There are two ways to promote your business online: organic marketing and paid advertising (also known as performance marketing).
Organic marketing includes organic social media, search engine optimization (SEO), content marketing, and word of mouth. While effective, this approach often requires patience, as building a strong organic presence takes time.
Paid advertising, on the other hand, can deliver faster results. Your business could appear at the top of search results pages and gain significant social media visibility within a short time frame.
This guide will walk you through the fundamentals of paid advertising and how to create high-performing ad campaigns for your business.
What is paid advertising?
Paid advertising is a marketing strategy in which businesses pay to display their ads to a targeted audience. The term predates the internet and can technically apply to any type of advertising, such as TV or radio advertising. However, when people use the term today, they’re most commonly referring to internet-based ads on search, social, and display networks.
Paid media platforms typically work on an auction system. Advertisers set their budget and bid for the ad space.
The most common pricing models include:
- Pay-per-click (PPC). With pay-per-click (PPC) ads—also known as cost-per-click (CPC) advertising, you pay every time a user clicks on your ad. This pricing model is widely used in search engine advertising.
- Cost-per-mille (CPM). You need to pay for every 1,000 times your ad is displayed, regardless of whether it is clicked. This model is common in display advertising and social media ads.
- Cost-per-action (CPA). You pay only when a user completes a specific action, such as a purchase, sign-up, or download. This model is ideal for performance-based advertising.
- Cost-per-view (CPV). You pay every time a user watches your video ad, usually for a specified duration (e.g., 30 seconds). This pricing model is used for YouTube and TikTok ads.
Your bids and total ad budget determine where your ads show up on your target audience’s searches, social media feeds, or banner ads around the web and for how long.
Benefits of paid advertising
Paid advertising can help you grow your brand, attract customers, and increase revenue. Here are some key benefits:
- Reach. Paid advertising allows businesses to very quickly reach thousands of people. This guaranteed reach is compelling compared to organic marketing, in which the reach isn’t guaranteed. For context, the average cost to reach 1,000 people on Facebook is about $13.75 per thousand ad impressions.
- Targeting. Paid advertising platforms provide advanced targeting options. This includes behavioral targeting (e.g., serving ads to people who have already visited your site), interest targeting (e.g., serving mountain bike ads to people who’ve shown an interest in mountain biking), and keyword targeting (e.g., serving ads to people who search “mountain bikes”).
- Measurement. Paid advertising platforms have built robust measurement tools to help advertisers understand the return on investment (ROI) of their advertising. They use cookies and pixel tracking to track when users see an ad, click it, and ultimately make a purchase. They can attribute purchases back to specific campaigns, ads, or keywords. This helps you understand which ad campaigns and ad creatives work best for your brand.
7 types of paid advertising
- Search engine advertising
- Social media advertising
- Display advertising
- Video advertising
- Retargeting advertising
- Native advertising
- Hybrid advertising
Here’s a quick overview of the types of paid ads:
Retail Accounting | Cost Accounting | |
---|---|---|
Accuracy | Not very accurate because it is based on the assumption of a constant sales margin. | Highly accurate because it's based on the actual historical cost of the inventory items. |
Usage | Used by businesses in the retail industry. | Used widely. It’s the default method of valuing closing inventory. |
Ease of Calculations | Easy to calculate. | Can be a bit more complex to calculate. |
IRS Acceptance | Acceptable | Acceptable |
Generally Accepted Accounting Principle (GAAP) | ✅ | ✅ |
“Understand how your audience thinks and what roles each channel plays in their lifestyle to determine what types of ads work best on each individual channel,” says Nicole Silver, director of marketing at Superpower Social. “I like to ask myself if the product ask/conversion ask is appropriate to make on a certain advertising channel, and if I was asked it as a customer, how likely would I be to convert?”
1. Search engine advertising
Search engine advertising (or search engine marketing) refers to the ads that appear on search engine results pages (SERPs) when someone searches for specific keywords.
Here’s what search ads can look like:
Search ads allow you to display ads based on users’ search intent—their motivation behind the search query (e.g., seeking information, comparing products/services, or buying). For example, a user searching for “mountain bikes for sale,” is likely motivated to make a purchase.
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2. Social media advertising
Social media advertising involves paid promotions on platforms like Facebook, Instagram, LinkedIn, TikTok, X, and Pinterest. These ads appear in users’ feeds, stories, reels, or as sponsored posts.
Like this:
Social media ads are powered by audience data. The networks track their users’ activity on the platform to understand their interests and serve them relevant ads. For instance, if you like an Instagram post about mountain bikes, you are more likely to get served a mountain bike ad.
You can use social media ads to create brand awareness, increase audience engagement, or drive sales.
3. Display advertising
Display ads consist of banners, images, or interactive ads placed on third-party websites and apps. They target users based on their demographics, interests, and search history.
You can use networks like the Google Display Network (GDN) and programmatic ad platforms to display your ads across a wide range of news sites, blogs, and mobile apps.
Here’s an example of a banner ad on Forbes’ site:
4. Video advertising
Video advertising allows you to run video-based ads on platforms like YouTube, TikTok, Facebook, and Instagram to engage your target audience. You can use video ads to emotionally engage your audience through storytelling and visuals.
Most video platforms allow you to choose the ad duration and placement—when you want your ads to show up (e.g., before, during, or after video content). For example, here’s a super long video ad of Mindvalley at the beginning of the video content on a popular fitness channel on YouTube.
5. Retargeting advertising
Retargeting ads target users who have previously visited a website, interacted with an ad, or added a product to the cart, but didn’t convert. It uses website cookies and tracking pixels (a piece of code) to track user behavior.
With retargeting, you can run your ads across search engines, social media, and display networks. This helps you recover lost website visitors and increase conversions.
“Use your GA4 data to discover your customer purchase timeline. If a user typically converts five days after first interacting with your brand, use this in your remarketing timelines across multi-platforms,” says Kelly Redican, digital marketer at A.M. Custom Clothing.
Read more: How To Use Search Retargeting To Maximize Awareness
6. Native advertising
Native advertising refers to ads that blend seamlessly with platform content. They look like organic posts rather than ads. You may often see these ads on news websites, social media, or ecommerce platforms.
For example, the promoted listings on Amazon is a type of native ad.
As you can see, the sponsored listing matches the look and feel of Amazon’s organic product listing. Similarly, in-feed ads on social media platforms imitate the appearance of organic content.
Read more: Native Advertising vs. Sponsored Content: What’s the Difference?
7. Hybrid advertising
Hybrid ad campaigns don’t fit cleanly into search, social, or display categories. The most prominent examples are Google’s Shopping ads. These campaigns take in information about your product or offering and turn them into responsive ads, showing them in a variety of formats across search, social, and display ad placements. They use their algorithms to reformat the ad to meet the context of where it’s shown.
Platforms for paid advertising
Each advertising platform serves different objectives and target audiences.
“Google Ads are still king for intent-driven campaigns—80% of shoppers begin with a search,” says Iñigo Rivero, co-founder and managing director at House of Marketers. “But Pinterest is great for aspirational purchases: 85% of pinners have made a purchase after seeing a product on the platform. Don’t rule out YouTube either—video ads increase brand recall by 70%.”
Here’s a quick reference guide to help you choose the right platforms based on your advertising goals:
Advertising Goal | Ideal Platforms |
---|---|
Brand awareness, audience engagement | Facebook, Instagram, TikTok, YouTube, X |
Lead generation, conversion | Google Ads, LinkedIn Ads, Facebook Lead ads |
Ecommerce or D2C product sales | Amazon Ads, Google Shopping, Pinterest Ads |
Website traffic | Google Ads, Microsoft Ads |
Video-based promotions | YouTube Ads, Meta Ads, TikTok Ads |
Retargeting | Google Display Network, AdRoll, Criteo, and programmatic demand-side platforms (DSPs) |
Search advertising platforms
- Google Ads. The most popular and powerful search advertising platform. It gives you access to a large pool of daily users on platforms like Google Search, YouTube, and Google’s partner networks. Learn how to set up a Google Ads campaign for your brand.
- Microsoft Advertising (formerly Bing Ads). Allows you to run search ads on Bing, Yahoo, and AOL. It can be a cost-effective alternative to Google Ads, especially if you’re targeting mid- to old-age groups or professionals.
“I really think there’s a big opportunity right now in Microsoft ads if you are a B2B ecommerce site,” says Nigel Adams, search marketing consultant and founder of Nigel Adams Digital. “I’m seeing an upward trend in paid acquisition from Bing, at a great ROI across a few of my clients who are in B2B ecomm.”
Social media advertising platforms
- Meta Ads. Lets you advertise across Meta’s platforms, including Facebook, Instagram, Messenger, and WhatsApp. It offers a comprehensive advertising ecosystem with detailed audience targeting, multiple ad formats, and advanced analytics.
- Pinterest Ads. Allows you to promote your products with highly visual, product-driven ads in Pinterest’s search and feed sections. These ads work best for lifestyle, home décor, fashion, food, and DIY brands.
- TikTok Ads. Helps you reach highly engaged, younger audiences (Gen Z and millennials) with short video ads. It’s an ideal platform for consumer brands running influencer marketing campaigns and ecommerce or direct-to-consumer (D2C) businesses that use TikTok Shopping and live selling features.
- LinkedIn Ads. It’s the leading business-to-business (B2B) social media advertising platform—ideal for targeting professionals based on job titles, company size, industry, and more. You can reach your audience with multiple ad formats like sponsored content in users’ feeds, text ads in the sidebar, or sponsored direct messages.
Video advertising platforms
- YouTube Ads. It’s the most popular video advertising platform that allows you to reach over 2.5 billion users on YouTube. You can run skippable, non-skippable, and interactive video ads. These ads are highly effective for ecommerce, tech, gaming, education, fitness, and lifestyle brands. Learn more about advertising on YouTube.
- Connected TV (CTV) and over-the-top (OTT) ads. These ads are displayed on internet-connected TVs (Apple TV, Amazon Fire TV) and streaming OTT platforms (video streaming services) like Netflix, Disney+, and Prime Video. You can use these ads to reach TV audiences who have switched from traditional cable TVs to CTVs or OTT platforms.
Read more: What Is Video Advertising? Tips for Effective Video Ads
Ecommerce advertising platforms
- Amazon Ads. Allows you to promote your products within Amazon shopping results. Since Amazon users are high-intent buyers (already looking for products), Amazon Ads can drive higher conversion rates.
- Google Shopping Ads (Product listing ads). Lets you advertise your products directly on Google’s search results page and shopping tab. Unlike traditional search ads, Shopping Ads also display product images, prices, and store information.
“If you’re a small ecommerce brand or D2C store and just getting started with paid ads, start with your top converting products,” says Chelsea Harding, Google Ads manager at Ecom Media. “Don’t spread the budget too thin across everything you offer if it means you won’t be able to collect the data when you need it.”
Display and retargeting advertising platforms
- Google Display Network (GDN). Lets you place banner, video, and interactive ads across the network of more than two million websites, video properties, and mobile apps. These ads work best for ecommerce brands that aim to serve personalized ads through dynamic retargeting or run cross-channel campaigns (search + display + video). Learn how to create Google display ads for your ecommerce or D2C store.
- AdRoll. It is a retargeting-focused ad platform that helps you re-engage site visitors across multiple channels through display ads, social media ads, email ads, and more. You can use these ads to target and bring back customers who abandon their shopping carts.
- Programmatic ad platforms (demand side platforms). Helps you automate the bidding and buying of digital ads in real time through programmatic advertising. Unlike GDN and AdRoll, DSPs allow advertisers to access multiple ad exchanges, supply-side platforms (SSPs), and ad inventories in one place.
Read more: Best Advertising Platforms for Launching a Digital Ad Campaign
How to create a paid advertising campaign
- Define your advertising goals and target audience
- Develop your ad creatives
- Configure your tracking
- Launch and iterate
Use these steps as a guide to create your own paid advertising campaigns:
1. Define your advertising goals and target audience
First, decide what you want to achieve (traffic, engagement, sales) through the ad campaign and the audience you want to reach. Ask yourself where your target customers get their information and what they’re interested in. This will help you identify the right ad platforms and set the budget for your ad campaigns.
“By identifying your ideal customers and where they spend time, you can run highly targeted ads and maximize your returns,” says Ilija Sekulov, digital marketing manager at DragApp. “On the contrary, broad targeting will waste your budget with little to no results.”
Let’s say, you’re a D2C skin care brand focusing on anti-aging products for women and you’re looking to increase product sales through advertising. Your audience frequently engages with content on Instagram, Facebook, and YouTube. Based on this information, you may want to run Google Shopping Ads to capture high-intent buyers searching for skincare solutions.
“To optimize your ad budget, organize your campaign structure based on the profit margins of various product categories,” says Chelsea Harding. “This allows you to set different budgets and [return on ad spend] goals based on what is more profitable for you to scale into and what isn’t.”
2. Develop your ad creatives
Next, develop your ad creatives based on your audience’s preferences and target channels. For example, if you want to run search campaigns, your ad copy should offer what the searcher is looking for.
“We reach out on LinkedIn to ask our ideal customers if they’re willing to meet with our CEO and share feedback on our company direction,” says Jessica Andrews, VP of marketing at Copper. “We ask about their challenges, favorite online communities, and influencers they follow—then share our vision for the future. We record and transcribe these interviews, then use ChatGPT to extract key themes and direct quotes to craft ad copy.”
If you run social or display campaigns, your goal is to develop highly engaging visual creative that immediately catches the user’s attention and showcases your value proposition. Also, make sure you have multiple variations of ads to test and learn from.
3. Configure your tracking
Most advertising platforms include analytic tools to measure the success of paid campaigns. It is important to set these up on your website before launch to have a clear picture of success.
Depending on your business and advertising goals, set up the tracking for relevant performance metrics. The most common metrics are purchases, clicks, and impressions. To enable the tracking of these metrics, you need to add a tracking code (shared by the ad platform) to your website.
Shopify offers built-in integrations with the most common advertising platforms like Meta, Google, YouTube, and Pinterest. You just need to connect your accounts to your Shopify store and your tracking will be set up.
4. Launch and iterate
Once you’ve added the target audience data, ad creatives, and budget into your ad platform, you’re ready to launch your ad campaigns. After the launch, you’ll start getting the performance data—which ads are working and which aren’t. It’s best to check your ad performance at least once a week to identify opportunities to improve.
“A smarter approach is to double down on what’s already converting while internally workshopping the weaker offer,” says Jaimon Hancock, founder of Adalystic Marketing. “Use sales, CRM automation, or cross-sell strategies to support it—but don’t pull budget away from what’s driving business growth. Think 80/20 rule: prioritize where you’re seeing the most impact.”
Paid advertising FAQ
What is the cost of paid advertising?
The cost of paid advertising varies based on platform, industry, competition, and pricing model (CPC, CPM, CPA, etc.). For example, Google Ads CPC can range from $1 to $50+ per click in competitive niches, while Facebook Ads may cost 50¢ to $5 per click. Most platforms allow you to set daily or lifetime budgets to control spending.
Do I need to have a website to run a paid advertising campaign?
Not necessarily. While Google Search Ads and Display Ads require a landing page, social media platforms like Facebook, Instagram, and TikTok allow you to run ads without a website. Online retailers or sellers can also advertise directly on Amazon, Etsy, or other marketplaces.
Will paid advertising affect my organic search results?
No, paid ads do not directly impact organic search rankings. However, they can increase brand awareness and traffic, which may lead to more backlinks, engagement, and conversions. This can indirectly improve SEO performance over time.