SEM stands for Search Engine Marketing. Not to be confused with SEO, SEM is the paid marketing side of search engines. This allows an entity to pay a search engine to show up more prominently in related search results.
Typically when you search for a good or service on Google, you will notice at least 3 or 4 results at the top marked with “Ad”. These are the entities that have paid to show up first in the query you typed in. Each advertising entity places a “bid” on a certain search query. The highest bid for the search query gets the first place spot in the results. So, the first 3 or 4 at the top are your highest bidders. You’ll also notice plenty of other ads at the bottom of the search results. These are your low bidders.
What should my budget look like?
Your SEM budget will vary greatly depending on your online assets and their ability to be indexed. It is very difficult to promote an under optimized website even with an exhaustive budget. For example, if you have a website about alligators and you are paying to show up in results for “dolphins”, you will need a very large budget. However, if your website is about dolphins and you’re paying to show up in results for “dolphins” then you can expect to spend much less than the alligator site and show up closer to the top.
Google wants to show users the website or link they are looking for. To this end, the more you get your content to match the keywords you are bidding on, the more Google with favor you and prioritize promoting your ads for less money. Starting with a very solid organic SEO foundation will result in cheaper ads that are more effective.
Beyond content optimization, the next (and biggest) budget factor is your local industry competition. Different industries have different levels of SEM competition. The more competitive the industry for a given location, the more expensive the ads will be. Running an advertisement for “air conditioning” in Houston, Texas will likely be more expensive than running the same ad for a small town in Montana.
Lastly, Google places value on keywords depending on search volume for a given location. People would not normally search “air conditioning” in a low populated town in Montana as compared to a large city in the South. The volumes simply would not compare. Thus, the cost of a single keyword or phrase can vary depending on location.