Paid advertising drives profits. It’s at the heart of the dominant tech companies’ business models, earning them tens of billions of dollars in revenues, quarter after quarter. Paid ads clearly work, especially for those businesses that get them right.
When getting started with paid ads, it can be useful to remind oneself of that old maxim: “you’ve got to spend money to make money.”
There are plenty of paid advertising platforms to choose from, however, most serious entrepreneurs and small business owners opt to begin their online advertising with paid search and display ads, via Google Ads.
In this article we give straightforward explanations of paid search and display ads; look at the relative strengths of each, before suggesting when you should use each ad format.
What Are Paid Search Ads?
Despite the growth of social media, paid search remains one of the most popular forms of Pay Per Click advertising.
Paid search works by showcasing your written ad, in the search engine results pages (SERPs) either above or below the organic results. Search ads consist of advertising copy split between three primary components:
- Headline,
- A display URL, and
- Description.
These three primary components can be augmented further through the use of various ad extensions.
Google wasn’t the first company to create the search advertising auction system, but they certainly were the first to perfect it. In combination with your campaign design, Google’s Ad Rank system will determine how often your search ads appear, their ranking in the SERPs, and how much each click on your ad will cost.
What Are Display Ads?
Display ads are another option within the Google Ads infrastructure. As the name suggests, display ads incorporate visuals into their design. However, the other key difference relates to user intent. Whereas Search Ads are shown to users in the SERPs when they are using Google to search for a specific product or service, Display Ads can be shown in a range of other contexts based on many more targeting settings.
Google does this by showing your display ads across the Display Network. It’s a collection of over 2 million websites, apps, and internet services that, together, reach over 90% of worldwide internet users. Based on your carefully optimized targeting settings, display ads can reach your target audience at different times and through different contexts and websites.
Display campaigns use responsive display ads, meaning your ads will automatically adjust in terms of size, format, and copywriting to fit the space they’re served in.
Cost and Effectiveness
Monitoring and evaluating the performance of paid advertising campaigns is a skill that you will pick up quickly. Especially if you’re careful with your advertising budget, as you should be. We’ve written about the PPC metrics small businesses should track with the key takeaway from that article being that: building a solid understanding of metrics is key to optimizing your paid advertising campaigns and improving your Return On Ad Spend (ROAS).
In comparing the relative strengths of search ads and display ads, we decided to look at the industry averages for each ad format across two metrics; Conversion Rate (CVR) and Cost Per Click (CPC).
Conversion Rate
Across industries, the average CVR for search ads was 4.40% whereas display ads earned an average CVR of 0.57%.
Remember what we said about user intent when highlighting the differences between search ads and display ads? That difference in user intent is the main reason why we see this difference in conversion rate.
Cost Per Click
Keep in mind that your choice of ad format will depend on your business’s circumstances and objectives. At the most basic level, the objective with is to present your businesses products and services as the right solution for your target audience.
The average cost per click follows a similar pattern with search ads coming in at $2.41 whilst display ads cost significantly less, on average, coming in at $0.59 per click.
With that in mind, let’s go through when to employ search ads and when to use display ads.
When to Use Search Ads
Search ads are a great way to get your business in front of your target audience quickly. Nonetheless, don’t assume creating your first search ads campaign will be a 2-minute job. Google Ads has incredible functionality. This means that you can go into great detail when designing and then customizing your campaigns.
It’s not just improving your ad copy. Assessing the performance of your campaigns and learning about your target audience will allow you to optimize your campaigns. For example, by adding negative keywords to remove the chance of your ad showing for low value or irrelevant search terms.
Three examples of when to use search ads:
1. When You Want to Reach High-Quality Leads
Search or user intent is what makes paid search ads so powerful. Identify the keywords and keyword phrases that you want to trigger your ad. Then, make sure your linked landing page relates to, or satisfies, the searcher’s intent.
2. If You’re Serving a Local Market
As we alluded to in the above bullet, your ad should satisfy the user’s intent. With search ads, specificity is rewarded. If you’re operating a local business, it makes sense to create campaigns around keyword phrases that include your locality – e.g. ‘phone repair store Thomasville’.
3. If Your Product or Service Has a Short Sales Cycle
Search ads are particularly useful for short sales cycles, i.e. you’re confident that after clicking on your ad, the lead will complete a sale. Sales cycles are generally shortened when the searcher’s high intent combines with a sense of urgency. For example, urgent services such as plumbers, veterinarians, or locksmiths are all suited for search ads.
When to Use Display Ads
Although they are ideal for promoting products or services that benefit from using visual images or video in their promotion, all types of businesses employ display ads as part of their online advertising strategy.
But, while search ads are more suited to earning quick sales, display ads are generally suited to gradual, more subtle conversions. As with search ads, continuous optimization is key. You should do this by excluding placements that prevent your ads from showing on irrelevant sites such as online game websites for kids.
Three examples of when to use display ads:
1. When Promoting a Visual Product or Experience
Products or services that will benefit from supporting visuals are suited to display ads. The other category that is well suited to display ads is experiences. Travel, tourism, and even hospitality businesses such as spas often use carefully targeted display ads.
2. For Retargeting Passive Leads
Display ads are ideal for retargeting campaigns. That is, serving a display ad (through Google’s display network) to a passive lead who visited your website previously but didn’t convert or complete the desired action. Retargeting campaigns allow you to keep your brand front of mind and earn those hard-to-get conversions.
3. When Operating in a Niche Market
Niche markets suit the use of display ads due to the Google Display Network’s algorithm. As Google will serve your display ads on contextual sites (you can also monitor and edit the list of sites) meaning display ads can be cost-effective when operating in niche markets.
Decision Time
You won’t be surprised to hear that Google recommends using a combination of search ads and display ads. However, your choice will depend on the circumstances of your business and your campaign objectives.
Our advice is to start by allocating a small budget to a search ad campaign so you can get a feel for the different targeting parameters and settings. Paid advertising is also a great way to gain insights into your target audience. Allocating your hard-earned cash to an advertising campaign encourages you to monitor, reassess and optimize your ads.
Or, if you’d prefer to scale your paid advertising efforts quicker, we offer expert management of your paid advertising campaigns.
Remember, though, paid advertising is a pay-to-play game, and errors in design can turn out to be expensive lessons.
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