marketing analysis lets you measure your campaigns’ success, identify improvement areas, and make data-backed optimizations to achieve better results over time.

If you’re wondering about the potential pros and cons of paid search, find all the relevant answers in the following article: The Pros and Cons of Paid Search Advertising.

A Brief History of Search Ads

The evolution of SEM has been closely intertwined with search engines’ rapid growth and dominance in the digital landscape. From its humble beginnings in the advent of online advertising to its current pivotal role in boosting a business’s online visibility, this digital marketing strategy has transformed how we market and connect with audiences on the web.

Here is a more detailed history of SEM. 

• 1990 – Alan Emtage created the world’s first search engine, Archie. It searched FTP sites to create an index of downloadable files.
• 1994 – Yahoo! Search began as a collection of favorable web pages that included a man-made description with each URL.
• 1995 – Paul Flaherty, Louis Monier, and Briton Michael Burrows launched AltaVista, the first search engine to allow natural language queries, offering unlimited bandwidth and advanced search features.
• 1998 – Larry Page and Sergey Brin launched Google at Stanford University as a new search engine that analyzed website relationships.
• 1998 – Yahoo! turned down an offer to buy Google for $1 million (a huge oversight because Google now has a net worth of $1.4 trillion).
• 1999 – GoTo, one of the first search engine companies, successfully introduced the first pay-for-placement search engine service for brands.
• 2000 – The online advertising market crashed after the dot com bubble burst as many businesses went bankrupt, scaring away advertisers.
• 2000 – Google introduced AdWords and a “Quality Score” model, whereby websites were ranked by bid price and historical clickthrough rates for better relevance.
• 2002 – Google introduced CPC bidding, allowing advertisers to optimize their campaigns based on “max” CPC bid rather than “actual” CPC bid.
• 2004 – Google held a search market share of 84.7% of all searches. They IPO with a market value of $23.1 billion.
• 2005 – Google launched Google Analytics, a platform allowing advertisers to manage their ad campaigns better.
• 2008 – Google made several major changes to their Quality Score calculation for more relevant rankings and better user experiences.
• 2009 – Microsoft rebranded its search engine from “Live Search” to “Bing.” They partnered with Yahoo! to syndicate their ads on Yahoo! Search to steal market share from Google.
• 2014 – Online advertising spending continued to rise, with the mobile advertising market growing by over 90% annually in the United States.
• 2018 – Google consolidated and rebranded AdWords and DoubleClick as “Google Ads” and “Google Ad Manager.” It provided businesses with a unified platform that offers the benefits of Google AdWords and enhanced campaign management capabilities through Google Ad Manager.
• Present Day – Search engines continually optimize their features and algorithms to provide better ad targeting for various devices.

Search Engine Marketing Statistics and Trends 

Search advertising has proven an effective channel for generating qualified sales leads. If you’re not already convinced of the huge potential value that search ads bring, maybe some of these search engine marketing statistics will help entice you:

• Search advertising takes up the largest share of the digital marketing market, with a volume of $279.3 billion, as of 2023.
• As of March 2023, Google dominates the global desktop search market with a share of 85.53%, followed by Bing at 8.23% and Yahoo! at 2.44%.
• More than 80% of Alphabet’s (Google) revenue comes from Google ads.
• Microsoft generated around $11.59 billion in revenue from Bing advertising.
• Around 65% of small- to medium-sized businesses (SMBs) use PPC advertising.
• SMBs spend between $9000 and $10,000 per month on SEM.

Feel free to check out our blog post for more online advertising trends and statistics to help shape your search ad campaigns: 40 Online Advertising Statistics You Should Really Know.

Paid Search Platforms

Here are the leading paid search platforms you can choose from (figures updated as of June 2023):

Whatever you choose, keep in mind that thesesearch advertising platforms aren’t necessarily competing products. As a matter of fact, they can effectively complement each other, allowing you to expand your ad’s reach to new and unique territories and audiences.

Here’s a guide to help you decide which platform best fits your brand’s needs: SEM Platforms and How They Differ.

Essential SEM Tools for Your Campaign

Like most other marketing functions, many aspects of SEM can be automated. The right suite of tools can help speed things up and reduce the chance of human error. Not to mention everything becomes easier to track, making it easier to be data-driven.

You can use various tools to make paid search marketing less overwhelming. Here are just some areas you can optimize with software:

1. Keyword Strategy – finding, qualifying, and tracking keywords
2. Ad Copywriting – optimizing copy for search engines
3. Ad Formatting – ad types, sizes, and placements
4. Competitor Research – competitor keywords and audience targeting strategies
5. Account Management – managing ads at account/campaign/group level
6. Budgeting – intelligent tools for optimizing SEM budgets

So, you’ve got quite a few options here when it comes to choosing search engine marketing tools. However, your best bet will always be to research which tools best fit your business model and advertising strategy. 

For a list of great SEO and SEM tools to try for free, check out our awesome post below: 6 Free Tools That Make SEM a Breeze.

How to Build a Solid Search Advertising Strategy

SEM services go beyond targeting keywords and launching for paid ad campaigns. Here are some tips for creating strong and effective SEM strategies

1. Develop a search ad plan

Whether you’re doing Bing or Google search engine marketing, the first step to any successful SEM campaign will always be to plan. Strategically documenting the process is essential to ensure everyone’s on the same page and that overall campaign progress can be measured.

Here are the basic steps you’ll need to cover in your SEM plan:

• Defining search ad campaign goals
• Accessing the competition
• Selecting your SEM platform(s)
• Researching keywords
• Setting a budget
• Writing the ad copy
• Tracking and optimization

To learn more about how to plan these steps in detail, read our article that dissects the search advertising planning process: How to Develop an SEM Plan That Works for Your Brand.

2. Research and select keywords

This is arguably the most important part of your campaign because it will lay the foundations for the rest of your efforts. Your selected keywords will determine how easily your audience can find you and how relevant your ad will be to searchers.

Specific keywords will perform better than others, with huge differences in bidding competition and cost-per-click. Not to mention that competitors are always coming, going, and shifting strategies. So, it’s highly recommended that your keyword testing and optimization efforts be ongoing. The last thing you want to do is waste resources on tactics that are no longer effective.

Find out everything you need to know to research and select the right keywords for your brand with our comprehensive post on keyword research: The SEM Guide to Researching and Selecting Keywords. 

3. Create search ad copy

Once you’ve selected the best keywords to target, it’s time to start thinking about how you’re going to entice your audience to make that all-important click. This is where you need to do a bit of convincing, so it definitely pays to be a good copywriter.

Copy is the first thing a user sees when they’re exposed to a search ad, and first impressions are incredibly important for businesses because they can mean the difference between establishing a positive relationship and losing that visitor’s interest for good.

Always ensure your ad copy is relevant to your target keyword. When people use search engines, they naturally filter out and ignore ads that aren’t relevant to them. They’ll do the same to you if your ad copy doesn’t match their search intent.

Apart from relevance, there are a few other persuasive techniques for writing great ad copy. You’ll find detailed steps in our corresponding article: How to Write Great Copy for Search Ads.

4. Optimize paid search campaigns

As mentioned earlier, your SEM campaign optimization efforts must not be restricted to a specific period. Testing and improving is an ongoing process that must be addressed regularly so your strategies remain competitive.

There are several areas where optimization efforts can have very positive effects on your campaign. Things to pay attention to are:

• Search ad account structure
• Keyword list expansion
• Negative keywords
• Bidding strategies
• Audience targeting strategies

Each of these facets can always be further improved, no matter how much you’ve optimized your strategy in the past. Keep in mind that paid search (and most other marketing strategies) is that it’s not set-and-forget.

If you’re looking for actionable ways to optimize your SEM campaign, we’ve got you covered: 9 Ways to Optimize Your Paid Search Campaigns.

5. Build a relevant landing page

You’ve selected your keywords and written the ad copy. Now’s the time to start creating an optimized landing page to drive users. If your ad’s message is the tip of the iceberg, your landing page must cover the rest.

If a user lands on your website via your search ad, you’ve already paid for the click. At this point, the least you can do is ensure you’re doing everything possible to turn that click into a conversion.

Here are some essential elements of any successful landing page:

• A powerful headline
• A lead capture form
• A clear call to action
• A concise explanation about the offer’s unique benefits in the context of the user

Apart from this, you should also minimize the distractions on your landing page that could divert a user’s attention away from your call-to-action.

For more best practices on building PPC landing pages, check out our recent blog post: How to Optimize Your PPC Landing Page for More Conversions.

6. Keyword bidding strategies

Depending on your campaign’s goal, you can select a bidding strategy tailored to drive a specific metric. So, whether you want to focus on driving more clicks, impressions, or conversions, a bidding strategy can help.

Stick with default manual keyword bidding to learn the ropes. It allows you to run tests and evolve your bidding strategy over time to make it increasingly more efficient.

However, you can choose an automated bidding strategy if you’re lucky enough to have “clean” data from previous search ad campaigns. With automated bidding, you can use your historical conversion data to optimize conversions or conversion value bids. 

To learn more about search ad bidding strategies, read our post: 10 Proven Keyword Bidding Strategies to Optimize Your AdWords Campaign.

7. Structure account and budgeting

How you set up your SEM account structure will dictate how your ads get triggered, as well as the overall efficiency of your campaign.  For this reason, it’s important to structure your account and budget well at the onset.

First, choosing the right campaign type tells the ad platform what to optimize for and the types of users to prioritize. You should also organize your account well at the campaign, group, and keyword levels to facilitate better internal processing. 

Then there’s campaign budgeting. How much is too much? That depends on your test results because you should never allocate significant budgets toward untested ad campaigns. Once you can prove the return from your test ad spend, you can start thinking about scaling up your budget and maximizing conversion volume.

Want to know more about AdWords account structuring and budgeting? We’ve got an article just for that: AdWords Account Structure and Budgeting Best Practices.

8. Measure SEM campaign performance

Like any other marketing function, SEM is built on the fundamental cycle of Plan, Execute, Review, and Optimize. Campaign tracking is crucial for any PPC effort because it is easy to start throwing money down the drain. Really, really quickly.

How to effectively track your campaign’s performance depends on your overall goal. Once you’ve defined that, it trickles down to what strategies you should choose and what metrics to watch. They’ll most likely include the following:

For more on measuring your campaign’s performance and how to tell a story from the data, read our recent article: Critical Metrics to Measure the Success of Your Search Ads.

How to Improve Your Quality Score and Ad Rank 

There’s no question that you should learn how to improve your quality score. Any uplift in this metric will directly reduce your cost-per-click, which means a higher return on your ad spend. We all love a good discount!

On top of that, it’ll naturally increase your chances of ranking higher, which will mean more clicks compared to your competitors. Since cost-per-click is calculated based on the quality score and CPC of the ad below yours, any increase in quality score will make your competitors’ clicks more expensive. That’s one hell of a win-win!

Want to learn how to improve your ad rank and quality score? Check out the article below: How to Improve Your Quality Score and Search Ad Ranking.

SEM Mistakes to Avoid 

It doesn’t take much for an ad to perform well (just the right copy shown to the right audience). That’s why search marketing is one of the best options for companies who want immediate results.

The barriers to entry for search advertising are very low, which naturally makes the search advertising landscape extremely competitive. It’s also very easy for businesses to spend on search ads. So, without the right knowledge, it’s possible to waste a lot of resources on tactics that don’t push the needle.

Don’t make the same mistakes that have caused many search ad campaigns to fail. Look out for these obvious blunders and avoid them at all costs: 10 Rookie SEM Mistakes You Could Be Making Right Now.

PPC vs. SEO: Do Paid Search Ads Affect SEO?

If you’re venturing into SEM after trying organic efforts, you may wonder: do ads affect SEO? The short answer is no. Search ads and SEO don’t directly affect each other. However, you could still definitively say that doing well with your search ad campaign complements your SEO strategy and vice-versa.

First, both marketing strategies depend highly on keyword data to determine search intent. So, any information you collect in one department serves to aid in the other. Secondly, the success of both strategies is also highly dependent on the quality of the corresponding landing page. Best practices carry across in that sense as well.

Although neither concept directly impacts the other, it’s good to know where there’s a relationship because they can definitely be complementary.

To learn more about how you can create win-win digital marketing scenarios for yourself, be sure to check out our article: Uncovering the Relationship Between SEO and Paid Search.

Competing in the Search Advertising Market 

The search engine promotion landscape is highly competitive because of its low barriers to entry. On the one hand, this means you have to play your cards right regarding your keyword and bidding strategies. But on the other, it’s easy to collect information about your competitors’ efforts and use it to improve your campaigns.

The more you know about the competition, the more competitive you can be. This post will help you research, analyze, and stay one step ahead of your competitors in the search ad market: How to Spy on Your Search Ad Competitors.

Going one step further, you can use search advertising to poach potential customers from your direct competitors effectively. This involves aggressively bidding on your competitors’ keywords to show your ad higher on SERPs.

With the help of SEM analytics tools, you can analyze your biggest competitors and find gaps in their value provision processes. You can then tailor your ads to address these weaknesses and display them to people searching for that brand, making your brand outrightly more attractive.

For more on poaching traffic and customers from the competition, read our article: How to Steal Customers the Right Way with Paid Search Advertising.

Taking SEM to the Next Level 

Now that you know the basics of paid search, it’s time to start looking at more advanced SEM strategies to take your campaign to the next level. One significant development in SEM is the emergence of Artificial Intelligence (AI), poised to revolutionize how businesses approach and optimize their SEM efforts and catapult their SEM ranking.

AI-powered technologies are increasingly integrated into search ad platforms, offering many innovative features and capabilities to enhance campaign efficiency, maximize returns, and improve SEM management processes. These AI-driven tools can automate bidding processes, optimize ad targeting, and deliver personalized ad experiences to users, ensuring more precise and impactful SEM campaigns.

As the landscape evolves, you must stay updated on the latest tools, features, and advancements in AI-powered SEM. By embracing these technological advancements and adapting their strategies accordingly, you can gain a competitive edge in the dynamic world of search engine marketing.

This list of advanced SEM strategies will help your campaign reach new heights: Advanced SEM Tips for Businesses.

Always be Optimizing 

The world of paid search is incredibly competitive, so it really helps to arm yourself with the right knowledge before venturing into new areas. Remember, it’s incredibly easy to waste resources on any form of PPC aimlessly. So, learn the best practices, research new strategies, and keep improving your campaign one step at a time to maximize your advertising returns.

Congratulations on making it through to the end of the article! It’s a real behemoth of a post answering the question, “what is search engine marketing?”

Here’s a free eBook filled with actionable SEM tips just to show our appreciation:

Need a hand building, maintaining, or optimizing your search advertising campaign? Here at Spiralytics, our obsessive attention to detail, paired with over a decade and 15 million advertising dollars of experience, will help skyrocket your sales funnel growth. As a trusted SEM agency in the Philippines, we can teach you how to improve your quality score on Google Ads, build a solid SEM strategy, and achieve your digital marketing goals.

Contact us today!

Article has been updated by Monica Padillo.