What is paid advertising?

Advertisers pay to show their ads or promote their products or services to their target audience through their ads. This is called paid advertising. It could be online, such as advertising on social media platforms and search engine advertising, or traditional, such as advertising on TV, radio, billboards, etc.

However, paid advertising primarily refers to online advertising or internet advertising.

Traditional marketing is an outbound form of marketing that has many disadvantages.

• Marketing on TV, Radio, and billboards can be expensive.
• These ads don’t guarantee views and results.
• Only a limited audience can be targeted.
• Difficult to track the results.

These disadvantages have become the reason for people to switch to online advertising.

Paid advertising works on two popular media buying models

CPC- Cost per click

CPM- Cost Per Mille (Cost per 1000 impressions)

CPC-Cost Per Click

You pay for every click, which means that whenever a person clicks on your ad, you will be charged. The best example of this type of model is Google search ads.

CPM-Cost per mille

You pay for every 1000 impressions, which means that you are charged for every 1000 people viewing your ad. Meta ads work on the CPM model.

Meta ads mainly target using demographics, interests, and location, while Google ads are based on targeting keywords or a user’s search query and location.

Auction and CPM

Several brands compete for the same space on the user’s social media feed, but only a few succeed, showing up in higher positions. Do you know why?

The position of the ads on social media feeds depends on AUCTION. The Auction decides the CPM for each ad in Meta ads and the quality score for each advertisement in Google ads. The ad’s position for each user is determined based on the Auction.

The CPM depends on some factors.

• Targeting-When you target a narrow audience, your CPM can be high. This is because Facebook tries hard to find and push your ads to the limited target audience you have mentioned.
• Bad creative– If your ad creative and copy are bad, your CPM goes high.
• Competition– When advertisers target a similar audience, the CPM goes high.
• Budget—If your budget is too low, Facebook will have difficulty optimizing your ad, and the CPM will be high.
• Geography—Have you noticed that the ad cost in India is less than in the United States? CPM depends on Geography.
• Seasonality-CPM is high during festive seasons like Diwali, Christmas, New Year, Big Billion Day, etc.
• Engagement– The more people engage with your ads, the less the CPM.

Business benefits of paid advertising

Advanced targeting

Unlike traditional marketing, where your ads reach all kinds of people, paid advertising can help advertisers reach their specific audience in a particular location at a specific time.

Measurable Results

Paid or online advertising is measurable. The number of clicks, impressions, conversions, ROI, ROAS, etc., can be measured from the ad campaign. This helps advertisers determine what is working and what is not.

Flexible 

Paid advertising is flexible. You can change the creative, ad copy, and budget at any time, even while the ad campaign runs, but this cannot be done in traditional marketing.

Auction

The ads are shown to people using an auction model. The Auction considers criteria like bid, ad relevancy, and engagement for an ad to be shown to people. This helps small businesses that cannot bid higher value compete with large businesses. This model gives equal opportunity to the advertisers.

Paid Advertising Channels

There are several paid advertising channels

Search Engine Advertising- Google search, Bing search

Display Advertising- Google display ads, programmatic display ads

Social Media Advertising- Fb ads, Instagram ads, Linkedin ads, X ads, etc

Video Advertising- YouTube ads, Streaming TV ads, etc

Native Advertising- Outbrain, Taboola, RevContent, FB audience network ads, etc

Search Engine Advertising

Display advertising

These are ads displayed on the Google Display Network. They are shown to people on websites, apps partnered with Google, and Google-owned properties like YouTube.These ads are in the form of banners or videos that drive traffic to a website or a landing page.

Social Media Advertising

Advertising on social media platforms like instagram, Facebook, Linkedin, X, Pinterest, Quora, etc is called social media advertising. These ads target based on location, interest, behaviour and demographics.

These ads can be in a single post, carousel, or video format. These ads are shown to three types of audience segments.

1. Problem-unaware-Solution-unaware- These people don’t know the problem and hence don’t know the solution. These people should be educated about the problem and the solution to it.
2. Problem-aware- Solution-aware: These are people who know the problem but don’t know the solution. You have to introduce your product to these people to show them how it can solve their problems.
3. Problem aware-Solution aware-These are people who know that there is a problem and there is a solution for this. You have to convince these kinds of people by showing them your USPs and explaining why they should choose you over the competitors.

Video Advertising

Video advertising involves promoting your products or services through digital media in short or long promotional videos.These videos can be used on social media, websites, apps, or onstream platforms.

Native advertising

Ads designed to match the site you are viewing are called native advertising. You might have faced this situation many times.When you read an article from a news website some hook or engaging news catches your eye.You click on it, thinking it is an article on the news channel, but then you realize it is an ad. The feature of these ads is that the viewer does not know they are viewing an ad.

Getting started with paid ads

Paid advertising helps boost brand awareness, increase engagement, generate leads, and increase sales of a brand /product or service. It also gives instant traffic to your website or landing page.How do you create and implement the right advertising strategy? Let’s see.

Identify your goals

The first step in running paid ads is identifying your goals. Determine whether you are running ads for the top of the funnel audience, which is people in the awareness stage, ads for the middle of the funnel audience, such as people who are in the consideration and interest stage, or ads for the bottom of the funnel audience, which is people who are likely to convert.

If you are a brand with a limited budget, you can choose the objective for the bottom-of-the-funnel audience, which is sales or leads.

Identify and understand your target audience

The next important step is to identify where your target audience is.Identify the location of your target audience and which social media channel they are more active on. Understand their problems and pain points and check if your products or services can solve them.

Create compelling ad creative and ad copy

Ad creative and ad copy are vital because they attract the target audience’s attention. The higher the click-through rate, the more likely they are to convert. 

A bad ad creative or ad copy will get a few clicks. Low engagement on ads will increase the CPM in meta ads and decrease the quality score in Google ads.

Before creating an ad creative, it is important to spy on the competitors.Check what ads are working for the competitors.Create an ad that solves the audience’s problem and highlights your product’s value proposition.

Prefer video ads over static ads.Keep testing new creatives in different angles.Grab the marketing ideas from influencers.There are many types of creative.You must experiment and find the best working creative for your business.

Some types of creatives are

• Benefits focussed- The creative that focuses more on the benefits of a product or service.
• User generated creative-These are creatives created by the user usually raw and non studio like.
• Testimonial creative- These are creatives that include a customer or client testimonial.
• Product demos- Creatives that explain the product demonstration.
• Founder driven-Creatives that show the founder to build a strong credibility and personal branding.
• Ugly creative- Creatives made with inexpensive resources such as printouts, sticky notes, or creative using a casual office setup.

Video ads also play a vital role in online advertising. Knowing the ABCD of video marketing is crucial to creating a high-converting ad. These steps will help you create a good video ad.

• A-Attract -Create a hook that makes viewers stop scrolling
• B-Brand –Show your brand early and often in the ad
• C-Connect-Make an emotional connect with the viewers.
• D-Direct-Direct them to take an action.

Professional graphic designers can design these creatives using design software. However,we are in the age of AI, so leveraging ChatGPT to create prompts and using AI image generator tools such as Google Gemini , Dall-e, Adobe Firefly, etc., to design creatives makes our job easier.

Build a high-converting landing page

The landing page is the destination a
customer reaches after clicking the ad. A good landing page should be
convincing. Follow these steps to build a high-converting landing page.

Title-Create
a title that explains the value of your product/service

Subtitle- Explain how you will create value for your customers

Visuals- Use visuals that explain your service/product

Social Proof– Give social proofs to increase the credibility of your
service/product

CTA –Give
a call to action to influence your customer to convert

Features-Give your customers unique features of your products

More Social Proof-Keep showing proof to increase the trust of the customers

FAQ-Answer
the frequent questions that customers have about your services and products.

CTA-Remind
customers to take action.

Founder: Introduce the founder. Personal branding is important because people may
forget the products and services but will remember the person they trust.

Budget and bidding strategy

In meta ads, there are two types of budget:

The lifetime budget

The daily budget

The lifetime budget

If you have a sale for a limited period, you can use this lifetime budget.The lifetime budget gives you an additional option called ad scheduling, where you can schedule when your ads should run.For example, if you are a cloud kitchen and want to target your audience of office goers during office hours,you could schedule the ad to run only on weekdays between 8 a.m. and 7 p.m.

The daily budget

This is the budget you set for each day.You can set the end date or let it run until you stop it manually.This budget type has the additional option of budget scheduling.If you know that sales will happen at a particular time of the day, you can increase a certain number or percentage of the budget in peak hours and run the ad with a lower budget during other hours of the day.

Bidding strategy

A good bidding strategy is essential to enhance the end result of a Google ad.There are different types of bidding strategies in Google ads or PPC ads.

Manual CPC

This is a bid strategy in which you set the maximum cost per click manually.You can manually set CPC for an ad group or individual keywords.

There are also automated bid strategies that you can use.They are :-

Maximize Clicks

When you select this strategy ,the website traffic increases.It automatically sets bid to get maximum clicks within your budget.

Target CPA

This strategy sets bid to get more conversions within your target CPA.

Maximize Conversions

This strategy sets bid to get maximum conversions while spending the whole budget.

Maximize Conversion value

This strategy sets the bid to get maximum conversion value while spending the whole budget.E-Commerce stores mostly use this.

Target ROAS

This strategy can be used when each of your products’ prices varies.It sets the bid to achieve your target ROAS.

Target Impression share—This strategy sets a bid to show on the results page for any position.The higher the target impression share,the more visibility on Google.

Maximum CPC bid– It is the maximum amount you are willing to pay for every click on your ad.

A/B Testing

This feature in meta ads allows you to test different creatives and target audiences. You can do A/B testing for two campaigns or two ad groups.You can test which creative (static, carousel, or video) is working better or target different locations or audiences with different interests to check which is working better. Usually, A/B testing is used to experiment with new ideas, and when you have found which type of ad your target audience engages more, You can start scaling that ad with a higher budget to generate leads or sales.

Optimization

There are two methods of optimization in Meta ads.

ABO-Ad group budget optimization

CBO or ACB-Campaign budget optimization or Advantage campaign budgeting

ABO-Ad group budget optimization

This optimization is done at the ad group level, similar to A/B testing. You create different ad groups under one campaign.

For example, Ad Group 1 targets people with just one interest, Ad Group 2 targets people with multiple interests, and Ad Group 3 is open targeting, where no interests are added.

You allocate the same budget to all three ad groups. After 2 to 3 days, you realize that ad groups 1 and 3 are working, but ad group 2 is not working, so you reduce the budget of ad group 2 and slightly increase the budget of ad groups 1 and 3. 

After a week, you find that ad group 3 has picked up well, ad group 2 has yet to give any results, and ad group 1 performs average. 

So now you pause the ad group 2 and monitor the ad groups 1 and 3. At this stage, you can even include another ad group with different audiences and check how it works.

At the end of this process, you will find out which ad group works well for your business. 

You can run many campaigns with different ad groups, testing creative and target audiences and finding the winners. This is the process of Ad group optimization. 

When you are trying out the ABO, make sure your audience doesn’t overlap each other. If this happens, your ads on Facebook and instagram will compete with each other. 

It is good to use different audiences for each ad group or, in case of overlapping, do the A/B testing so that the ads shown to one audience will not be shown to the other.

The ABO strategy is used to test out different combinations of ad creative or target audiences. Once you find a set of winners that work well for your business, you can scale the ad budget.

CBO or ACB-Campaign budget optimization or Advantage campaign budgeting

The campaign budget optimization strategy is used to scale the winners or the ad groups that perform well. You can run a separate campaign with the highly performing ad group or put all the highly performing ad groups under one campaign and start scaling to generate more revenue. In this campaign, you can gradually increase the budget and optimize it to generate more leads or sales.

ROI and performance of the ads

The main aim of business owners is to achieve a high ROI.

Return on investment (ROI) is the total profit you have gained from the total marketing costs. It is calculated using the formula:

ROI = Total Profit / Total marketing cost

This marketing cost includes the ad spend and any other amount you have spent on different marketing techniques, whether online or offline.

ROI is different from ROAS

ROAS –Return on AD spend is the amount you get in return for spending $1 on ads. ROAS is a campaign-level metric. It involves only the amount spent on online advertising.

ROAS = Profit/ad spend

Performance of the ads

Few criteria can determine the performance of the ads.

• Your ads are working if your objective is achieved. If your objective is sales and sales happen, your ad performs well.
• If ROAS is above 1, it is positive; if it is less than 1, it is negative. A good ad will result in a positive ROAS.
• A high click-through rate (CTR) means people engage more with the ad.
• If your ad performs well, your conversion rate will be high. Conversion rate is the percentage of users taking a specific action on your website compared to the number of visitors to the ad.
• If your ads perform well, your revenue and thus profit will increase.

Monitoring and Tracking

It is crucial for every business to consistently monitor the ads and track their performance using tools like Google Analytics. 

Analytics tools help to determine the number of website visitors, average time spent on the website, user behavior, traffic from various ads, traffic from multiple locations, Conversions, click-through rate, etc.

You can even add tracking pixels to your website to track page views, conversions, or specific custom events. 

The tracking pixels are code snippets that can track user actions and send the data back to Facebook or Google when placed on the website.

 The pixel data is usually used to create custom audiences and re-targeting campaigns.

Conclusion

We have discussed paid advertising, its benefits, and how to get started with Meta and Google ads. So what are you waiting for? Choose the right platform for your business and create your first paid ad to grow your business.