Google AdWords

Google AdWords 101

Written by Chris LaFay in Search Engine

Welcome to Part 2 of our ‘How To Advertise on Google’ series. Today, we will cover the nuts and bolts of advertising on Google. We will also run through the important lingo of the advertising world. Let’s dive in!

In our last article we touched on why advertising on Google is worth your time and money. Now, we will delve into the building blocks that make up advertising on Google AdWords. By the end of this article you will understand the fundamentals of how Pay-Per-Click (PPC) advertising works.

Keywords

If you decide to advertise on Google AdWords, you have to determine who you want to see your ads. You probably want to reach people who are searching for your business directly. If you are ‘Harry’s Home Repair’ you want people searching for that on Google to see your ad. In this example, ‘Harry’s Home Repair’ is what Google calls a “keyword”. When doing a search on Google, the thing you type in is the keyword.
When advertising on Google AdWords, you get to choose which keywords you want to advertise on. This is a key benefit to AdWords. You only pay for what you want. All the power lies with you. You do not have to advertise for just anything someone might search for on Google, but rather only for those “keywords” which people type into Google that you feel are related to your business. You choose the keywords that matter, write the ads, and only pay when someone clicks on your ads.

Pay-Per-Click (PPC)

The concept of pay-per-click is as straightforward as it gets in advertising. When you advertise on Google AdWords, you can write your own ads and have them show up when people search for your business. Any time someone clicks on your ad, Google charges you for that click, thus you pay-per-click (aka PPC). While this is a simple concept, the cost part is a bit more complex.

Cost-Per-Click (CPC)

Advertising on Google AdWords takes place behind the scenes in what is called a ‘real-time auction’. You do not pay a set cost for every click, but rather the cost is dynamic. It can change, increasing or decreasing, at any time and 1 click might cost you $1 while later it costs you $0.50. AdWords determines the cost and it is based on a number of factors. One of the largest factors is competition.

You are not likely to be the only person who wants to advertise on Google. If you have a niche business, you might be the only one advertising, or one of few. This means you are more likely to have to pay less per click on your ads. If you are in a more competitive business, and multiple business exist who advertise on Google AdWords, the cost-per-click of your ad might be higher. In this way, more generic searches on Google tend to cost more as there are likely to be more people advertising. A very specific search is likely to be less costly as it is more unique with less competition.

Example

Keyword: ‘Home Repair’ – CPC = $5
Keyword: ‘Home Repair in Athens, GA’ – CPC = $3

Bidding

There is an important safeguard in place to combat the changing cost-per-click on your ads. While Google’s method of determining the costs may change at any time, you can determine how much you are willing to pay for each click. This is referred to as “bidding” or setting a “Max CPC” and it ensures the power of advertising on Google AdWords stays with you.

Let’s say you have a set amount of money you can spend on advertising and you only want to spend $100. If you’ve done some research, you might know that the main keyword you want to advertise on costs between $3-5 per click. You want to advertise on this keyword, but not break the bank. You can set it up so that you put in a “bid” of $3 for the keyword. No matter how much the cost as determined by Google changes, you will never pay more than your “bid” of $3.

As an added measure to keep your spending in check, you can also set a maximum budget so that even if you get a lot of clicks and rack up more cost you will not spend beyond a set total amount. You can set an individual “bid” at $3 so that each click will not cost more than that, but you can also set $100 as your max budget so that if your ads get lots of clicks, AdWords will automatically stop without going beyond your budget.

So how can you bid low and still get in the mix of advertising on higher-cost keywords? It all comes down to the order in which ads appear on Google, or the Ad Rank.

Ad Rank

Every time someone searches for something (a ‘keyword’) on Google, there are a number of different ads that show up. For most searches, there are multiple ads which come up and there could be anywhere from 0 to +10 ads showing at any time. When someone searches on Google, it looks through all of the people who are “bidding” and places them in an order which is referred to as the ‘Ad Rank’.

The order of ads is determined by how much you have “bid” for what is being searched (the keyword), and how much other people advertising on Google are willing to “bid”. In the simplest terms, the person who is bidding more will show up 1st in the rank, and then it trickles down to whoever bids the least. If you want your ad to be one of the first things people see when they search on Google, you can pay more to ensure you have the top rank.

If you want to be in the mix, but not pay a premium then your ad might rank somewhere in the middle. Your ad will still appear when people search on Google, but may not be the 1st thing they see. While you have the best chance for a click by being in the top position on Google, you will still get clicks even if you are not the 1st ad.

Conclusion

The main reason why Google is worth your time is that the control lies in your hands. You determine how much you are willing to bid for each keyword. All of the decisions come from you: how much cost you are comfortable with, who you want to advertise to, and how much you are willing to pay-per-click to do it.

Next up in our ‘How To Advertise on Google’ series we will go in-depth into keywords. Expect to learn how to choose keywords for Google AdWords. If you enjoy the series, please subscribe to our email list to receive a weekly recap of all of our content. You can also follow me on Twitter @rbsjackets.