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Search Engine Marketing (SEM)

Strategy
DistributionAds

Definition

Advertising on search engines where you bid to show ads when users search for specific keywords

Related Knowledge

Cost Per Click (CPC)Customer Acquisition Cost (CAC)Return on Ad Spend (ROAS)

Auction mechanics

Winning is not just about bidding the highest. Google uses Ad Rank, which combines your bid with Quality Score.

Quality Score is based on:

  • Expected click-through rate (CTR)
  • Ad relevance
  • Landing page experience

    • A well-optimized ad with a lower bid can outrank a poorly optimized ad with a higher bid. This incentivizes advertisers to create relevant, useful ads.

    Keyword match types

    Keywords can be matched broadly or precisely.

  • Broad match: Finds more queries, but risks irrelevant traffic.
  • Phrase / exact match: Matches closer to the exact query, gives tighter control but less reach.
  • Negative keywords: Terms you exclude so your ads do not show for irrelevant searches.

    • Core performance metrics

  • ROAS (Return on Ad Spend): Revenue generated ÷ ad spend.
  • CPA (Cost per Acquisition): Ad spend ÷ number of conversions.

    • In paid search you are buying intent. Someone searching "buy running shoes" has much higher purchase intent than someone passively scrolling social media.

    SEM vs. SEO

  • SEM: Paid, immediate visibility, but stops when you stop paying.
  • SEO: Organic. Takes months to build but compounds over time.

    • Most growth strategies use both, with SEM often used to test keywords before investing in SEO for those terms.

    5Mini case: Intent and keyword quality

    Challenge: Intent qualification

    For a product like Lovable, someone searching "free app builder" is usually worth less than someone searching "enterprise software builder".

    Optimization approach:

  • Analyze Cost Per Click (CPC) vs. value of the user segment.
  • Cut or bid down low-intent terms that bring non-paying users.

    • Example decision you might share with the team:

    "Stop bidding on the word 'free'. It costs us money and brings users who rarely convert to paid. Let's reallocate that budget to higher-intent terms like 'enterprise app builder' or 'no-code app builder for teams'."