Many well-known platforms use paid advertising to monetize the data they collect. There is a lot of variety out there, from the established Google and Bing to the disruptors Facebook and LinkedIn and newcomers like Tik Tok. These platforms have realized they can make a lot of money from biddable media and have increased ad space in recent years.

While opportunities are expanding, the industry is growing more competitive, and it is becoming increasingly challenging to rely entirely on organic (non-paid for) channels to get the traffic you require. Enterprises are lured to buy advertisements, and businesses are under pressure to comply if they want to compete in a crowded landscape.

What exactly is paid advertising?

Paid advertising is a type of online advertising in which marketers bid in real-time auctions to have their adverts appear in certain slots on a platform or network. In this search for patio furniture, for example, you can see both shopping advertisements and text ads.

It is also known as biddable media or PPC advertising. PPC is an abbreviation for Pay-Per-Click advertising, which means you pay every time someone clicks on your ads.

This technique is typically in contrast to earned or owned advertising, in which you can use a platform to distribute your material for free, such as Facebook or LinkedIn posts. 

How Does Pay-Per-Click Advertising Work?

The majority of platforms that provide paid advertising services utilize algorithms to run real-time auctions. The algorithms pick which ad to display in an open online slot. The criteria are frequently a combination of the bid amount and the quality of the advertising, but they might differ according to the platform employed. However, platforms do not always make the criterion clear, and there are other other elements to consider.

Ads come in a variety of shapes and styles, including text, photos, videos, and more. Many platforms now include the option to automatically favor ads that are performing well depending on your objectives. Their computers detect far more signals than people can, making it more efficient to let them decide which advertising to display.

There are several targeting choices available, however the majority of them fall into two broad categories:

Search advertising is activated when someone actively searches for specific keywords; the ads typically appear on a Search Engine Results Page (SERP) and answer a specific topic.

Display advertisements - triggered by someone meeting specified targeting criteria such as demographics or interests; the ads typically appear when a user is surfing the web or an app and can be considered disruptive.

Depending on the platform, these two categories can sometimes be merged and matched. However, if possible, we recommend analyzing their performance individually. This is because search advertisements perform better than display ads because they are less intrusive.

The Evolution of Paid Online Advertising

The first banner ad debuted on the internet publication HotWired, which was part of Wired magazine, in 1994. They needed a way to make money, so they adopted the usual practice of selling ad slots within their magazine pages. This strategy was essentially transported to the internet, and publishers would charge an upfront fee to run adverts in certain slots for a set period of time.

Banner advertising dominated the internet, and in 1996, Doubleclick, now owned by Google, emerged to provide marketers with more information about their effectiveness. This changed the market since you could see the data in real time and optimize accordingly instead of having to wait until the campaign was over to make changes.

The Advantages of Paid Advertising for Business

Paid advertising is an excellent strategy to immediately increase traffic - and thus conversions. In comparison, investing in Search Engine Optimization (SEO) strategies takes longer, and you'll typically notice benefits months after making improvements to your website.

This isn't to say that PPC is easier to set up and manage than SEO, or that you should exclusively focus on PPC. Paid advertising is an excellent short-term strategy, however SEO should be viewed as a long-term investment for a company experiencing rapid growth. As a result, if possible, keep a budget for both channels. It's similar to investing in the stock market in that you need to diversify your alternatives to achieve the desired return.