Our Comprehensive Beginner's Guide to Paid Advertising

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11 Jan 2022
5 min read

What is Paid Advertising?

Put simply enough, paid advertising is any form of advertising that is purchased (paid for) rather than earned or owned. In today’s market, this means any form of PPC (pay-per-click) advertising, social media ads (such as Facebook, TikTok and Instagram ads), and other services like these.

In this guide, we will help you learn all the basics of paid advertising as well as why and how you should consider partnering with an agency to help develop and execute a paid advertising strategy.

  • Why is Paid Advertising Important?
  • What is PPC?
  • What Are Social Media Ads?
  • What KPIs or Metrics Should My Paid Advertising Campaign Consider?
  • What Should I Look for in a Paid Advertising Agency?

Why Is Paid Advertising Important?

Paid advertising is important because it’s one of the quickest and most trackable ways a business can achieve a higher ROI (return on investment) than simply waiting for their organic reach to expand wide enough to achieve profit. On average, a PPC campaign will return a ROAS (return on ad spend) of $2 for every $1- that’s 200%. With a skilled agency and strategy, your ROAS will be even greater. Another factor to consider is that the chance of a potential consumer converting is 50% higher for paid advertising traffic than organic. So now that we’ve gone over a few stats to demonstrate the importance of paid ads, let’s dive deeper into the main types to consider: PPC and social media ads.

What Is PPC?

PPC or “pay-per-click” advertising is a broad term for a number of different types of digital advertising in which businesses bid on certain keywords and platforms to place their ads. If their ad bid wins the auction, it will be displayed when a consumer’s search query corresponds with the keyword or criteria of the auction. If the consumer clicks on the ad, the business that placed the ad will pay the “cost-per-click” (CPC) amount they bid. It is important to keep in mind that if a consumer doesn’t click on the ad they see, there is no cost to the business, which is the key difference between PPC advertising and CPM (cost per mille) which means cost per thousand impressions and is the commonplace for social media ads. There are several platforms and search engines that offer PPC services but for now, we’ll go over the most prominent, Google Ads. To explore PPC a little further, there are several types to consider for your campaign.

The main forms of Google Ads are:

  • Search network campaigns
  • Display network campaigns
  • Video campaigns (on Youtube)
  • Shopping campaigns
  • App campaigns
  • Local campaigns

From these different types, there are many ways to customize your ads with the needs and goals of your overall campaign. There are pros and cons to each kind, so knowing your audience and partnering with highly skilled and experienced Google Ads specialists is crucial to the success of your campaign, especially considering how competitive the field is.

What Are Social Media Ads?

Within the large-scope that is online paid advertising, social media ads play a powerful role in the success of an ad campaign. As mentioned earlier, social media ads are typically not purchased and tracked as traditional PPC ads. Instead of paying for each click an ad receives, a business pays per every thousand impressions, again, this is known as “cost-per-mille” or CPM. Similar to PPC, social media ads can be a highly targeted, efficient, and lucrative strategy in an ad campaign. In PPC, Google is king. In social media, there are several platforms to consider based on your audience segments, campaign goals, and types of ads you want to run.

The main social media platforms to consider are:

  • Facebook
  • Instagram
  • TikTok
  • LinkedIn
  • Pinterest
  • Twitter
  • Youtube

Within these platforms, there are plenty of ways to customize ads and campaigns to better suit your target audience. With this in mind, it is crucial to have a well-developed “persona” of each of your target segments. From there, you will be able to choose which platforms will reach your audiences most effectively and what types of messages you’ll need to convey in each campaign. Is your target audience young? If so, you’ll want to run ads on TikTok rather than Facebook. Are you in business-to-business sales? If so, you’ll likely want to run ads on LinkedIn rather than Twitter. Knowing where to run ads and how to tailor them to a specific demographic is what sets apart great social media ad campaigns.

What KPIs or Metrics Should My Paid Advertising Campaign Consider?

One of the most significant benefits of paid advertising campaigns in digital marketing is that it is highly trackable. Each platform offers their own set of metrics and KPIs (key performance indicators) that provide insights on how your campaign is performing. These metrics are recorded in real-time which enables you to tweak and revise the campaign as it progresses to ensure its success. There are many different KPIs you can track and experts across the industry will have varying views about the values of each, so we’ll just show you some of the most important metrics to help get you started.

KPIs to track for paid advertising campaigns:

  • Cost per Click (CPC) or Cost per Mille (CPM)
  • Click Through Rate (CTR)
  • Return on Ad Spend (ROAS) or Return on Investment (ROI)
  • Ad Quality Score
  • Impression Share
  • Conversion Rate

We’ll dig deeper into each of these metrics later on but it’s important to understand that the most important factors to consider are conversion rate, and return on ad spend. At the end of the day, these two metrics dictate if a campaign is successful. With so many different KPIs to follow, it’s easy to get lost in the numbers and get caught in “paralysis by analysis” where you find yourself stuck as you try to optimize for each metric and then the campaign ends up going nowhere because it isn’t focused on the end goal of converting leads into revenue.

What Should I Look for in a Paid Advertising Agency?

There are many characteristics every high-level paid advertising agency should possess but a few stand out.

  • High-level understanding of data and analytics
  • Strong optimization capabilities
  • Enthusiasm for keyword and target audience research
  • Effective utilization of the many paid advertising channels
  • Strong foundation in the digital marketing industry

A well-balanced agency will demonstrate all of these traits and have the experience and results to back them up. Knowledge of the analytics, the consumer, and the industry as a whole are crucial to the success of an agency and thus, your campaigns. Nxt Era Marketing has a highly qualified and highly experienced team of paid advertising specialists ready to help you elevate your business and exceed all expectations. Contact us today for a free consultation!

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