Pay-per-click (PPC) advertising is a powerful digital marketing strategy that allows businesses to reach their target audience by placing ads on popular search engines and social media platforms. PPC advertising is a type of online advertising in which advertisers pay each time a user clicks on one of their ads. The goal of PPC advertising is to drive traffic to a website, generate leads, and increase sales. The most popular PPC advertising platforms include Google Ads, Microsoft Ads, Amazon Ads, and LinkedIn Ads. Keyword research is at the heart of PPC campaigns.

Display and video ads work in different ways. A search term on a search engine does not initiate these ads. They appear based on the interests and demographics of consumers. They include a wide variety of ad formats, including static images, carousels, animations, and, of course, video. The most popular display and video ad platforms include Meta (Facebook) Ads, Instagram Ads, Google Ads (especially YouTube), TikTok Ads, Amazon Ads and Twitter Ads. These ads can appear in the social media feeds of users, third-party websites, mobile apps and on other digital platforms. Audience targeting is a key part of Display and Video ads.

An “audience” is a group of people who share common demographics, location, interests, habits, or other features. If they previously interacted with the advertiser, for example by watching a previous ad creative or purchasing a product, they become part of a “remarketing” audience. By preparing campaigns that cater to the needs and wants of a particular audience, a business can nurture its brand and generate sales. Using paid ads, a business can boost website traffic, increase brand exposure, generate leads, and increase product sales.

Businesses must define their goals, target audience, and social media platform(s) to operate an effective digital advertising campaign. They must also produce engaging ad content, including photos, videos, and prose, to attract the attention of consumers. To maximize ROI, firms must continually review and optimize their audience targeting. To increase ad effectiveness and meet their goals, they may change their targeting criteria, ad type, bidding strategy, and other campaign features.

Advertisements can be created in a variety of formats, including simple text ads, images, videos, and shopping advertisements (that include the photo and price of products). While text ads (also called “search ads”) are still commonly used, video ads are becoming increasingly popular as they enable storytelling and educating the consumers.

In digital advertising, keeping the ad creative relevant to the target audience is essential. Being able to entertain or educate consumers is a skill in high demand. It is also important to remember that a simple yet clear offer in the ad creative can be much more impactful than fancy graphic design. With the rise of Artificial Intelligence (AI) tools, we expect the number and variety of ad creatives to get a boost in the coming years. However, the importance of relevancy is here to stay.

Measuring the success of a paid campaign requires analyzing several key metrics, including click-through rate (CTR), cost per click (CPC), cost per action (CPA), conversion rate, reach, frequency, and return on ad spend (ROAS). Let’s review these key metrics.

CTR measures the percentage of users who clicked on an ad after seeing it (it’s the ratio of clicks to impressions). It helps us measure the effectiveness and relevance of an ad. For example, a CTR of 1% means that, on average 1 out of 100 people who saw the ad clicked on it. If the ad creative (including its offer, format and ad copy) is relevant, it will attract more clicks and result in a higher CTR.

CPC measures the cost of each click (it’s the ratio of cost to clicks). It helps us measure the cost effectiveness of paid campaigns. However, a better metric for measuring performance is cost per action (CPA). An action (also called a “conversion”) is any user action that is valuable for a business. It can be as basic as an email signup, or as complex as a sales transaction. CPA is the ratio of cost to actions. For example, a CPC of $10 may look too high, but if the CPA is reasonable, the campaign can still be very profitable for the business.

The conversion rate measures the percentage of users who complete a desired action on a landing page, such as making a purchase or filling out a form. Of all the key metrics, the conversion rate has the biggest impact on success. For it to be high, all parts of the paid campaign have to work together from the initial ad creative to the landing page and the actual product or service.

Reach and frequency are metrics that are commonly used in display and video ads. Reach measures the number of people who have seen at least one ad impression. Frequency measures the number of times a given consumer has seen a specific ad creative (it is the ratio of impressions to reach). For example, an ad creative may have reached 1,000 people over the course of a day. If it had 2,000 impressions during the same time period, the frequency would be 2.

Finally, the return on ad spend is the industry standard for measuring the return on investment from an advertising campaign. It’s an “apples to apples'' comparison: it’s the ratio of total revenues to total advertising spend. For example, if a campaign generated $3,000 in revenues and it cost $1,000 to run the ad campaigns, then the ROAS would be 3x (or 300%).

Measuring all of these metrics is not easy. There are a number of challenges, including user privacy, technical complexity, and the sheer amount of data to process and analyze. However, without measurement, digital marketing cannot be as powerful. Therefore, before spending any money on advertising, a marketer needs to have a plan in place for conversion tracking.

component of digital marketing as it allows businesses to track the actions users take after clicking on an ad. By tracking conversions, businesses can determine which campaigns are most effective at driving conversions and optimize their campaigns accordingly. This applies to all types of digital marketing campaigns, including paid advertising as well as the other techniques we will cover next.

One optimization technique is A/B testing, which involves creating multiple versions of an ad and testing them to see which one performs the best. Businesses can also optimize their campaigns by adjusting their bidding strategy, targeting specific keywords, and improving their ad copy and landing pages.