SEM CalculationWhat Is SEM (Search Engine Marketing)?

The meaning of SEM has evolved over the relatively short life of digital marketing. Originally, search engine marketing meant all promotional activities related to search engines. It was an umbrella term for both SEO (search engine optimization) and PPC (Pay-per-click advertising). However, more recently SEM has been used to just mean paid search advertising. Therefore, SEM and PPC can be used interchangeably to mean paid advertising on search engines like Google (through Adwords) and Bing (through Bing Ads), or on other more country specific search engines. In Russia, Yandex is the the most popular search engine, in China they use Baidu and in South Korea, Naver. I have personally managed SEM advertising on these search engines when I managed Hilton’s international account while working at Forward3D in London. Our deliverables were to advertise all Hilton hotels worldwide except in the US, to the world.

Why Use SEM?

Search Engine Marketing allows advertisers to pay Google, through Adwords management, to appear at the top of search results pages. Some may argue that nobody clicks on those paid ads at the top of results pages. However, Google is currently worth $527b US, almost all of which has been earned from advertisers paying for clicks. Clearly some people are clicking on those ads, and advertisers are gaining value by paying for them.

SERP ExampleHow Much Does Adwords Cost?

How much Adwords clicks cost entirely depends on who else wants to appear for that search term. Adwords runs like an auction, so advertisers bid for how much they are willing to pay for each click. Google displays the ads in order of how much money they will generate from them being clicked. If it can see one ad gets clicked on more often (a higher clickthrough-rate or CTR) it is likely to move that ad to the top. Therefore, how good your ad is, combined with how much you are willing to pay and how much your competitors will pay, decides your actual CPC (cost per click).

For advertisers like lawyers, a client can be worth a huge amount of money. For this reason, the average CPC for lawyers is around C$60. We can see that these clients are so profitable for them that there’s even lawyers from Portland appearing for my “injury lawyers vancouver” search. For advertisers on the less competitive end of the spectrum, in my experience managing Ralph Lauren’s Adwords and Bing Ads accounts in Europe, our CPCs ranged from C$1 to C$4. The more generic the search term (keyword), the more advertisers are likely to be bidding on it, and the more expensive it is likely to be. For example, the keyword “shoes”cost around C$4 to be around position three, while the keyword “ralph lauren tote bag” cost around C$1 to be in position 1. In general, the more expensive the product advertised, the more the clicks will cost.

SEM Strategy

SEM tends to generate the best ROI for clients, because we can show an ad targeted to exactly what the user wants. Bids can be adjusted precisely in terms of how much value different search terms drive. However, a solid SEM strategy also includes other marketing channels.

For search engine marketing to be most effective, it should run alongside SEO, and potentially social media advertising too. SEO is concerned with making sites function as well as possible, so this adds value to SEM campaigns. Both SEM and SEO are dependent on people searching for the product in the first place. They therefore rely on brand or product awareness. Social advertising (and display advertising to an extent) are usually the best method to drive this awareness. The best strategy then, catches users throughout all stages of the conversion process, always being visible, and offering the opportunity to convert easily.

If you would like more information about SEM or digital marketing strategy, just drop me a message