SEA 101: booking options, costs and goals

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BASIC thinking  is an online magazine and is one of the widest reaching tech platforms in German-speaking countries. The magazine reports about social media, marketing, and business topics daily. This article was written by Christina Widner from BASIC thinking GmbH and BASIC thinking International.

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SEA stands for search engine advertising, and that is precisely what it is. This includes, for example, text displays in search engine results and advertising banners. In the first part of our series “SEA 101” we covered the definition, functions and advantages of SEA. In this article, we will shed light upon the booking options, costs and goals.

Booking options in SEA

The most well-known SEA provider is Google with its Google Ads, where companies have the option to display fitting advertisements either directly on Google or in the display network. Companies may choose between different types of advertisement displays.

The different types of advertisement displays

Advertisements located directly in the search results are the best-known and most popular options. The ads appear together with the normal, organic search results, but are specifically labelled as such. They can appear over, under or next to the search results.

Another type are the Google Shopping advertisements. These appear directly above or next to the search results, just as text advertisements. With one click, customers are sent directly to the respective product and can buy it. This advertising option is usually used by online shop owners that send their product data and pictures to Google.

Besides those, there is also the option of the advertising banner. For this, companies can register in the display network Google AdSense and integrate not only text advertisements, but also banner and video advertisements into their website.

Billing options for SEA

The costs for search engine advertising are calculated via the following billing options:

  • CPC (cost per click): As soon as a user clicks on an advertisement, costs are ensued per click. The cost is agreed upon beforehand.
  • CPM (cost per mille): This billing option is also known as cost per thousand (CPT). The company pays per 1,000 displays of an advertisement. Whether users click on the ad or not does not affect the price.
  • CPA (cost per acquisition): Here, neither the clicks nor displays plays a role. The company only pays when a customer actually buys something. The decisive factor for this option therefore is the conversion rate.
  • CPP (cost per phone call): This works via a Google redirect number, and the company pays per call that originates from their advertisement.

Costs for SEA

The costs for SEA cannot be generalised without further ado. With the example of CPC, we will explain which factors play a role and how the price is determined. The following basically applies: More popular search terms come with more competition, and therefore also with a higher price per click.

Who receives the advertising placement in the end is decided via auctioning. For example, say company A would pay 8 euros for the top place of the advertisement displays for a certain keyword. Company B would pay 6 euros for the same placement and same keyword. In this case, company A would win the auction. The costs then do not amount to 8 euros, though, but to 6.01 euros. In this way, Google eases companies’ fear of paying too much for advertisements.

Nowadays it is possible to display advertisements for any keyword. This is why companies should conduct extensive keyword research in order to figure out which keywords are the right ones for them.

However, price is no longer the only factor that decides who receives the placement. The quality of the advertisement plays an important role as well. Therefore it is possible that an advertisement with a higher quality wins the auction without having to pay the higher price.

The goals of SEA

SEA is an important part of many companies’ marketing strategy. The goal of text advertisements is therefore usually to increase their click rate. For online shops, Google Shopping advertisements are in turn a good option to increase conversion.

Basically, it comes down to this: The higher a company’s budget for SEA measures is, the faster and more precisely it will be able to reach its advertising goals. Especially when it comes to strong and relevant keywords

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