Introduction to Paid Advertising

Where I try to convince you that advertising isn't always an annoyance (and that you shouldn't be afraid of ad blockers)

This article is part of my Entreprenerd: Marketing for Programmers book, which is currently available to read for free online.

In the following pages, I will cast a bird’s-eye view of today’s paid advertising ecosystem. What follows is *not a detailed “how to” guide. Instead, I will present an armoury of principles that will steer you clear of the gravest pitfalls in paid advertising and help you navigate the broader landscape. Once you’ve absorbed these broad ideas, you’ll need to search elsewhere for specific implementation details.1*

Let’s continue by addressing the main objections to paid advertising.

Paid advertising is taboo. After an entire childhood of despairing when our cartoons were interrupted by soap detergent advertisements, we’ve all grown deeply sceptical of anything that smells remotely like paid-for marketing. And for most of us, this reflexive dislike has survived into adulthood.

Effective advertising doesn’t feel like advertising to its recipients. It doesn’t seem mercantile, pushy, offensive, irrelevant, or even fully recognisable as a sales attempt. Instead, it simply points out that someone out there has a solution to a problem they currently face. Sometimes, those being advertised to don’t even perceive their having seen an ad. They click a sponsored link and, five seconds later, if you asked them how they arrived on the advertiser’s website, they would deny having clicked an ad. It’s as if good advertising bypasses people’s psychological aversion to commercial messages.

Imagine you’ve relocated abroad and need to find a health insurer. You Google for “health insurance” and the top-ranking organic hits point to the websites of big brand insurers. You visit a few of these websites and study their plans and prices. But their offerings are complicated and difficult to compare with one another. This challenge is not made any easier by the sales materials only being available in the tongue of your newly adopted land. You start to tire from the strain of information overload and feel a swell of uncertainty about how to resolve this important decision.

In these situations, what you need is a trustworthy English-language health insurance comparison service. Imagine that one existed, but you never thought to look for it. Its existence wouldn’t have done you any good, so you would eventually be compelled to chose a big brand insurer under uncomfortable uncertainty, likely getting ripped off in the process.

Suppose instead that the comparison service had taken out Google advertisements for the search term “health insurance”. That would ensure that you would become aware of its services at the time you needed them. Through its website, you would have been able to choose between insurance plans in an informed manner, likely securing a much better deal for this long-term expense.

The effect of the comparison service’s advertising was to connect two well-matched parties that would otherwise have never discovered each other. This enriches everyone’s lives and thus is the magic of advertising as discovery. The next time a newly opened Indian restaurant (your favourite cuisine) informs you about their nearby branch, think “happy discovery”. And the next time the retailer of home cinema projectors informs you that the model you were saving up for is now on sale, think “happy discovery”. And when I, the author of this book, advertise my next release, think…

No One Clicks on Paid Adverts

There is a commonly held belief that people searching on Google completely ignore sponsored links and adverts. Any attempt at advertising would remain unseen and ignored—at best, a waste of your time.

How true is this assumption? In 2011, a study by GroupM UK and Nielsen sampled 1.4 billion searches and found that 94% of clicks went to organic results, leaving only 6% to paid advertising.2 Other studies are less pessimistic: Richard Zwicky from Enquisite studied search traffic patterns for 5000 major websites and found that paid advertising clicks added up to 10.5% of the overall search traffic share.3

Although a traffic slice of between 6% and 10.5% is underwhelming, it’s worth remembering that a small slice from an obscenely large pie can still feed many mouths. And these little slices are more nourishing than the average because paid search visitors convert at a 1.5x higher rate than organic ones, once they have landed on your website.4

There is a demographic trend also worth pointing out: GroupM UK and Nielsen found that while only 5% of those under 17 clicked on paid ads, as many as 23% of those over 55 clicked.5 The older your target audience, the more likely they are to respond to paid adverts.

To a certain degree, focusing too much on click share is narrow-minded. Even if no one ever clicks on your paid adverts, they still see them. This visibility establishes your brand in the public’s eyes, which may well lead to future organic business. It’s a model not unlike that of old-fashioned newspaper and magazine advertising.

Of course, all the above depends on ad blocker adoption.

Doesn’t Everyone Have Ad Blockers, Anyway?

Perhaps the most common objection I hear young, tech-savvy people levy against online advertising is that “most people use ad-blocking software, so paid advertising is dead”.

This is a valid concern. To what degree should you be worried?

A 2015 study by PageFair and Adobe estimated that 16% of US internet users are using ad blocking software. Figures for European countries vary from about 10% (France) to 37% (Greece).6 All in all, ad blockers are still a minority thing.

There are other reasons for advertisers not to feel too disheartened.

Among internet users that have ad blockers installed, most only have them on their primary laptops. Ad blocking for mobile phone browsers is only available in iOS (13.9% market share7), and even within this ecosystem adoption is undersubscribed. Furthermore, it’s unlikely that Apple or Google will ever allow ad blockers for mobile phone apps such as Facebook or Twitter.

Despite what their names suggest, ad blockers do not block all ads. The most downloaded ad-blocking plugin, Adblock Plus, allows unobtrusive and well-behaved advertisements from reputable publishers to pass through its filters. The logic behind their allowing exceptions is that internet users first resorted to ad blockers in response to annoying pop-ups, loud autoplaying video commercials that sucked up bandwidth, and monkey-punch games. Civilised and non-abusive advertisements, like Google Search ads, are far less annoying, so the argument for banning them is less compelling.

Ad-blockage usage is weighted towards certain demographics, and you might be lucky enough to serve an audience with lower adoption rates. PageFair reported in 2014 that while 41% of American internet users aged between 18 and 29 used ad-blocking software, only 15% of those aged over 60 did the same.8

Ad blocking also affects some industries more than others. According to PageFair’s 2015 report, blocking rates by site category were as follows:

  • 26.5% of gaming websites

  • 19.1% of social networking websites

  • 17.0% of tech/internet websites

  • 16.9% of sports websites

  • (some left out)

  • 5.2% of personals/dating websites

  • 5.0% of real estate websites

  • 4.9% of charitable organisation websites

  • 2.5% of government/legal websites

Paying for Attention Is Dirty

Paid advertising feels wrong for another reason: It seems somehow repugnant to pay for attention, as if buying friendship (or other things).

But this disadvantage is also, in its way, an advantage—particularly for marketers promoting dreadfully boring businesses. In all likelihood, a YouTube video for mortgage refinancing or life insurance won’t be going mega-viral anytime soon. Pragmatically speaking, it’s wiser for these dull businesses to drop any illusions that their products are interesting and instead just cough up money for attention. Sure, buying a share of the limelight feels fishy, but sometimes that is the price of success.

It’s Too Expensive

Paid advertising is financially risky: A poorly performing campaign blazes through cash reserves faster than a fire through a city built of nothing but kindling.

New businesses, barring a funding jackpot, are usually strapped for cash. The last thing they want to do is take on more expenses. Naturally, they shy away from paying for advertising…after all, aren’t there plenty of free options available, like SEO or social media or press coverage?

Here’s the catch: The free options are hard to pull off. The work demanded is labour intensive and, even if you apply yourself and give it your all, the results often lie outside your sphere of control, dependent on capricious search engine algorithms or journalistic opinion that you cannot reliably influence. In general, these alternative marketing channels are free only in the sense that what you save in money, you lose in time.

Moreover, even if your stars align and everything goes supremely well, there can be a long delay before you see any results with a free channel. Paid advertising has the rare and wonderful advantage among online marketing channels of being able to deliver traffic to a new venture as soon as it opens its doors. Other channels, such as SEO, can take months or even years before they start delivering respectable amounts of traffic. Many new businesses cannot afford that kind of lag. I know I couldn’t when I started out. Today, my business Oxbridge Notes receives well over 90% of its traffic from SEO, but when I launched, the figure was stuck firmly at 0%. Back then, Google Adwords sent me all my traffic, and I have them to thank for my first few hundred sales. In fact, my business wouldn’t have survived long enough for me to be writing this book if it weren’t for paid advertising shuttling me through those first few patchy months. Although SEO is ultimately more efficient in the late game thanks to its low per unit cost, paid advertising is a necessity at kick-off.

Compared to other approaches, paid advertising is (relatively) effortless, fast-acting, and tractable to your will. It’s not unrealistic to have your first campaign up and running within a few hours, and to receive your first sale that same day.

And as regards worries about financial costs, there is one simple formula to remember: As long as your unit advertising costs don’t exceed your unit profits, paid advertising remains a good deal. And it becomes an exceptionally good deal if your unit advertising costs are only a mere fraction of your unit profit.

Why Pay for Traffic That Would Have Visited Anyway?

It’s a common concern amongst internet advertisers that they might pay for traffic they would have otherwise gotten for free through other channels.

Imagine a tattoo artist with an established and effective SEO campaign. Anyone in their city who googles “tattoo artist” sees the artist’s website rank #1 in the organic results. Given the artist’s existing success in organic search, is it worth their while advertising on the same keywords with Google Adwords? Isn’t there the danger that whoever clicks on the tattoo artist’s paid adverts would have clicked on their free organic results if there were no paid advertisements jostling for their attention?

There is some truth to this fear. Without a doubt, a percentage of the tattoo artist’s otherwise free traffic will end up as paid-for traffic, as least when the artist advertises on keywords which are already receiving organic traffic. That said, advertising on promising search terms for which the artist barely ranks is a good idea though. These terms are essentially brand new territory, and the artist won’t be competing with their organic results by advertising on them.

Despite the toll levied by paid advertising, I would still argue that the artist should go ahead and pay for advertisement. My grounds are as follows:

1. The cost isn’t that high.

At least with Google Adwords’, their Quality Score system dramatically reduces the price of advertising when there is, in their eyes, a good “match” between the keyword targeting and the page the advertisement leads to. In practice, I have often noticed a cost per click of £0.01 when advertising for any keyword I already rank #1 for in organic search.

2. Countermeasure to competitor advertising.

At any time, it’s possible for competitors to start advertising on keywords you rank #1 for in organic searches. Their campaigns poop on your party and siphon away leads before they get as far as reading the organic results where you shine. When your competitors start advertising, often you need to respond with advertising of your own just to retain your market share. This is especially true when your competitors avail themselves of special paid-ads-only bells and whistles. For example, Google Adwords has a feature called “ad extensions”, which are extra widgets within the advert that draw the eye and encourage conversions. We’ll discuss these in a later chapter.

3. Control over advertising messages.

In organic search, Google decides what text snippet accompanies your result entry. They are influenced by an on-page SEO element known as the meta-description, but not bound to obey it. All too often, Google completely ignores this meta-description directive and just displays a random jumble of words taken from your page. By way of contrast, paid advertisements give the marketer full control over the exact wording of their adverts, enabling them to craft their text to present themselves exactly as they please.

And even if Google Search completely respected the meta-description directive, Google Adwords would still offer superior control because advertisers can create different advertising copy variants for every single keyword advertised upon. For example, the keyword “henna ink temporary” should be matched with an advertisement whose copy highlights how long henna ink lasts, whereas the keyword “tattoo pain” would be better focused on options for minimising pain during the tattoo session. With this kind of flexibility, the tattoo artist can directly address the concerns of their leads as indicated by what they typed into Google. The net result of this adaptivity will be higher click-through rates.

Organic marketers cannot avail themselves of this same flexibility because each webpage is limited to one meta-description. Every web surfer, no matter what they searched for in Google, will be presented with the same unchanging and hopelessly general front (that is, unless Google decides to disregard the meta-description for that search and instead throw up gobbledygook).

4. Social signalling of trust/credibility.

Business-minded customers believe that when a company buys paid advertising, that counts as a rough indicator that the company is an established and profitable entity, and one that is therefore reliable and safe to deal with. The act of buying advertising is a type of social signalling that establishes seriousness and credibility.

(Side-note: In some markets, adverts may have the opposite effect. Anti-“The System” types may never click on adverts out of principle. They might also believe that any company paying for a public boost must be compensating for the substandard quality of their product.)

  1. In general, I would recommend watching YouTube videos that were created a maximum of one year ago—the video format is easier to absorb and follow when you’re learning about where to click within the many menus of labyrinthine advertising platforms. 


  3. The original source said, “for every 1 click on a paid search result, the organic results generate 8.5 clicks”. I converted this to a percentage for clarity. 






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