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Google Adwords 101

May 15th 2012 at 1:46 AM

You’ve probably encountered the word AdWords at least once or twice. You know it has something to do with Google. But if you were asked what AdWords is really about, would you be able to answer the question? If your answer is no, reading on will help you do just that.

If you’ve conducted at least one search via Google’s website, then you have already seen these Adwords. These are the text advertisements that appear on the results page of your Google search.

For example, you’re looking up information on macro photography. You would very likely then type in the words “macro” and “photography” into the Google search box. Those words are called keywords and Google uses them as the basis to look for information on the Web.

Google publishes its findings back to you on what’s called a results page. The results page is a list of webpages Google suggests you visit to know more about your topic of inquiry (in this case macro photography).

On the results page there are text ads. One is about an online store that sells cameras, while another is from a company that offers photography printing services.

Now you may think that it’s pretty cool (and coincidental) that the ads that appear on the results page have something to do with your topic of interest. But what you should know is that this coincidence is in fact, planned on purpose by Google – and this is how AdWords works. By typing keywords into the search box, you have identified what kind of advertisers will appear on your results page.

To get a clearer understanding of how this works, try to picture yourself as an owner of a business (in this case, a camera sales and repair shop) with a website. As a business owner, you need to let people know about your business and that means you need to advertise.

Before AdWords, that meant you had to spend a huge amount of money on print, radio or TV ads. For smaller businesses it might mean making flyers and posters to be distributed in your area. But that, too, takes time and money.

To make things less encouraging, there is no surefire way of knowing that the people who’ll be seeing your ad are actually interested in seeing it, much less on your actual product or service.

With AdWords, not only are you showing your advertisement to people who are interested in your product, you also spend a significantly less amount of time and money in producing it. This is because of primarily two reasons:

1. Keywords are what matters.
In placing your ad with Google AdWords, you don’t need to spend on expensive productions. All you need is a keen sense of knowing how your (potential) customer thinks.

As in the previous example, when a person types in “macro photography” on Google’s search box, it means he is looking for information about the topic, hence, interested in knowing more.

Google allows you to capitalize on this interest by giving you the opportunity to show the user your advertisement for your camera shop. The user is already interested about your line of business and therefore chances are good that he will read your ad.

Knowing what keywords people will use to look up information allows you to address your ad to a more specific target.

2. Pay only when they click through.
The other great thing about Google AdWords is that the cost of advertising is brought down to very manageable levels. Unlike conventional advertisements where you have to pay FIRST before your ad is shown, Google charges you only when a user clicks on your ad to visit your website.

Just how much is charged for every click? Only as much as you want it to be. Google has implemented a bidding system to “sell” keywords where advertisers, just like you, will dictate how much a cost-per-click (CPC) on an ad will be. The general principle being: the more popular the keyword is, the more expensive it can become.

For example in this case, the CPC on a results page using the (more popular) keywords “macro photography” may cost 50 cents while the CPC on an ad appearing on the results page for the (not so popular) keywords “macro lens maintenance” may just be 20 cents.

However, don’t be misled with this seemingly low cost. Agreeing to pay 50 cents per click may not seem much, but if 200 people click on your ad every day, you’re looking at $3000 per month. Even for a medium-sized business, that is still something to consider. This is where smarter advertisers not only spend less in advertising but also increase their revenue by converting more casual visitors to actual customers.

By using more specific keywords you show your ad to a person whose interests are that much closer to what your business is offering. Therefore, when he clicks on your ad to go visit your website, it is no longer your burden to convince him he needs your product or service.

With this setup, it is not far-fetched to being able to conduct a nationwide ad campaign for your business at a dollar a day AND see encouraging results on the bottomline.

In the end however, all these innovations still build on the foundation of knowing your customer and how they think. Once you’ve got this down pat, AdWords then becomes a much more powerful tool that can increase your online business’ potential to make profit.

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