What is search engine marketing (SEM)?

Search engines today are trans­porta­tion hubs for the in­for­ma­tion on the World Wide Web. Together with e-mail com­mu­ni­ca­tion, web searches are by far the most fre­quent­ly used ap­pli­ca­tions of the internet. Those trying to locate in­for­ma­tion, products, or service providers online generally tend to uses search engines such as Google, Bing, or Yahoo. Con­verse­ly, web content that does not appear in the results lists of these search engines es­sen­tial­ly remains invisible to internet users. For this reason, it is es­pe­cial­ly crucial for online stores and retailers to secure a prominent position in these search result lists to generate as many internet visitors as possible. By using various methods of search engine marketing (SEM), websites are able to increase their vis­i­bil­i­ty.

SEM entails placing paid ads in search engines (SEA = search engine ad­ver­tis­ing) as well as im­ple­ment­ing measures to increase a website’s ranking in the organic search results by op­ti­miz­ing content (SEO = search engine op­ti­miza­tion).

Together with its sub-dis­ci­plines of SEO and SEA, search engine marketing is con­sid­ered to be the most important online-marketing channel currently available. One reason for this is SEM’s fun­da­men­tal­ly different approach to ad­ver­tis­ing measures when compared to more con­ven­tion­al online marketing channels. While display ad­ver­tis­ing, e-mail marketing, social media ad­ver­tis­ing, or offline ad­ver­tis­ing all fall under the category of “push strate­gies”, SEM occurs through “pull marketing”. Instead of receiving a barrage of un­so­licit­ed ads, as is the case in tra­di­tion­al marketing efforts, customers search Google, or another search engine, for things like “buy shoes” or “order groceries”, thereby revealing their intention to purchase a par­tic­u­lar good or service to the ad­ver­tis­er. Following this, search-related ad­ver­tise­ments are con­sid­ered to be valuable clues about future customer behavior. Taking advantage of this knowledge enables search engine marketing ac­tiv­i­ties to greatly cut down on scatter loss.

Search engine markets in most countries are typically dominated by one single provider. Google occupies about 65 percent of the global market share and boasts a similar per­cent­age in the United States. The US domestic market features other players, such as Yahoo and Bing, which, depending on the source, cu­mu­la­tive­ly occupy about 28 percent of the search share. Other country-specific search engines include Russia’s Yandex and China’s Baidu. While these search engines enjoy market-leader status at home, they remain largely ir­rel­e­vant for the rest of the world.

As sub­com­po­nents of the larger framework of search engine marketing, search engine ad­ver­tis­ing (SEA) and search engine op­ti­miza­tion (SEO) both share the same goal: to gain more visitors for a website. Where these two in­stru­ments vary, however, is in their re­spec­tive uses. While SEA focuses on fee-based fade-in ad­ver­tise­ments that appear in tandem with the search results, SEO strate­gies rely on an entirely different approach: op­ti­miz­ing a website’s organic search results.  With SEO, the search result ranking is not entirely dependent on ad­ver­tis­ing budgets. Instead, websites seeking to increase their placement are required to follow the rules that the relevance-based al­go­rithms of search engines have laid out.

Due to the dominance of Google in the United States, search engine ad­ver­tis­ing commonly takes the form of the Google product, AdWords. In addition to normal search engine result lists, this program also delivers fade-in ad­ver­tis­ing images and texts that are triggered to appear once a specially assigned keyword is used. These ad­ver­tise­ments generally appear high­light­ed in the right side of the browser window and before and after the organic search results. Search engine providers rely on companies’ will­ing­ness to shell out large sums of money on search engine ad­ver­tis­ing, with Google gen­er­at­ing more than 95% of its turnover from AdWords revenue alone. There is no charge for simply depicting an ad­ver­tise­ment in the search result list. Payment is only required after a user has clicked on an ad­ver­tise­ment, and, as a result, accessed the ad­ver­tis­er’s website. Costs for this service are not fixed, rather they are de­ter­mined through an auc­tion­ing processes. Whether and to what extent an ad appears during searches is de­ter­mined by more than the just the amount of the customer’s bid. In order to deliver users the most relevant results for fade-in ad­ver­tise­ments, ads are first cat­e­go­rized using Quality Score and sub­se­quent­ly displayed in the order of their relevance from the user’s per­spec­tive.  

Website operators wishing for prominent locations in the organic search result lists have a more wide-ranging task to deal with than their SEA-focused coun­ter­parts. Measures enabling a website to or­gan­i­cal­ly appear higher in the search engine result pages (SERPS) are what encompass the practice known as search engine op­ti­miza­tion (SEO). SEO is comprised of two different sub­cat­e­gories: on page op­ti­miza­tion, which shapes websites so that they are easier for search engines to read, and off page-op­ti­miza­tion, which primarily has to do with the practices of link marketing.   

• On page SEO measures: op­ti­miz­ing website content according to in­for­ma­tion quality, keyword op­ti­miza­tion, ap­pear­ance, and technical ad­just­ments of a search engine friendly page structure (header, html tags, internal links, etc.)
• Off page SEO measures: op­ti­miz­ing incoming links according to qual­i­ta­tive and quan­ti­ta­tive aspects: search engine-optimized backlink profiles and sup­port­ing presence in social networks through social signals.

Compared to other online marketing channels, search engine op­ti­miza­tion offers a sig­nif­i­cant advantage in terms of sus­tain­abil­i­ty. While search engine marketing with purchased ads are only as good as their re­spec­tive ad­ver­tis­ing budgets, SEO op­ti­miza­tions in the on page and off page sub­cat­e­gories continue to win over new customers long after their initial in­vest­ments have been accounted for. Websites that secure good positions in organic searches through SEO op­ti­miza­tion ensure a steady stream of site visitors for years. Marketing channels, such as SEA or display ads, on the other hand, only generate visitors as long as the ad­ver­tise­ment is being run.