Adwords Basics

(This post is for those who are new to AdWords.)

I was going to start this blog with the 10 Most Common AdWords Mistakes, but then figured it would be a good idea to look briefly at some AdWords basics first. I don’t mean the mechanics of setting up and managing an AdWords account – Google has an excellent online help to assist with this. What’s more useful is an understanding of Google’s philosophy in managing its users, and a quick overview of the structure of an advertising program.

If you understand a little of this, it will really help you in the process of setting up and tuning your AdWords account correctly. It will also provide a context for the 10 Most Common AdWords Mistakes.

Getting a high return on your investment in AdWords requires more than just creating an account with Google, and dumping a whole bunch of keywords in the one ad group with a single ad pointed at the your web-site’s homepage. If you do this, you will pay too much for your traffic, and your pay-per-click campaign will be ineffective.

Google’s Philosophy

Google has built its huge user base on the principle of delivering relevant information. When you perform a Google search you expect to get the most relevant websites at the top of the list. That’s why you use Google.

One of the ways Google has monetised this user base, is by providing pay-per-click ads on the right hand side of its’ search results pages. Now, Google knows that if a user is likely to click on an ad, that user has got to have trust that ad links to information that is relevant to what they are searching for. Not just some sort of spam or bait to get them to a site with a completely different agenda. They don’t want to click on an ad for financial services and end up in a casino.

If users trust Google ads, they’ll continue to click on them – and continue to deliver rivers of cash to Google.

So Google, in protecting it’s rivers of cash, rewards the owners of ads that it thinks are relevant. It figures that ads are relevant if:

  • The click-through rate on an ad is high.
  • There is a strong correlation between the content of the ad and the content of the landing page it is linked to.
  • The landing page itself is ranked well, and is part of a site which (according to Google) has high quality information.

Google creates market pressure for greater relevance, by charging advertisers less for what it perceives to be more relevant ads for any given position on a particular search results page.

Main Structural Elements

An AdWords advertising account is often referred to as an ‘AdWords campaign’. But in Google-speak the word campaign is used to describe a part of an advertising program with a specific focus, such as a geographic region, product grouping, or language. A campaign is the highest level component of an AdWords account.

For example we could set up a Google account to advertise ‘Red Centre Boomerangs’. If we were to sell them into both the UK and US markets we would need separate campaigns for each market. These markets would be quite different, not just with currency but also with pay-per-click pricing, product offers and other factors. They should be managed as separate campaigns within our Google account.

An AdWords account is divided into one or more campaigns, and each campaign contains ad groups. Each ad group contains keywords, and related ads.

Separate campaigns should be set up for advertising:

  • In different geographic regions
  • On the search network as compared with Google’s content network (more on this later).
  • At different times of the day or AdWords accounts are divided into separate campaigns, and each campaign days of the week.
  • For different product lines, brands or information resources being promoted.

Separate ad groups should be set up within each campaign for each cluster of closely related keywords. (Although advertisers often fail to do this.) Ads are then developed to go with each keyword cluster. Usually the text of the ad includes the keywords.

By having a relatively large number of ad groups with a few keywords in each, we can effectively target market niches or channels.

Conversions

A conversion occurs when a visitor to a website does something that it is a primary business objective of the site. For example:

  • Purchase a product or service.
  • Fill out a form providing a sales lead for a product or service.
  • Subscribe to a mailing list.
  • Download a file, such as a pdf information file or product demo.

Conversions can be tracked using the tracking provided with a Google AdWords account. The key benefits of tracking conversions include the ability to:

  • Identify which ads, keywords and landing pages generate the highest levels of conversions.
  • Accurately determine the cost of each conversion, and hence return on investment (ROI).

Conclusion

An understanding of Google’s philosophy of information quality helps AdWords account managers design more effective ad campaigns.

A key online marketing concept is the idea of market niches or channels. If these channels are to be effectively exploited, then the AdWords account structure must be properly segmented.

Measuring traffic and conversions enables an accurate calculation of ROI.


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