Understanding the Business of Search Ads
Work in progress for understanding the search ads business.
Defining the Business
Search ads appear on Search Engine Results Pages (SERPs) for keyword queries, part of Pay-Per-Click (PPC) marketing. Ads display based on bids, at top/bottom of results or alongside organics. This auction model uses bid, quality, and relevance for placement. It connects advertisers to high-intent users, charging per click for engagement-based efficiency.
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Text ads include headlines, descriptions, site links; extensions add calls or locations. Formats like shopping ads feature images/prices. Revenue efficiency uses Click-Through Rate (CTR) (impressions to clicks), Cost Per Click (CPC) (cost per click), Return on Ad Spend (ROAS) (revenue/ad spend). High CTR (e.g., 6% in dating) shows relevance; ROAS >4:1 signals e-commerce success. Metrics guide optimization for lower costs, higher conversions.