What is Google AdWords and How Does it Work?

Wondering, “What is Google AdWords?”

In this article, you are going to learn about what Google AdWords is, how to use it and a whole lot more.

How would you like to see your site listed at the very top of the search results almost immediately? Does that sound too good to be true? It isn’t. You can make that happen with Google AdWords. Of course, you’ll have to make a financial investment. But that’s really just the cost of doing business. Think about it: if you want your site to appear at the top of the search engine results pages (SERPs) organically, you’ll still have to make some kind of financial investment. You’ll either outsource your search engine optimization (SEO) efforts to an agency or buy the necessary tools to make it happen. And then you get to sit back and wait months for your site to rank. When you opt for Google AdWords, though, your site could appear at the top of the SERPs in a matter of hours. But before you start, you need to know what Google AdWords actually is. 

What is Google AdWords: First Steps To Understanding

Fire up Google in your browser and search for “casual pants.” At the very top of the SERPs, you’ll probably see a carousel of sponsored results followed by 4 ads. Skip on down below the ads and look at the organic results. You’ll see names like Kohl’s, Dockers, and Nordstrom at the top. Now, suppose you’re running a new business that’s selling casual pants. Do you really think that you can easily outrank those brands in the search results? You certainly can’t do it quickly, if at all. However, you can jump ahead of them if you buy an AdWords ad. In fact, you might even get to the very top of the SERPs, just below the carousel. That should help increase your sales.

Google AdWords lets you advertise on the #1 website where people search for information. It’s a great way to give your brand more exposure and connect with online shoppers when they’re ready to make a purchase.

What is Google AdWords: Also Known As Pay Per Click

You’ve probably heard the old saying “you get what you pay for.” With Google AdWords, that’s absolutely true. You only pay when somebody clicks on your ad and visits your site. It’s that simple. If your ad appears a million times in the SERPs but nobody clicks on it, you don’t pay a dime. Of course, that also means there’s something very wrong with your ad. The Google AdWords pay per click (PPC) model is a great way to maximize your return on investment (ROI). It’s also an advantage over other advertising platforms. People who run ads on TV or the radio don’t pay for performance. They’re paying for the ad. If nobody responds to the ad, they still pay. It’s easy to flush a lot of cash away with those kinds of “old school” advertising strategies. On the other hand, you only pay for clicks when you opt for Google AdWords. That way, you can be sure you’re only charged an expense when you successfully reach somebody who’s interested in what you’re offering.

Google AdWords Can Be Affordable

With Google AdWords, you not only get what you pay for in terms of clicks. You also get no more than you pay for in terms of your budget. You can tell Google AdWords how much money you’re willing to spend on advertising over a period of time. Once you’ve spent that much, the system will stop running your ads. In other words: there are no cost overruns with AdWords. Even better: you can set a budget of just a few dollars a day. You don’t have to “go big or go home” with Google AdWords. You can start small and, if you find that your advertising is generating a healthy return, you can increase your ad budget incrementally. The ability to set a small budget is also a great way to test ad strategies. You can run a few ads with different copy and check your analytics to see which one gets the most clicks. Then, you can adjust your budget to put more money into the best-performing ad.

What is Google AdWords: Purchase Intent

Another selling point for Google AdWords: it gives you the ability to reach people with purchase intent. How? By advertising with the right keywords. We’ll cover keywords a bit more in a different section. For now, though, understand that you can connect with people ready to make a purchase by choosing the right keywords to associate with your ad. For example, if your business is selling casual slacks, you could optimize your ad to appear when people search for “discount casual slacks.” You can be pretty sure that people who are searching for discount casual slacks are ready to make a purchase. If your ad appears at the top of the SERPs when people search for that term, some of them will likely visit your site and make a purchase. When that happens, that’s an immediate ROI. The ability to reach people with purchase intent is one of the best reasons to use AdWords to promote your business.

Targeting with Google AdWords

Google AdWords also gives you the ability to target your ads so you can reach just the right people. You can target ads by demographic, interests, location, time, day, device and more. The ability to target your ads so that they appear only to people who you want to see them is yet another advantage that digital marketing offers over some of the more traditional advertising methods.

Auction-Based

Google AdWords is auction-based. That means advertisers bid for keywords. If you want your ad to appear at the top of the SERPs, you’ll need to offer a competitive bid for a keyword. Keep in mind, though, that the highest bidder doesn’t always get to the very top of the search results. Google AdWords also looks at the overall quality of the ad itself. We’ll cover this more in a bit. For now, just understand that Google AdWords operates as a demand-driven market. The more people want to advertise for a specific keyword, the more that keyword will cost. As of this writing, the suggested bid for the keyword “auto insurance” is $51.62. That means if you optimize your ad so that it appears when people search for “auto insurance,” you can expect to pay around $51.62 for each click. Clearly, a lot of advertisers are bidding up that keyword. That’s for good reason, though. Think about how much companies stand to earn with the average car insurance policy. Add that to the fact that people tend to renew insurance policies for years and you can see the potential for a significant ROI. Google AdWords also ranks keywords based on their level of competitiveness. When lots of advertisers are bidding for a keyword, it’s considered a high competition keyword. When not too many advertisers are bidding for a keyword, it’s considered a low competition keyword. Another thing to keep in mind is that Google is very nice when it comes to charging you based on your bid. If you bid a high amount for a keyword, but others are bidding less, Google probably won’t charge you for your maximum bid. There’s a whole science to keyword bidding. You can read more about that on an AdWords Help page.

What is Google AdWords Quality Score

As we’ve seen, Google won’t necessarily bump your ad to the top of the SERPs just because you’re the highest bidder for a keyword. Google also looks at something called the Quality Score. The Quality Score is a number between 1 and 10, with 10 being the best. Here’s why the Quality Score matters: Google doesn’t just care about making money. It’s also concerned with user experience. For example, let’s say that you bid on the keyword “casual slacks” for an ad that has nothing to do with casual slacks. Google doesn’t want to show that ad to users because it’s not relevant to their search term. Google evaluates an ad based on relevance to its keyword. That contributes to its Quality Score. Additionally, Google looks at the ad’s landing page as a factor in determining the Quality Score. It not only evaluates the content but the user-friendliness of the page as well. Google also looks at the expected and historical clickthrough rate (CTR) of an ad as a contributor to the Quality Score. That means ads with historically higher CTRs are likely to have a higher quality score. Finally, Google also looks at your AdWords account history. If you’re a credible brand, your Quality Score will be adjusted upwards accordingly.

Ad Rank

Your bid and your Quality Score are used to calculate your Ad Rank. If you have a higher Ad Rank than any other advertisers bidding for your keyword, then your ad will appear at the top of the SERPs. It’s that simple. The Ad Rank is calculated by multiplying your maximum bid by your Quality Score. So if your maximum bid is $2.00 and your Quality Score is 9, then your Ad Rank is 18 (2 x 9). If somebody else bidding on your keyword has an Ad Rank higher than 18, then that advertiser’s ad will appear above yours in the SERPs. You can change that by increasing your bid or your Quality Score. Usually, it’s easier to increase your bid.

What is Google AdWords: Getting Started with Campaigns

Now that we’ve covered the basics of Google AdWords, let’s take a look at how you can start running ads on Google’s search results. It all starts with a campaign. What is a campaign? It’s a set of ads related to a specific category. For example, let’s say that you run a casual clothing outlet online. You might want one ad campaign for men’s casual slacks and another ad campaign for women’s casual slacks. Campaigns are sometimes related to a theme as well. For example, if you’re running ads to target people during the holiday season, you might set up a campaign of holiday-themed ads.

Ad Groups

Campaigns are at the top of the hierarchy in Google AdWords. Just below them are ad groups. An ad group is a set of one or more related ads that share a common set of keywords. For example, let’s say you run three separate ads for the keywords “women’s slacks” and “discount women’s slacks.” All of those ads would belong to the same ad group because they use the same keywords. Ad groups are helpful because you can use them to target the same products or services to different people within your target market. For example, let’s say you want to run ads for women’s slacks that cater to different interests. In that case, you could run one set of ads that target women who want to look great while saving money and another set of ads that target women who are looking for business casual clothes. Each of those targeting options would fall under the same campaign (“women’s slacks”) even though they’re in different ad groups. Truth be told, many advertisers don’t even bother to segment their ads based on interests. You might be able to gain a competitive advantage if you do so.

What are Google AdWords Ads

Just as a campaign consists of one or more ad groups, an ad group consists of one or more ads. The ad itself is the most important part of any campaign. That’s what your potential customers see in the search results. Google AdWords ads consist of four parts:

• The Headline – This is the clickable link that corresponds to the title of an HTML page that appears in the organic results. You should make it catchy so that it grabs people’s attention and convinces them that they need to read more. You’re allowed a maximum of 30 characters for your headline.
• The Second Headline – You get two headlines with Google AdWords. They both appear at the top of the ad, separated by a dash. You’re also allowed a maximum of 30 characters for the second headline.
• The Display URL – In addition to clicking on the title to get to your landing page, users can also click on the URL itself. It’s best to keep the URL short and sweet as Google will cut it off if it’s too long.
• The Description – This is where you generally put your call to action (CTA). Offer an incentive, an irresistible deal, a unique selling proposition (USP) or some other reason to get visitors to your landing page. It might be a good idea to hire a professional copywriter if you don’t know much about how to use words that sell. You’re allowed a maximum of 80 characters for the description.

Types of Ads to Run

When you launch your first campaign, Google AdWords will ask you what kind of ad you want to run. It will give you several options, including:

• Search Network with Display Select
• Search Network only
• Display Network only
• Shopping

If you’re a newbie, it’s probably a good idea to go with “Search Network only.” That’s especially true if you don’t have any graphics for display ads. Keep in mind also that search network advertising is how you target people with purchase intent, as we’ve seen above. That’s another reason why it’s a great idea to select that option.

Setting up Your Google AdWords Budget

Google AdWords will also ask you about your budget. To get that figure right, you might have to get an accountant involved. More than likely, though, you can do it yourself. Start by taking a look at your historical conversion rate on your landing page. What percentage of people who visit your site end up making a purchase? Once you’ve got that figure, it’s time to visit the Keyword Planner. You can do that by logging into your AdWords account, and selecting “Keyword Planner” under “Tools.” Then, select “Search for new keywords using a phrase, website, or category” on the page that appears.

Great Reads!

• Pros and Cons of the Keyword Planner
• How to Choose Match Type in Google Keyword Planner
• How to do Keyword Research Like a 10 Year Veteran

Finally, enter your desired keyword in the “Your product or service” text field. Click the “Get Ideas” button at the bottom. Scan over the middle of the page and you’ll see suggested bids for your keyword plus related keywords. That will give you an idea of how much you’ll spend when someone clicks on your ad. Now you have your conversion rate and your bid per keyword. With those two pieces of information, you can determine if your AdWords campaign even has the potential for a positive return. For example, let’s say the conversion rate on your landing page is 1%. With each sale, you earn $25 in revenue. You go to Keyword Planner and see that the suggested bid for your keyword is $1. At first blush, you might think that the AdWords campaign will give you a really good return. You spend $1 for a click and get $25 in revenue. What’s not to love? But remember: your conversion rate is 1%. That means out of every 100 people who visit your landing page, only one of them will make a purchase. In that case, you’d really be spending $100 (100 visits x $1) to generate $25 in revenue. That’s not sustainable. On the other hand, if Keyword Planner told you that the suggested bid for your keyword is just 10 cents, you’d spend $10 (100 visits x 10 cents) to generate $25 in revenue. That’s a lot better. Once you’ve determined that your AdWords campaign has some potential for profit, it’s just a matter of deciding how much money you want to put into it. Take a look at your marketing budget and see what’s available for advertising. Keep in mind, it’s a good idea to start small with Google AdWords. You can always scale up later if you find that you’re generating a positive return.

Setting the Match Type in Google AdWords

Once you’ve selected one or more keywords and start setting up your ad, Google AdWords will ask you about the match type for those keywords. You have three options:

• Exact Match – Only people who type in the exact keyword you’re using will see your ad.
• Phrase Match – People whose search terms include the keyword you’re using will see your ad.
• Broad Match – People who type in a search term similar to the keyword you’re using will see your ad.

As a rule of thumb, you should probably avoid “Broad Match.” It’s not very targeted and can lead to unpredictable results. Use “Phrase Match” if you’re okay with people adding other words to your search term. For example, if your keyword is “women’s slacks” and you want to show your ad to someone searches for “dark blue women’s slacks.” Select “Exact Match” if you only want to show your ads to people who search for the exact keywords you’ve selected.

Check Your Analytics

Once you’ve launched your campaign, it’s a great idea to visit Google AdWords at least once a day to see how your ads are performing. If you find that you’re getting plenty of clicks but not a lot of sales from your landing page, then that usually points to a problem on the landing page. On the other hand, if you’re getting a low CTR but people who land on your page are converting at a high rate, then you might need to improve your ad copy. Remember: in digital marketing, never assume anything. Always evaluate and correct.

What is Google AdWords – Wrapping It Up

Google AdWords is an excellent way to boost your sales online. It offers targeted advertising at a price that can fit within the budget of almost every business. If you haven’t launched an AdWords campaign yet, why not start today?