Which half of your advertising works?

This article is the second in a five part series. For the full series, click here.

It was once said with humour: “I know that half my advertising works. I just don’t know which half.”

Such a sentiment is no longer likely to raise a smile. This is because smart marketers (including business owners) now expect a return on investment (ROI) from their marketing (like duh).

So, what brought about this change in expectations? One player in the mix was undoubtedly Search Engine Marketing (SEM). In this first installment, we introduce SEM, and why it’s important for ROI.

SEM is a clever wee abbreviation used to describe Search Engine Marketing. Why is it worth an acronym? Aside from being a verbal mouthful (don’t you just lurve tech speak), over the past 10 years, or so, it has become wildly popular with business builders and marketers.

The cause is simple. SEM has proven itself to be a manageable, transparent and generally affordable way to increase a website’s traffic and provide brands with better visibility on search engines (and the like).

Search Engine Land describes SEM as an umbrella term that encompasses search engine optimisation (SEO) techniques and pay per click marketing. Advertising services by Yahoo! and free knowledge channels like Wikipedia have resulted in a distorted definition that moved SEO away from SEM. This early definition may rock some peeps’ worlds but, to keep things simple for us foolish mortals, we prefer to use the term SEM to define paid search marketing.

Paid search marketing (also known as pay per click and cost per click marketing, just to keep things interesting) is usually achieved by buying ad space on search engines such as Yahoo!, Bing and of course, Google.

Why SEM whoops traditional advertising’s patootie

Don’t confuse paid search marketing with purchasing ad space in a traditional advertising market such as a newspaper or television channel. Search engines act as the great equaliser; small and large businesses compete on a level playing field due to its cost effective model.

Need more reasons to heart SEM? It’s got advance reporting tools a-go-go. That means businesses can tie each ad click to the term that triggered the ad, the dosh they paid for that click, and the profit generated by – you guessed it – the click.

Gone are the days when marketing gurus and business analysts failed to determine what percentage of advertising costs resulted in a positive ROI.

By comparison, print, radio, and television advertising may provide a rough estimate of the people your ad reached out to or the number of eyeball views it caught, but it’s impossible to tie each sale to the channel it came from.

SEM is now used by hundreds and thousands of businesses to reach a global audience and get more customers at a fraction of the price they’d have paid for traditional advertising.

The big kahunas

Now that you’re all over SEM, it’s important to understand the options that it provides and how you can use them to your advantage. Though there are several PPC channels on offer, here are the four biggies:

1. Google AdWords

2. Yahoo! Search Advertising

3. Microsoft Ad Center

4. Facebook Ads

Many businesses use all of the above for promoting products and services but, if you’re a SEM newbie, we recommend that you ease yourself in with AdWords.

It has a fairly simple user interface, making it easy to navigate and create advertising campaigns.

Another argument that works in AdWords’ favour is the wide reach that Google offers. According to the stats, AdWords can help you reach more people than Yahoo! and Microsoft combined.

So, why would anyone use AdWords?

As a business owner, you have only one goal: better profits and a positive ROI. (OK, so two goals.)

AdWords helps you achieve exactly that. Wouldn’t it make you happy if every penny you spent in advertising or marketing your business was accounted for?

It should go without saying, but just in case: to understand how SEM can help in calculating your return ROI, it’s important to know what ROI is.

For online advertising, your ROI is the ratio of your online advertising costs and the profits you generate through these mediums. And, as your mother will tell you, profits must always exceed costs.

What tools does Google AdWords have to help achieve ROI?

Sophisticated reporting tools

Advanced reporting available in the AdWords interface is useful for generating hourly, weekly, and monthly reports that provide insight into key metrics like cost per click, conversion rate, keywords that generated maximum revenue, and weak performing keywords. Knowing this data can help you eliminate keywords that are dragging down your ROI while increasing the CPC for profitable keywords.

Analytics linking

If you’re not already in the know, Google Analytics is the preferred free web analytic program. Its suave features make ecommerce tracking a breeze. All you need is a bit of code that must be put on all pages of your website. Analytics gives you the information required to calculate your ROI and tie it to the channel it came from, allowing you to segregate profits according to organic sales, online sales, AdWords sales, and so on. This helps you in determining which advertising channels are earning their keep.

If you don’t want to get into the intricacies of advanced Analytics set up, conversion tracking is a good alternative for measuring advertising success. (And it’s part of the AdWords package.)

Keeping it simple

When starting out with Google AdWords, it is advisable to read the Help Center for an advertising 101. Video tutorials, seminars, and presentations make it easy to understand the process and help you create a successful advertising campaign.