Paid Search: PPC, SEM, CPC, CPM—What does it all mean?

September 7, 2018 | Kristen Erickson
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Editor's note: This post was originally published in June 2015 and has been updated to be more current and comprehensive.

As digital advertising has become more commonplace, the technology has improved significantly. What once used to be a quite manual process can now be done programmatically; social media channels allow for comprehensive paid strategies to support or work in tandem with SEM; and almost all businesses are now considering some form of digital advertising to stay competitive. Digital advertising has become "table stakes," a must for businesses who wish to stay relevant in 2018 and beyond.

But that doesn't mean it's simple. The acronyms alone can make even the most seasoned marketer's head spin. PPC, SEM, CPC, CPM, SEO...the list goes on and on. Below we've outlined the basic definitions of these common digital advertising acronyms, and a light mapping guide for marketers who have a specific goal in mind for their advertising campaign.

First, let's take a step back and make sure we're all on the same page. When a user types a keyword or phrase into a search engine, the first few results are ads. That means that these brands have paid Google and outbid their competitors so their results show up first.

PPC_Restaurant_Search

Among the ad results on the top of the search page, some appear higher than others. Google decides which companies show up at the top based on their bid (higher bids = higher placement) and their quality score (Google won't let you pay to place low-quality ads at the top; they have to be relevant and have a history of high performance/clicks).

  • A company’s bid is the amount of money they are paying Google to advertise. A company can manually set their bids or allow Google to bid for them based on their set budget.
  • Quality score is Google’s measurement of how relevant and informative your page is. This is measured by: 
    • Your ad’s click through rate (CTR)
    • Relevancy of your page
    • Use of keywords
    • Success based on targeted geographic location
    • Performance on various devices (laptops, smartphones, tablets, etc.)

The higher the quality score, the lower the bid because Google wants to rank relevant and useful content at the top of their list.

Now, an overview of the various acronyms:

SEM (Search Engine Marketing)

Search Engine Marketing (SEM) used to refer to both organically increasing your search engine rank through SEO and inorganically increasing your search engine rank through paid search. Now, the term SEM usually refers to just paid search.

PPC (Pay Per Click)

Pay per click ads, like the name implies, only charge the brand/company each time the ad is clicked. Pay per click paid search ads are mostly text-based, the ads you see at the top of the search engine results page. More often than not, PPC paid search is used to drive traffic to a website page and generate conversions or leads. This is quite different than display advertising in which impressions and awareness are better hallmarks of success. If you are thinking PPC is only for consumer brands, think again. Digital advertising in the B2B space is more popular than ever.

CPC (Cost Per Click)

CPC is one of the common metrics tracked very closely by advertisers managing a PPC campaign. In most cases, the advertiser will want to keep the CPC as low as possible while still beating competitors and maintaining a 1 or 2 position on the results page. 

CPM (Cost Per Mille)

Cost per mille (CPM), also known as cost per thousand or cost per impression advertising, means that a company pays the search engine every 1000 times their ad shows up on a search result. This method is good for companies who are trying to raise their brand awareness, because the ad being seen is more important than the ad being clicked or a lead being converted.

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Ready to launch your first digital advertising campaign? Grab your complimentary copy of “Six Reasons Why PPC Is the Go-To Strategy for Tight Budgets” for additional digital advertising education. 

Topics: Digital Advertising

About the Author
Kristen Erickson

With 10 years of digital strategy and inbound marketing experience, Kristen leads the transformation and customer experience team for Falls Digital. Kristen’s background is rooted in content strategy, buyer persona development and understanding the customer’s touchpoints with a brand—information she uses to develop actionable plans for clients.

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