Paid Search
A form of digital advertising where businesses bid on keywords to display text, shopping, or local ads in search engine results pages. Also known as SEM (search engine marketing) or PPC (pay-per-click), it drives targeted traffic from users with high purchase intent. Google Ads dominates with approximately 90% market share, followed by Microsoft Ads at 6-8%. Paid search ads appear above and below organic results, with Google showing up to 4 ads at the top of the page. Ad formats include expanded text ads, responsive search ads, shopping ads with product images and prices, and local service ads with business ratings.
Why It Matters
Paid search captures demand at the moment users are actively searching for products or solutions. It delivers the highest-intent traffic of any digital channel, with average conversion rates of 3-5% across industries compared to 0.5-1% for display advertising. Paid search is essential for driving immediate conversions and measurable ROI, with most campaigns showing positive returns within the first month. Strategic keyword segmentation into branded, non-branded, and competitor campaigns enables differentiated bidding and budget allocation. Negative keyword management prevents wasted spend on irrelevant queries, with top-performing accounts adding 50-100 negative keywords per month based on search term reports.
Example
A dental practice bids on 'emergency dentist near me' at $12 CPC. Each click has a 15% conversion rate for appointment bookings worth $500 on average, producing a CPA of $80 and a 6.25:1 return on ad spend despite the high CPC. The practice then segments campaigns by service type: emergency services at $12 CPC convert at 15%, cosmetic dentistry at $8 CPC converts at 6%, and routine checkups at $4 CPC convert at 10%. By allocating 50% of budget to emergency and routine campaigns with the best unit economics, the practice increases monthly bookings by 35% while reducing blended CPA from $95 to $68.
Related Terms
CPC
Cost Per Click is the price an advertiser pays each time a user clicks on their ad. It is the dominant pricing model in search advertising and is also used in social and display campaigns. CPC is determined by an auction system where advertisers set maximum bids, but actual costs depend on competitor bids and quality factors. Average CPCs vary dramatically by industry: legal keywords can exceed $50 per click, while retail averages $1-$2. On Google Ads, actual CPC is typically 20-50% below the maximum bid due to the second-price auction mechanism.
Quality Score
A rating on a 1-10 scale used by Google Ads to measure the relevance and quality of your keywords, ads, and landing pages. It is composed of three components: expected click-through rate, ad relevance, and landing page experience, each rated above average, average, or below average. Quality Score is calculated at the keyword level and updated dynamically as performance data accumulates. While other platforms like Microsoft Ads use similar quality metrics, Google's Quality Score is the most widely referenced. A score of 7 or above is generally considered good, while scores below 5 indicate significant optimization opportunities.