Search Advertising

Search Engine Marketing

As we mentioned earlier, paid media can be broadly categorized into search ads and display ads. Advertising on search engines like Google, called search engine marketing (SEM), is important when consumers are actively searching for a product (e.g., shoes) or looking for a solution to a problem (e.g., relief from foot pain) where your product may be relevant. Let’s explore search engine marketing in more detail.

As a key driver of conversion in the customer journey, Search Engine Marketing or SEM is a critical tool to have in your paid media toolkit. Let's learn a bit more about how SEM works and explore important choices and considerations for getting the most out of it.

When consumers pose a query in a search engine, such as Google, the list of returned links includes both organic and paid links. Organic links are the links that Google deems most relevant to the user's query and are not paid for by any company. The page will also likely display paid links, also known as sponsored links or search ads, which companies pay to place there. Paid links typically appear above organic links or in a column alongside them, and are marked as such.

For example, when you go to a search engine and enter the words Harvard Business School Online, the page will likely display a result with some labels such as ad or sponsored. The other results on the page are the organic links. We will focus on paid links for the moment and come back to the organic links later.

In this case, the words Harvard Business School Online are an example of search terms or keywords that a user enters in a search engine. Companies pay for these keywords by bidding on search engines to place ads in response to consumer's query for these keywords.

In our example, HBS Online has bid on the specific keyword Harvard Business School Online on Google and created an ad that appears for the search engine user. When a company bids on keywords closely associated with its brand, it is likely to capture consumers who are close to conversion because they're already searching for the brand by name.

In this scenario, SEM is typically associated with a higher click-through rate than display advertising because more people are likely to click on an ad for a brand they just searched for than on a display ad that they passively encounter. But as we will learn, SEM can also be deployed effectively in the mid-funnel.

We'll take a few minutes now to walk you through the mechanics of SEM. However, it is important to note that the best practices in this area are fast-evolving and ever-changing. Platforms such as Facebook and Google have resources you can consult regularly to ensure that you're up-to-date on these matters.

We will focus the majority of our time here on the more strategic implications of each channel.

For a brief overview of the search engine marketing process, let’s turn to Ben Kirshner, whom you met earlier.

Ben Kirshner, Tinuiti, Founder and Former CEO:

So when you're starting out in search engine marketing, you have to realize this is not rocket science. It's labor. And so the thing about search engine marketing, especially on Google, you have to come up with keywords. So a lot of the heavy lifting is upfront, setting up the campaign and building a keyword list.

The second component is creating your ads. So when a certain keyword is triggered, what do you want your ad to say?

And then the third component is picking where that ad is going to land on. If you're using the example of Nordstrom, and someone does a search for shoes, is Nordstrom going to send you to their homepage and show you, "Hey, we're Nordstrom"? Are they going to send you to their shoes page that has men and women? Or are they going to try to get smart and figure out, "Oh, these are men searching for shoes, so we're going to send you to the men's page?" Or are we going to send you to the highest, most popular products page? Or are we going to send you to a product listing page? So, figuring out where to send the traffic is also part of it.

And then the fourth component is your bid strategy and how much you're going to pay per click and how the bidding works. That labor-intensive process of figuring out all the keywords, figuring out all the ads, figuring the bids at, figuring out the landing page, that's what really goes into search engine marketing.

And then the last component is really the reporting and optimization. If you're spending money on keywords, and they're not working, what do you do first? Do you change the messaging? Do you change the targeting of the keyword? Do you change the bid? Do you change the landing page? What is going wrong?

Ben highlighted five components of effectively implementing SEM:

• Choosing keywords that lead to the ad
• Designing the content of the ad
• Identifying the best landing page for the ad
• Developing a bidding strategy for the keywords
• Analyzing results and optimizing accordingly

Look back at the list you created. How many of the keywords you chose were related to a specific company name or product name? How many were related to a wider product category or association? These are distinctions between branded and generic keywords. As we will soon learn, these two types of keyword function somewhat differently in SEM.

Branded and Generic Keywords

One important aspect of SEM is your selection of keywords. As you just learned, there are two categories of keywords you will need to consider:

• Branded keywords: Keywords related to a company’s brand. To use OOFOS as an example, such keywords would be any search terms that include the company’s name, such as “OOFOS recovery shoes.”
• Generic (or non-branded) keywords: Keywords related to a category/product. Again, to use OOFOS as an example, some relevant generic keywords might be things like “best recovery shoes” or “comfortable post-workout shoes.”

In the case of OOFOS, branded keywords are likely to be more efficient because these keywords target consumers who are closer to conversion (since they are searching for OOFOS by name). However, these circumstances do not mean that OOFOS should only allocate budget towards branded keywords. 

Placing search ads on both branded and generic keywords will target consumers who are actively searching for the product category. Consumers using generic keywords, however, are also likely to be considering shoes of OOFOS’s competitors. It is therefore important that OOFOS also use generic keywords to convince these consumers to buy from OOFOS and not from its competitors.

Decisions about investing in search engine marketing need to be thought of in the context of the marketing funnel and your objectives: Is your goal to reach customers at the top of the funnel who are at the beginning of their customer journeys, or ones close to conversion? Let’s explore how SEM fits within the marketing funnel.

One helpful way to think about SEM in the context of the marketing funnel is by distinguishing between active and passive consumer behavior. Search engine marketing is more relevant when consumers are actively searching for something online.

For example, if I have plans to travel to Los Angeles, and I'm looking for a hotel, I might type, "hotel in LA," a generic keyword, into a search engine. Let's say that you are running marketing for Hilton Hotels. You, the marketer, may want to bid on the keyword, "hotel in LA," to ensure that consumers like me who are looking to book a hotel room in LA consider your brand as they weigh their options. By bidding on a generic keyword, "hotel in LA," you are trying to influence my choice while I'm in the consideration phase of my decision journey. By investing in generic keywords, you're more likely to attract a wider range of consumers, who may not be familiar with or thinking of your brand when searching for a product, such as, "hotel in LA." However, many of them may not end up buying your brand because they aren't necessarily as familiar with or considering it.

Alternatively, you could bid on the branded keyword, Hilton Hotel in LA. Branded keywords are more suited to the bottom of the marketing funnel, and they result in a higher conversion rate compared to generic keywords because you're targeting consumers who are actively searching for your brand. However, branded keywords typically reach a smaller set of consumers than generic keywords. Even if you have a brand with a high awareness, like Hilton Hotels, competitors may bid on your branded keywords, such as Hilton Hotel in LA, to attract consumers who are actively looking for your brand. So you may soon find that their products appear first when people search for your branded terms. This is why it may be essential for you to continue bidding on branded keywords, even if you have a mature brand.

The main message here is that it's critical to consider context in setting tactics for SEM. Context includes the extent to which consumers are aware of your brand, your targeted funnel stage, the work done or to be done at other stages, the intensity of competition, and your objectives. Understanding this context will help you design an appropriate SEM strategy for your brand and react quickly and accurately as you test and learn.

In general, search engine marketing is an effective paid media channel for driving conversion at the bottom of the funnel.

Now, let’s turn, in the next article, to the other major type of paid media we introduced: display advertising.