Online Advertising Foundations

Digital marketing is a broad field that combines traditional frameworks with digital mediums. The goal of digital marketing is the same as it is in the traditional sense; identify, create, and deploy value offerings that align with the needs and wants of consumer segment(s). The foundations of digital marketing follow the AIDA model, the consumer decision process model, and the inbound methodology. In the last post, we learned about search engine optimization, and more specifically on, off, and technical SEO foundations. This post focuses on pay-per-click (PPC) and display advertising.

How Search & Display Advertising Works

Google launched its AdWords platform on October 23, 2000, while Microsoft [Bing] launched its ad platform Bing Ads on September 10, 2012; prior, Microsoft was running different ad platforms on MSN and Yahoo, but created the Yahoo! Bing Search alliance, and eventually added AOL to the list of partners (Unknown, 2015; Unknown, 2018).

Google’s mission:

“To organize the world’s information and make it universally accessible and useful.” (Google, 2018)

Bing’s mission:

“To help you search less and do more.” (Bing, 2018)

Search & Display Advertising: A Win-Win Scenario

The premise behind search and display advertising, is that it provides an avenue for Google and Bing [Microsoft] to monetize their traffic and users’ needs by bridging the needs of businesses trying to attract/reach the same search and Internet community. This type of advertising platform creates a win-win for advertisers and Google and Bing. Consumers on the other hand, make the decision whether to click an ad, or click an organic listing. Advertisers only pay if the consumer clicks on their ad or search listing. Different bidding methods allow advertisers to pay for clicks (PPC), impressions (CPM), or conversions (CPA), but the underlying principle that separates digital advertising from traditional is the advertiser only pays when the consumer interacts in some form with their ad; the exception to the rule is with CPM bidding which is very similar to traditional advertising.

How Online Advertising Works

Advertisers have the ability to target and develop their ads as they choose, as long as it’s aligned with the advertising guidelines. Advertisers select their bidding method – PPC [CPC], CPA, CPM – and identify the maximum they are willing to bid. The advertisers then select keywords, and each time a query is entered, or a consumer visits a site that aligns with those phrases, Google/Bing’s algorithm runs an auction. The advertiser with the highest ad rank wins the auction, and their ad is placed. When there is opportunity for more than one ad, as is the case in the search engines, ads will be placed in descending order (Fishkin & Hogenhaven, 2013; Kim, 2017; Larson & Draper, 2018).

Online Advertising Options

Online advertising provides several avenues for digital marketers to communicate with their target consumers. Some of the most popular include:

• Paid Search
• Display
• Video
• Paid Social
• Native Advertising

Paid Search Ads

Search is the most common type of online advertising. Search ads are the ones that appear above or below the organic results in Google or Bing. An additional option is to use the search network in addition to search. Ads are shown the same way, but on partner sites. The Google search network partners include YouTube, Amazon, and The New York Times. Bing also has a search network that works in the same way. Bing’s partners include MSN, AOL, and Yahoo.

(Shih, 2018)

Display Network Ads

The display network works similar to the search network, although the partner sites are different. With display, marketers can create rich ads using visuals in various sizes to communicate with their consumers. The display network is the digital version of print and billboards. The same logic applies when developing these ads. Although Google and Bing provide the option to run both search and display together, it is not recommended for the following reasons:

• Unable to bid search and display separately in same campaign
• Metrics between search and display is not clear
• Unable to target each separately

Instead, set up separate campaigns for search and display. This will allow better tracking of each platform, more accurate targeting, and better bid control.

(Shih, 2018)

Video Ads

Video ads work very similar to static image ads on the display network. Videos appear on either YouTube, or other network partner sites. Google presents the following ad options:

• TrueView in-stream ads
• TrueView video discovery ads
• Bumper ads
• Outstream ads

TrueView in-stream ads are the ones you see on YouTube, or other sites, that play for five seconds, and provide the consumer to skip the ad if they are not interested. TrueView video discovery ads appear as a thumbnail with some text below videos. If the consumer clicks on the thumbnail, they will be directed to YouTube to watch the ad. Bumper ads are six seconds long, and can play before, during, or after a video on YouTube or the display network partner video sites. Finally, outstream ads start muted. Consumers can click the ad to unmute. Marketers are charged when more than half the ad screen is shown for two seconds or greater. Outstream ads are shown on apps and partner sites, no YouTube.

Paid Social Ads

Paid social ads are the ads you see on all the popular social media network sites. They include:

• Facebook
• Instagram
• Twitter
• LinkedIn
• Pinterest
• Snapchat
• Reddit
• Stumbleupon

We will learn more about these in a few weeks.

Native Advertising

Native advertising is a deceptive (depending on who you ask) type of advertising that presents itself as content. If the consumer is not aware, they might not notice small disclaimers that state “sponsored content”, or something similar. Native ads have been gaining traction, but there is a great debate due to the potential for deception to unsuspecting consumers. John Oliver contrasts it nicely in a segment on his show a few years back.

Bid Management

Bidding Methods

Google allows marketers to automate or manually control their bids. I would caution against this, and echo that of Perry Marshall and Bryan Todd (2012) that believe allowing Google to automate your bidding is the easiest way to blow through your ad budget ineffectively. Don’t believe the hype. Google’s prime motivation is to get advertisers to spend the most money possible. The different bid options are as follows:

• Cost-per-click (CPC) aka PPC
• Enhanced-cost-per-click (ECPC)
• Cost-per-thousand viewable impressions (vCPM)
• Cost-per-acquisition (CPA)
• Cost-per-view (CPV) – VIDEO Ads

Bidding Strateiges

Depending on the desired outcome of the campaign [clicks, impressions, conversions, or views], digital marketers have several bidding strategies. The digital marketer should have a good idea of their goals before selecting their desired bidding strategy. Here are some common goals and bid strategies:

• Generate traffic [leads] – CPC
• Conversions – Target CPA, Target ROAS, Maximize Conversions, or ECPC
• Brand Awareness – vCPM
• Increase Views (Video) – CPV or CPM
• Product Consideration (Video) – CPV

Smart bidding provides marketers with four different options to improve conversions. With target CPA, marketers set their specific target CPA. With target return-on-ad-spend (ROAS), marketers specify their target ROAS and generate conversions surrounding the specified target. Marketers can maximize conversions by letting Google spend the entire ad budget to an optimal CPC that maximizes the potential for conversions. Finally, enhanced cost-per-click ECPC is an optional feature that can be used with manual bidding which will allow Google to automatically adjust your bids to maximize the opportunity for conversions (Google, 2018).

 

Ad Rank

Ad rank is a value that determines an ad position. According to Google (2018), “ad Rank is calculated using your bid amount, your auction-time ad quality (including expected click-through rate, ad relevance, and landing page experience), the Ad Rank thresholds, the context of the person’s search, and the expected impact of extensions and other ad formats”(para.1). Larry Kim (2013) suggests that ad rank is a factor of the CPC bid and the quality score. The quality score is an estimate of the quality of your ads, keywords, and landing pages (Google, 2018).

Keyword Match Types

Exact Match

The use of exact match keyword targeting means that only those searches that are nearly identical to the keyphrase targeted will trigger the ad; this includes misspellings and abbreviations (Larson et al., 2018).

Exact match targeting uses square brackets around the [keyword] in the ad interface.

Pro

• Preserves advertising budget – low waste of ad dollars

Con

• Money is left on the table – missed opportunities for phrases similar to the one(s) targeted

Broad Match

Broad match targeting allows Google (Bing) to show ads to any searchers whose query “broadly” matches the phrase being searched for.

Pro

• Advertisers do not miss out on any opportunities

Con

• Advertiser will spend their ad budget to show ads (and risk clicks) to consumers who have no intention of purchasing, or using, their product/service

Phrase Match

Phrase match targeting only shows ads when the search query matches includes the specific word being targeted. It uses quotes around the “keyword” in the ad interface

Pro

• Preserves advertising budget – lower wasted ad dollars

Con

• Money is still left on the table – missed opportunities

Modified Broad Match (aka Broad Match Modifier)

Modified broach match targeting provides advertisers with a nice compromise between broad match and phrase match. Modified broad match is implemented by placing a plus sign in front of the +keyword.

Negative Keywords

The use of negative keywords instructs the search engine to not show the advertisement if a specific term is used. Negative keywords are added in a specific location in the Google and Bing ads interfaces. Using negative keywords is another method (and very effective one) to control keyword targeting more precisely. Advertisers should be viewing their ad performance daily and reviewing the keywords report to identify which keywords are triggering their ads. They may find their ad (and clicks) are occurring for a phrase they do not want to target. The advertiser can prevent their ad from showing for these words by adding these phrases as negative keywords, and hence, the campaign is refined to tighter targeting.

Final Words On Keyword Match Types

It should be noted that marketers should start with exact or phrase match targeting first. This will enable the marketer to collect data such as quality score and bid info, as well as identify keyword opportunities. Only once the marketer has a good idea about how the campaign is performing should they consider expanding their match type. I personally recommend phrase match, and possibly broad match modifiers in some situations. Broad match is broad, and very easy to waste the ad budget. Proceed with caution.

Account Structure

A common error I find is poor account structure. Many businesses setup their Ads account with one campaign, and one ad group. They plug in all their keywords to the ad group, and wonder why their online advertising isn’t successful. The key to proper account structure is to segment the campaigns, ad groups, and keywords. For example, if you own a business that sells shoes, you’re not going to want one ad group that is comprised of keywords for running shoes, dress shoes, women’s shoes…etc. A good marketer segments their ad groups so each ad group only includes words associated with one topic. This will lead to more ad groups, but it will also lead to better quality scores, better control of keywords, and most likely lower CPC (Marshall & Todd, 2012; Larson et al., 2018).

Source: WordStream

Online Advertising Process Flow

The online advertising process flow starts with the marketer planning, followed by the design of the conversion flow, campaign structure, ads, landing pages, campaign setup, tracking implementation, deployment, and finally tracking. Marketers must have a plan before deploying online advertising, or any advertising for that matter.

G-STIC & Online Advertising

G-STIC stands for:

• Goals
• Strategy
• Tactics
• Implementation
• Control

G-STIC is a framework that aids marketers with solving problems. Alexander Chernev (2018) promotes it as generalized approach that enables marketers to identify, analyze, and solve marketing problems, as well as develop marketing plans. Once a mission and goals have been defined, the marketer uses a 5C’s analysis to analyze the company, customer, competitor, collaborator, and context of the situation. An output of the 5C analysis is an identified target market and value proposition from which tactics can be developed. While the traditional 4P’s of marketing are still used, Chernev (2018) expands upon the 4P’s to come up with seven specifics for the market offering:

• Product
• Service
• Brand
• Price
• Incentives
• Communication
• Distribution

Using these seven tactics, marketers can develop and implement a marketing strategy. The result is tracking the goals and benchmarks based on each tactic.

(Chernev, 2018)

5C’s Analysis & Online Advertising

As discussed above, conducting a 5C’s analysis will provide clarity on the situation at hand. Marketers can use the insights gained from each area of the 5C’s to prepare them and their online marketing campaign.

Customer

What is their intent? Where are they in the AIDA model? Where are they in their consumer purchase decision process?

Use Google and Bing’s auto suggest feature to identify keywords and phrases that are being searched for

Marketers who have an extensive knowledge of the consumer behavior principles can draw on these to identify the internal and external influences that stimulate the target consumers.

Company

Insights gained from the company research will identify brand metrics, branding, brand positioning, and how the brand will be represented in online ads. This info can also be used to develop the landing page to make sure it is cohesive and on brand.

Competition

Review the competition extensively. What keywords are they targeting? What is their positioning? What is their value proposition? See if you can identify their ads? Identify weaknesses in their strategy that you can exploit. What is their conversion funnel like? What about their landing page? Is it optimized? Is it following the best practices discussed here?

Collaborators

Who are the online collaborators that will work with you to communicate to your target online? Google, Bing, Other? Although we will discuss social in another lecture, what social networks could be used to communicate with your target market? Are there any other online ad networks that can be used? What about influencers and native advertising?

Context

What is the marketing environment like? What about the economy? Are there any regulations or political policies that will affect your offering?

Targeting & Online Advertising

Google and Bing Ads provide marketers with the ability to target using demographics, geographics, device, language, time of day, and keywords. Recently, in-market audiences were expanded to include search advertising on both Google and Bing. Previously, they were only available for use on the display network. In-market audiences use machine learning to predict purchase intent based on present search activity as well as browser history, which allows marketers to target consumers that are predicted to be very close to, if not ready, to converting (Gilbert, 2018).

A marketer should have a good understanding of their target market(s). The 5C’s analysis will help to identify opportunities and refine the target market. Online advertising enables marketers to target at a more refined level than traditional advertising. For example, marketers can target people in only specific cities, or regions within a specific distance to a certain city. Refining targeting in online advertising is the proper thing to do. Since marketers only pay when there is an interaction with the ad, there is no need to develop a communications strategy geared to have expanded reach; the exception is with CPM where the goal is brand awareness by reach and possibly frequency.

Remarketing is a tool used to target display ads (and search if you have enough visitors) to visitors to your site. Remarketing lists can be setup for visitors who went to your site and left. As they browse around the Internet, depending on your settings, visitors will be served your display ads at a frequency and duration that you specify. This is great for attribution. Remarketing can also be setup for those visitors who visited the checkout page, but never checked out. It can also be setup dynamically so that ads are served based on the pages that were interacted with on your site. This is great for ecommerce sites.

Customer Value & Online Advertising

The goal of any marketer is to provide value to consumers. As Chernev (2018) suggests, it is the reason to choose your offering over another.

(Chernev, 2018)

Marketers can define customer value using the following dimensions:

• Functional Value
• Psychological Value
• Monetary Value

Functional Value

Functional value represents the physical properties and use of the product/service. It is the performance of the offering. Chernev (2018) suggests it is any of the following:

• Performance
• Reliability
• Durability
• Compatibility
• Ease of Use
• Design
• Customization
• Form
• Style
• Packaging

Marketers need to define functional value before communications are prepared. What value does the offering provide?

Psychological Value

Psychological value refers to the mental benefits that go along with the offering. Hawkins and Mothersbaugh (2016) refer to these as the external and internal influences. These include:

• Culture
• Subculture
• Demographics
• Social Status
• Reference Groups
• Family
• Marketing Activities
• Motives
• Self-concept
• Attitudes
• Personality
• Memory
• Learning
• Emotions

As a marketer, you must tap into what are the psychological benefits of the offering. What does the offering do for their self-concept? What is their perception of your offering? How does the offering motivate your target market? How does it make them feel? What memories do they have of your product? How is your target influenced by external forces? What marketing activities is your target market exposed to?

The marketer must also consider the targets position in the AIDA and consumer purchase decision models. All these factors should be considered as you start to design your communications plan for any online advertising activities.

Monetary Value

Monetary value refers to the price sensitivity and susceptibility to promotions and incentives of the target market. How do they view the price of your offering? Are they price sensitive? Do you understand the elasticity of demand for your offering? What is the usage rate? Can you use the recency frequency monetary (RFM) model to create a customer centric targeting strategy?

By mapping customer value, the marketer can identify all value drivers up front, which will be used in the communications strategy development.

(Chernev, 2018)

G-STIC & Communications Planning

Chernev (2018) expands on the G-STIC framework, and uses it for the communications plan to focus solely on the communications strategy. This framework is an excellent tool that marketers can use to develop their online advertising campaigns.

(Chernev, 2018)

Landing Pages & Online Advertising

Marketers should be careful when developing the landing page. Use the value drivers identified. Use the company branding. Use the best practices for on-page SEO when developing the landing page. Most importantly, make sure the page that consumers land on after clicking your ad is targeted and relevant to the ad that was served. There’s nothing worse than creating an ad, and sending consumers to the homepage where they need to search the site to find what they were looking for. Don’t do it. They will bounce from your site, and you will have wasted a valuable click. Refer to SEO foundations to learn more about on page SEO.

Execution & Tracking an Online Advertising Campaign

SEO & PPC

Paid search can be enhanced using SEO and visa-versa. Long-tail keywords can be used to identify negative keywords to optimize the keyword targeting of PPC campaigns. Good performing ad copy should be used as the meta description for the landing page to improve organic click-thru rates (CTR). SEO can also be improved by using high converting keywords from PPC campaigns. Visitors to your site through organic means, are perfect candidates for remarketing (Grybniak, 2018). Branding can be improved by purchasing ads for your branded keywords. This will ensure your competitors don’t steal your customers by bidding on your branded keywords, and you will own more SERP real estate by combining organic and paid ads for branded keywords.

Metrics

Digital marketers can often be misled by some of the metrics in the Google Ads interface. A popular one is the average ad position. An ad with an average position of one, doesn’t necessarily mean the ad was the very first ad on the SERP. Depending on Google’s algorithm, ads may not show at the top of the SERP. They might show at the bottom instead. This would still be the first ad, but depending where the ads are placed in the SERP will depend how visible the ad is to potential consumers. Google has implemented new ad metrics to better clarify where ads are positioned on the SERP. They include:

• (Abs.Top) % – percentage that ad is shown as very first ad above organic results
• (Top) % – percentage that ad is shown anywhere above organic results
• Search (Absolute Top) IS – impressions received as very first ad above organic results vs. eligible impressions to be the very first ad above organic results
• Search (Top) IS – impressions received above organic results vs. eligible impressions for the ad to appear above organic results

(Google, 2018; Southern, 2018)

Marketers should always make sure they are setting their site up with Google Analytics tracking code, and linking both the Google Analytics and Google Search Console to their Ads accounts. This will enrich the amount of data you can track and provide even greater actionable insights. We will learn more about this in another lecture.

Next Steps

If you’re truly interested in learning more about online advertising, Google offers an excellent ads certification program where you can become certified in search, display, video, and shopping ads.

References

Bing. (2018). Find it Faster with Bing Product Search. Retrieved from Bing: https://blogs.bing.com/search/2013/08/23/find-it-faster-with-bing-product-search/

Chernev, A. (2018). Strategic Marketing Management (9th ed.). USA: Cerebellum Press.

Fishkin, R., & Hogenhaven, T. (2013). Inbound Marketing & SEO. West Sussex: WILEY.

Gilbert, D. (2018, November 6). In-Market Audiences for Search: How & When to Use It. Retrieved from Search Engine Journal: https://www.searchenginejournal.com/in-market-audiences-for-search/273531/

Google. (2018). About top and absolute top metrics. Retrieved from Google Ads Help: https://support.google.com/google-ads/answer/7501826?hl=en

Google. (2018). Ad Rank. Retrieved from Google Ads Help: https://support.google.com/google-ads/answer/1752122?hl=en

Google. (2018). Determine a bid strategy based on your goals. Retrieved from Google Ads Help: https://support.google.com/google-ads/answer/2472725?hl=en

Google. (2018). Quality Score: Definition. Retrieved from Google Ads Help: https://support.google.com/google-ads/answer/140351?hl=en

Google. (n.d.). Better Targeting with Dynamic Remarketing. Retrieved from Google Analytics Academy: https://analytics.google.com/analytics/academy/course/7/unit/4/lesson/2

Grybniak, S. (2018, November 7). How to Combine SEO & PPC for More Powerful Results. Retrieved from Search Engine Journal: https://www.searchenginejournal.com/combine-seo-ppc/276771/

Hawkins, D. I., & Mothersbaugh, D. L. (2016). Consumer Behavior: Building Marketing Strategy (13th ed.). New York, New York, United States: McGraw-Hill Irwin. Retrieved April 11, 2018

Kim, L. (2017, July 28). Google AdWords’ New Ad Rank Formula: What You Need to Know. Retrieved from Hubspot: https://blog.hubspot.com/marketing/adwords-ad-rank-formula-what-to-know-ht

Larson, J., & Draper, S. (2018). Digital Marketing Essentials. Rexburg, Idaho, United States: Edify.

Marshall, P., & Todd, B. (2012). Ultimate Guide to Google AdWords (3rd ed.). United States: Entrepreneur Press.

Shih, J. (2018). AdWords: Google Search Partners List 2018. Retrieved from Twinword.com: https://www.twinword.com/blog/adwords-google-search-partners-list-2018/

Southern, M. (2018, November 6). Google Ads Improves its Search Ad Metrics With Clearer Insights. Retrieved from Search Engine Journal: https://www.searchenginejournal.com/google-ads-improves-its-search-ad-metrics-with-clearer-insights/277013/

Unknown. (2015, April 3). The Evolution of Google AdWords – A $38 Billion Advertising Platform. Retrieved from WordStream: https://www.wordstream.com/blog/ws/2012/06/05/evolution-of-adwords

Unkown. (2018). Bing Ads History. Retrieved from Wikipedia: https://en.wikipedia.org/wiki/Bing_Ads