Introduction to Google AdWords
What Is Google AdWords
Google AdWords has completely revolutionized businesses around the world… it used to be you paid other media like the newspaper to show an ad and you were the one taking the risk of whether the ad worked or not…
You could target specific demographics like real estate if you placed ads in the real estate section, but even then, it did not guarantee results…
When Google AdWords came around it changed the way marketers thought about spending their advertising dollars…
Google AdWords realized that people who were going to Google and searching for something, were people trying to solve a problem or fulfill a need…
So if someone searched for ‘how to play golf’… that person wants to learn how to play golf!… and as an advertiser you have the ability to make your ad appear on the search results for keywords like “how to play golf” and sell your ‘golf training’ products…
In other words, Google allows you to show your ad only when someone searches specific keywords which you decide upfront… and even better, you only pay if your ad gets clicked on…
That’s like having the newspaper charging you for your ad only when someone contacts you…
But it gets even better…
The way Google charges for these ads is what has really made them grow exponentially and turned them into a multi-billion dollar company…
Rather than setting up a straight bid system where the highest bidder gets to be on the top position, they take into account how well your ad is working…
See, the main goal of Google is to deliver the most relevant results to their users… and they hold advertisers to the same level of relevancy as they do organic search results…
So they look at what’s called Click Through Rate (CTR)… which simply means the percentage of clicks you get compared to all of your impressions… If your ad is shown 100 times and it gets clicked all 100 times, then you have 100% CTR… if your ad is shown 100 times but it only gets clicked 50 times then you have 50% CTR… if it only gets clicked one time out of a hundred then you’d have a 1% CTR and so on…
Now I don’t know the exact formula Google uses to determine how much your bid counts, but take the following example for illustration purposes only…
Say you bid a dollar and you have 100% CTR… then Google will say you are bidding 100% of your dollar… but if you bid a dollar and only have 50% CTR, then Google will say you are bidding only 50% of your dollar or fifty cents…
So if you take two advertisers… all things being equal… if bidder ‘B’ has 50% CTR and bidder ‘A’ has 100% CTR… then bidder ‘B’ would have to bid twice as much to be at the same position as bidder ‘A’…
In other words, if you ad gets clicked on more often, Google sees that as being relevant and rewards you by charging you less…
Now since there are very smart marketers who know how to inflate their CTR by writing ads too compelling yet irrelevant, Google has a third criteria to determine bid prices… it’s called Quality Score…
Not only does your ad on Google have to get clicked on, it must also take the user to a relevant page where the user finds what was promised… and the way Google determines this is various factors like page loading time, site navigation from the landing page, but most importantly the time the user spends on the site…
So if your ad gets clicked on and the user clicks the back button immediately, Google sees that as your landing page not being relevant… If on the other hand, the user clicks on your ad and spends a minute on the site then Google will see that as more relevant… if they click on your ad, spend more time and perhaps even click on other links on your site then it becomes even more relevant…
… and similar to CTR, if your page is 100% relevant (quality score of 10) then it takes the full dollar amount that you bid… if your page is only 50% relevant (quality score of 5) then it only takes half of the dollar amount that you bid…
So just for illustration purposes only your bid is worth: $$ x CTR% X Quality Score %…
The higher your Click Through Rate and Quality Score, the less you have to pay to get on the first position of Google AdWords… so now you have to learn how to boost your CTR and Quality Scores to pay less and make your campaigns more profitable… and you have to learn the structure of AdWords and exactly how does Google AdWords Work…
