Which one of your marketing investments is driving the most conversions? Check out this Data Snack and increase your conversion rates by source.
Data Snacks | Jul 30
Dann Albright on April 29, 2021 • 14 minute read
There are two heavy hitters in online ads: search and display ads. (If you were thinking Google and Facebook instead, you’d be right too)
And as an advertiser, it might be hard for you to decide which ad format would get you the best results depending on your current ad budget.
So, how do you determine whether to run search ads or display ads when you only have the budget to advertise on one Google ads network? What are the major differences between the two?
In this guide, we’ll discuss all of these and more:
Search ads offer the unique benefit of placing your ad on SERPs for users conducting searches using specific words or phrases related to your product or service.
It works in such a way that advertisers bid for their chosen keyword or query, and whenever a user enters a search query using those keywords, the search engine tries to find a keyword match within its ad groups. If there are many advertisers bidding for the same keywords, Google uses an auction system to rank the ads that appear on the search results pages, and determine the cost advertisers have to pay to appear on top.
Apart from bidding, Google also takes into account advertisers’ Ad Rank – factors such as quality score, ad rank, relevance, etc when determining whether your ad will be shown to its target audience and on top of SERPs.
Display advertising is a type of online advertising where an ad is shown to audiences on a website, or social media platform with the aim to get them to carry out a certain desired action. The ads are distributed through an ad network and usually include an image or video. (Facebook, and Google are the big players here, along with Twitter Ads, Instagram Ads, and Linkedin Ads).
Display ads are charged on a cost per click basis, or only when a user clicks on your ad. More importantly, display ads are excellent for brands looking to build brand awareness.
Types of display ads include: static/banner ads, animated ads, interactive ads, video ads, among others.
Below is an example of a display ad by Book Depository on Independent’s website.
So, what’s the difference between display ads and search ads?
The major difference between search ads and display ads is that search ads appear to people with interests in your product or service, and a buying intent (pull advertising) while display ads are shown to people visiting other websites based on various targeting parameters, e.g audience-based targeting, content-based targeting. Most likely these people are not in need of your product or service.
Also, both are set up and run on two different platforms: the search network and the display network.
At first glance, it looks like the response is clear. Over 70% of our respondents, if limited to a single type of ad, would run search ads:
And with the budget that they do have, those marketers run search ads much more often:
It seems like an easy win for search ads, which does account for the largest percentage of ad dollars online.
But once we started digging into the survey responses, we discovered that the issue isn’t as clear-cut as it might seem. In fact, there are some very good arguments for display ads.
It all comes down to what generates engagement from your prospects. And it depends on many things, from where they are in your funnel to their purchase intent to what you’re selling.
The charts make it look straightforward. But planning a successful ad buy is complex. Let’s see what these real-world marketers have to say about their own ads.
Search ads are great for converting customers who are showing intent to buy. Display ads are better for brand awareness. It was the most common refrain we heard from marketers.
Because search ads are displayed to people already looking for a product or service like yours. With display ads, you can’t usually target them to a prospect who is ready to buy. “Usually, display ads are shown to casual website visitors just by virtue of their presence, while search ads only trigger in response to a deliberate search query. By inference, search ads will be seen more often by those with an avowed interest, while display ads are more of a shot in the dark” per Andrew McLoughlin from Colibri Digital Marketing.
Michal Ann Strahilevitz, professor of marketing at University of Wollongong, likened it to being a guest to the party, “It’s generally better to be an invited guest (search) than an uninvited guest (display). We are all nicer to the friend we invite for dinner than we are to the stranger knocking on our door during dinner.
However, for some product and service categories, display ads will make a lot more sense because people are unlikely to search for you or your category.” Similarly, Chris Weaver from MWI called it “Push vs Pull Advertising.”
Agency Match‘s Nelson Jordan told us that “We tend to see the highest ROI when we use search ads for the first and final interaction before purchase or conversion. We’ve found that while display ads are great for brand awareness, it’s harder to run a profitable campaign at later stages in the funnel.”
Mojalefa Mothudi from Spitfire Inbound shared an interesting way to leverage search ads data to set display ad budgets. In their experience, “search ads generate more leads and more importantly: more customers.” But, when they took on a client who valued both, they changed up their strategy to make it more integrated.
“We decided to dynamically set the budget of our display remarketing campaigns of specific products based on the search demand of the corresponding text ads. In short, campaigns with more search demand get more money for display ads too.”
The results? “This led to a conversion rate to leads increasing by 36%, while the number of leads that we subsequently managed to close into customers increased by 34%, simply because we used display ad remarketing to nurture the leads into customers.
Stephen Montagne of NetHustler gave similar examples: “if you want to promote and market something related to finance and insurance, you will do way better with search ads. But if you plan on advertising something related to technology or gaming, etc., you can do better on the display network.”
Some industries can take advantage of urgency, as well. “For example, a local air conditioning contractor may not have many visitors coming to their site to read about energy saving tips,” says Wes Marsh, director of digital marketing at DigitalUs.
“However, you can bet a paid search ad that says 24-hour emergency service will certainly get a visitor’s attention when it’s 3 am and they’re sweating bullets after their AC goes out.”
“Display ads are stronger in regards to brand awareness and driving a large volume of traffic. Search ads are great when you want to drive conversions because people have likely already done their research and are ready to make a purchase” says Rachel Bills, lead PPC digital strategist at Intuitive Digital.
She also pointed out that search and display ads should be used together. This was another common thing we heard.
“It’s not really a question of which generates more leads and sales but rather when to use each,” says MODassic Marketing founder Ryan Short. Short also pointed out that sales cycles and price points can affect which ads perform. With very short sales cycles (like those prevalent in consumer e-commerce), you can get lots of value with display ads, he added.
Editor’s Note: Looking for a quick way to monitor your most important Google Ad metrics? Use this Google Ads PPC Performance Dashboard Template to track and improve your Google ad campaigns.
Several marketers said that remarketing is the best use of display ads. Once a potential customer knows about your product or service, a well-placed display ad can remind them of why they wanted to purchase.
By using images of the products that browsers were looking at and limiting the remarketing campaign to 10 days, Contempo Space maximizes results and minimizes the number of people who find the ads annoying.
It’s all about reminding people of what they want, says Chris Sansone, web strategist at Contempo Space. “Customers have told us that with larger purchases like a bedroom set, they might see something they like and plan to talk to their spouse about the idea. The retargeting ads have served as a reminder later to have that conversation and make the purchase.”
Combustible founder Julien Raby points out that capturing the attention of a new audience with a relevant ad is hard. Which is why the ROI on “pure display” ads is usually quite low.
With remarketing, Combustible sometimes gets better ROI from display than search ads. But it’s also important to note that Raby and his agency only spend about 10% of their ad budgets on display ads.
You need to know where your prospects are in the sales funnel. But you also need to take your industry into account.
Futurety‘s VP of business strategy Sam Underwood points out that search ads are often best for “moment of need” purchases. “Think pizza (I’m hungry), wireless routers (my Netflix is too slow), or car repair (my transmission is making noise),” he says.
Display ads, on the other hand, are “great for products that may need more visual demonstration than a text-only search ad; a home decor item or art event, for example.”
(Underwood also points out that it’s difficult to track the ROI of display ads, as they may cause viewers to go back to your site later. His advice is to watch your organic [and direct] traffic after placing a display ad. You may see it go up.)
Kristan Rivers, co-founder of AdInMo, gives two examples: “Coca Cola can’t sell a can of coke from a clickthrough, nor can Chevrolet sell a car that way.” That may not be 100% true, but you get the point. A picture of a refreshing can of Coke is much more appealing than a text ad telling you about it.
He also made sure to point out that the type of display ad makes a difference. His company places ads in mobile games, and display ads have a significantly better ROI there than text-based ones.
“I would never run display ads over search ads when it comes to lead generation for a software or service based company,” says Akiva Leyton, marketing manager at Falcon Marketing. “On the other hand, with ecommerce, display ads can prove to be much better performing than search ads, as people are naturally visual creatures. They are more likely to purchase something they can visually see.”
The figures above show that search is generally marketers’ preferred way to advertise. But that doesn’t mean you should go all in on search ads. Some marketers have had great success with smart display ads, too.
“Overall, we have seen search outperform display in driving actual sales,” says Jake Havenridge, senior paid search strategist at SmartBug Media. But, importantly, “display can drive a significant increase in total top-of-the-funnel leads [when combined with an educational offer], which are often captured at a much more economical [cost per lead].”
Driving down that cost per lead can result in great ROI, so don’t dismiss display ads.
And you may find that display just works well for your audience, even if you’re not advertising in ecommerce or similar areas. Tommy Landry, founder of Return On Now, told us about an experience his agency had in running ads for real estate software:
“Initially, we recommended focusing on search, primarily because of past observations supporting it as having a higher ROI. We were absolutely wrong. Display outpaced search by a long margin both in total clicks and conversions, as well as cost per conversion.”
Editor’s note: It’s important to see how your Facebook Ads investment is impacting your business’ bottom line. Our Facebook Ads Purchase & Leads Breakdown dashboard is an easy way to find out: it shows your leads and purchases by campaign, alongside your cost per lead.
While most of our respondents stressed that search ads are better for marketing to prospects who are “in market” for a product, Raul Tiru from GlobalOwls pointed out that Google’s Display Network has an “In-Market” Audience capability. “We’ve started with search ads for very specific keywords. Then we moved to broader keywords. Both did fine but then we tested the “in-market” target group within Google Display Network.
Surprisingly, this group costs a lot less and converted better. Google really seems to be great in identifying people willing to buy a specific product. It’s definitely worth experimenting with the ‘in-market’ group within GDN.”
Many marketers stressed that you should test both search and display ads for your company, because they work well in tandem. Driving maximum ROI with a combination of both should be the ultimate goal.
“Technology has evolved the modern user’s purchase and education journey and because of that, accounts that utilize search, display, app, and video marketing normally achieve the most success.” said Ian Revling from Evolve Digital Labs
For example, Folsom Creative president Brandon Kidd usually starts with an 80/20 split between search and display ads. Then he tweaks them from there to get the lowest cost per acquisition (CPA). Even though display ads often cost less, Folsom’s CPA on search ads is usually 35% lower than that on display ads.
(He also recommends using Google Ads extensions to get the most out of your search ads.)
“When clicks often exceed $100 a piece, I really don’t think there’s an excuse not to use display anymore,” says Adam Gingery, digital strategy and paid search manager at Majux Marketing. If you’re in a niche with high cost-per-click, you’ll get more for your dollar with display.
And Gingery points out that display isn’t just great for remarketing—it’s also great for building a remarketing audience. Combined with the low cost per click, display ads provide great value for digital marketers.
Charles Ave Marketing founder Kim Kohatsu brought up a similar point: “In many competitive industries, search CPCs can be so high it makes positive ROI nearly impossible.” And although search ads often bring a higher ROI, she says, the possibility to use varying formats with both image and video “can go a long way in selling a product before a user clicks.”
Of course, it all comes down to metrics and what works for your company.
As you can see, choosing search or display ads largely comes down to your goals and your target customers. But no matter which you choose, you still need to do it well.
PlanSource‘s content marketing manager Meisha Bochicchio points out that your search ads have to be well-optimized. The key is to “properly implementing your search advertising and having a strategy to address multiple stages of the sales funnel.”
What will resonate with your audience? There’s only one way to find out. Start testing, analyze the data, and build on it.
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