The SEM Auction

Hey, by now, you probably know that search engine marketing is a great way to advertise people at just the right moment when they’re looking for your product or service but do you know how it actually works? Well, search engine marketing is based on an auction system.

So in this lesson, we’ll discuss how the auction works and look at an example to help you figure out how to use SEM in the best way for your business. Let’s start with a search for a common service, say, wedding photography. Take a look at the results page. In the center, you’ll see organic listings, listings that weren’t paid for. And at the top and down the right column, you’ll see the paid ads. Search engines limit the number of slots adverts can appear in on an individual page. Advertisers then compete in an auction for those slots. So after you search for wedding photography, you’ll see the outcome of the auction. The adverts that win appear in more desirable slots on the results page. Usually that means near the top. The runners up appear in lower slots or right. You’re probably wondering how does the auction work? Well, like most auctions, you place a bid which influences your performance in the auction, but it’s not all about your bid in this auction. The relevance of your advert is crucial as well. So success in the auction means having a competitive bid as well as strong relevance. Getting both of these right is the recipe for success in SEM. Let’s look at both of these factors, starting with the bids in the auction. So you’re willing to pay up to two pounds when people click on your ad after searching for wedding photography, the price is often called your maximum cost per click or max CPC. If your competitors only got a max CPC of, let’s say, a pound, you’ll have a higher bid, meaning you’ll be ahead in the auction. Keep in mind, businesses can change their max pieces at any time.

You need to keep an eye on your bids regularly to ensure you’re getting the performance that you want. As I said earlier, there’s more to the auction than just the bids. The other big factor is relevance. This is a measure normally rated from one to 10 of how closely your add relates to what a person searches for. Search engines such as Google and Bing refer to this as your quality score. For example, if someone searches for wedding photography and your ads headline is Wedding Photography in Cardiff, the search engine probably considers your ad highly relevant.

This means you’re likely to get a high quality score. But what if your adverts headliners, wedding services, Cardiff both adverts refer to weddings, but this one is less relevant because it’s talking about wedding services instead of wedding photography. In this case, your relevance wouldn’t be as good, so you’d probably have a lower quality school. Think of it this way when two competing businesses have equal bid prices, the business with the higher quality score will appear higher on the search results. Page one of the best ways you can improve your performance in CRM is to consistently review your campaigns to find more ways to become more relevant with so far the price you’re willing to pay for a click. The maximum CPC and your quality school are the main things that determine your performance in the auction. Now let’s push our scenario one step further.

Say two different businesses compete on the same keyword wedding photography. If we look closely, we can take all this info and figure out what will happen in the auction multiplied out, Richard’s auction school called is 12 class scores, an impressive 30, even with a lower max CPC. So what does this mean? Although her bid was a pound less than Richards, Claire’s advert wins the auction and she gets a higher position on the page than Richard and that pretty much covers SEM auctions, as you can see. You can’t simply buy your way to the top. This is to ensure the most relevant adverts win the auction, not simply the ones with the highest bids. If your ads lack relevance and you get a low quality score, it’ll be difficult to compete. In fact, if relevance is too low, the search engines may not display your ad tool to improve your performance. Stay focused on improving the relevance of all your adverts. Make sure that your adverts always closely match the terms that people have just search for. By doing this, you can win better positions for your ads without having to pay more money.

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