Paid Search Marketing – Definition

Cite this article as:"Paid Search Marketing – Definition," in The Business Professor, updated March 31, 2019, last accessed December 4, 2020,


A kind of web marketing that connects your ads with the searchers finding actively the information you provide, is referred to as Paid Search Marketing. It is scalable and cheaper. The smartest and most well-known campaign is PPC (Pay Per Click). But what’s the logic behind it?

In the sponsored links of a search engine, you make a bid for your business related keywords. Means, you are paying a small fee to the search engine per click.

A Little More on What is Paid Search Marketing

You might think that making payment against each click will end up with a lot of payment, but it is not like that if the campaign is well designed. This is because your ads will only be visible to your potential customers when they will search for your offered products and services precisely. They are often much more to be at the buying point, say, your website, as compared to a casual browser. Therefore, it depends on the right search and a bit tinkering. The ads you placed using paid search marketing will ultimately enable you to earn higher than the cost you paid for their placement.

How Paid Search Marketing Works Backstage

To display your ad in the sponsored links needs you to enter into an auction and win the bid from other advertisers for your ads space. So, an important question is why do you need to adopt paid search marketing despite you have an option of ranking using organic results of google free of cost?

First and foremost point is that organic search advertising also known as search engine optimization is not free. To win superior organic search rank, it requires much time, knowledge and efforts.

Particularly, for a website that is still less established and new, it will definitely take time to obtain sufficient domain authority and get traffic on your web pages for the best keywords. Another thing is that many people do not search beyond the 1st page of Google. You are just in a condition of wait and see for qualified leads.

Entering into the auction of Google Adwords is not much hard as is supposed to be. It is just a game of maths.

The Rules of Ad Ranking in Paid Search

Google Adwords is actually its PPC (Pay Per Click) platform. Despite it looks like a bit complex, Google has basically designed it to give the highest Return on Investment (ROI) to three entities, I.e. The company, Google and the searchers.

Google rewards the intelligently targeted and most relevant PPC campaigns by taking lesser charges for ad clicks. Hence, if your ads are more useful and domain-specific, your website performance will boost up. You get a reward for getting traffic on your website.

Each time, someone initiates a search, Google examines all the Adwords marketers and selects the winners to display their ad in the space on the search results web page. It selects the winners on the basis of a few factors, such as how relevant the keywords are, what is the quality of keywords? how is the ad campaign? and what is the size of the keywords bid?

Particularly, whose ad will appear on the first page depends on the ad rank of a marketer, a metric estimated by multiplying 2 main factors, CPC Bid (the highest payment a marketer is willing to make) and a value that considers relevance, click through rate and the quality of landing page known as Quality Score.

So, how can you create the most effective paid search marketing campaign? Start from keywords.

Keywords Are Key in Paid Search Marketing

  • Use negative keywords to your advantage: Negative keywords help you to filter the search terms which are not related to your products and services. For the irrelevant searches, your ads will not appear. It can save, in the long run, a lot of payment on wasteful clicks.
  • Don’t go too broad: Another worth noticing point is that you should not go too broad. Means, use longer keywords or the keyword phrases used infrequently. They basically increase the visits volume as compared to short and most common keywords. We call them Long Tail Keywords. They depict a high intent, hence, considered to be the excellent choice for the paid search marketing campaign. For instance, let’s suppose, a person searches for ‘organic cat food free delivery’. The results will be broader than the short keywords like ‘cat food’.
  • Stay relevant always! A great noticeable tip is to use the keywords that match the landing page text, you linked to. Google keenly observes such type of accuracy and keeps away the advertisers who use irrelevant or different keywords. How awkward it is if your landing page is about carpet cleaning services and the ad says, wedding photos of Angelina!

From generic to branded: A model of spillover in paid search advertising, Rutz, O. J., & Bucklin, R. E. (2011). Journal of Marketing Research, 48(1), 87-102. In the paid search marketing, the advertisers make payment to search engines for ad placement using the generic keywords expected to be entered by a visitor. The authors present a dynamic linear model to differentiate the payment of generic and branded searches based on Nerlove Arrow marketing framework. The result is that we should first analyse the spillover and search behaviour while generating keywords for paid search.

Consumer heterogeneity and paid search effectiveness: A large‐scale field experiment, Blake, T., Nosko, C., & Tadelis, S. (2015). Econometrica, 83(1), 155-174. Paid Search Marketing is a great source of earning for search engines over the internet. The authors make several experiments at eBay to estimate the effectiveness of paid search marketing. The brand keywords advertisements have no short term advantages. For non-brand search keywords, new visitors are positively attractive towards ads but the frequent visitors are not influenced as such. So, their average returns are negative.

A model of individual keyword performance in paid search advertising, Rutz, O. J., & Bucklin, R. E. (2007).  The marketers have to win the bid for paid search marketing against certain keywords for their ads placed on the first page of a search engine. The sale conversions, number of clicks and profitable performance may take time in many cases. The authors present a theory of individual keyword conversion to address the sparseness issue. The campaign management on the basis of the Estimated Cost Per Sale Model will outperform for the advertising.

Driving online and offline sales: The cross-channel effects of traditional, online display, and paid search advertising, Dinner, I. M., Heerde Van, H. J., & Neslin, S. A. (2014). Journal of marketing research, 51(5), 527-545. It is utmost important for every online business to understand the requirements of a successful paid search marketing. The research explores the carryover, magnitude, and presence of the cross channel impacts for online marketing and media. The authors describe how effective paid advertising can convert sales. Search marketing plays a vital role nowadays. The companies which do not focus on the cross effects, lose the effectiveness of their ads.

Paid search: The innovation that changed the Web, Laffey, D. (2007). Business Horizons, 50(3), 211-218. Google faces the issue of income generation when the visitors want free content but the marketers expect the searchers’ interest. So, paid search is a great option for the advertisers. This concept was introduced back in 1998. Today, it is a dominant strategy in all forms of online marketing. This paper examines the mechanics of paid search operations and provides useful information for the guidance of the managers.

Paid search [search engines], Jansen, B. J. (2006). Computer, 39(7), 88-90. In this article, the author highlights the significance of paid search marketing. It has become a need of the hour for a successful business online.

A latent instrumental variables approach to modeling keyword conversion in paid search advertising, Rutz, O. J., Bucklin, R. E., & Sonnier, G. P. (2012). Journal of Marketing Research, 49(3), 306-319. The writers design a model that estimates the performance of buying conversion using individual keywords in paid search marketing. It daily estimates keyword conversion and rate of click through for the endogenous factors of text ads. A latent instrumental variable technique has been used to solve this issue. The authors generate a list of effective keywords based on the conversion rates and elaborate it.

Modeling indirect effects of paid search advertising: Which keywords lead to more future visits?, Rutz, O. J., Trusov, M., & Bucklin, R. E. (2011). Marketing Science, 30(4), 646-665. The effect of a paid search campaign is that many visitors open the same website for online shopping that they saw earlier on the first page of a search engine. The authors present a model named “Bayesian Elastic Net Model”. It covers the textual properties of keywords. The findings show an important effect of paid search marketing which is explicitly different across keywords. The calculated indirect influence is fairly large. So, the branded searches are linked to the higher type-in visitation.

Paid search advertising, Rutz, O. J., & Bucklin, R. E. (2016). In Advanced Database Marketing (pp. 251-268). Routledge. This paper is based on an in-depth analysis of paid search advertising, which has become an essential part of online marketing.

Modeling competition and its impact on paidsearch advertising, Yang, S., Lu, S., & Lu, X. (2013). Marketing Science, 33(1), 134-153. This research covers the concept of the paid search marketing campaign and the impact of competition on click volume of the ads. The authors consider the main determinants of this rivalry. It means how the forces of demand and supply play their role in the entry probability of companies. The statistical analysis shows that the decay factor, click volume and value per click are affected by the no. of competing advertisements.

A cross-industry analysis of the spillover effect in paid search advertising, Nottorf, F., & Funk, B. (2013). Electronic Markets, 23(3), 205-216. This study highlights the generic search functions in paid search marketing across companies with the help of DLM (Dynamic Linear Model). The authors place ads for generic keywords and analyze the spillover effect. The results are based on the customers’ behaviour. The effect varies across sectors, such as for the authors to investigate the telecommunication sector. It minimizes the cost/order up to forty-two percent.

Running and Chasing–The Competition between Paid Search Marketing and Search Engine Optimization, Li, K., Lin, M., Lin, Z., & Xing, B. (2014, January). In System Sciences (HICSS), 2014 47th Hawaii International Conference on (pp. 3110-3119). IEEE. The paid search marketing is for the marketers to purchase the top rankings in the sponsored links. Search engine optimization strives to optimise the websites of marketers. This paper evaluates the competition of organic search quality. The findings of the research are that Search Engine Providers lead the SEO market. The competition in both these models represents a game of chasing and running. If a better algorithm is used, the effectiveness of Google promotes the profitability of SEO and PSM.

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