Chapter 1: Introduction to AdWords

Chapter 1: Introduction to AdWords

Search Engine Marketing and Online Advertising

When you read a book, the table of contents helps you navigate your way around it. Online, you use a search engine to help you find what you're looking for. There's so much data and information online that it takes a lot of effort to organize and present it in a usable way. And that's the primary goal of a search engine.

Search engines help users find the most relevant results for key phrases typed into the search box. Since it's all automated there's a lot that goes on behind the scenes once you hit the search button.

Types of Search Results

With Google, there are two types of search results; organic and paid. The organic search results are the free listings. They're sometimes called the natural search results. These listings are based on over 200 factors including onsite and offsite (link building) factors.

Gaining high rankings in the organic results is the goal of many because it's free and so many people choose to click on these listings.

Although they are free, there's a huge time commitment to getting these organic results, which is why many businesses are willing to pay to get them.

If you can get high paid rankings and still make a profit over the cost of the ad then it only makes sense to use paid advertising.  AdWords allows you to track your ad spend and profits at virtually every level. That way you can make sure you're actually making a profit on your paid advertising.

AdWords ads have a slightly different look than the organic search results. They can be found on the top, side and bottom of a results page. And they are displayed whether a visitor is using a desktop computer, laptop, tablet, or a mobile phone with browser capabilities.

AdWords displays text ads on Google.com as well as on partner sites in the Google Search and Display networks. 

Organic and Paid Results

The algorithms for the organic and the paid listings are completely separate. 

You can actually wind up with top results for both if you have the budget for the paid listings and are able to get top organic listings for your webpages.

The Google AdWords Certification Exam focus on the paid, AdWords listings.

AdWords is a complicated system, but it can be highly profitable if you learn how to use it. Another benefit is it's faster than waiting for organic rankings and you have complete control over it.

With AdWords, you can pay to place your website in the natural search results and acquire potential qualified customers.

AdWords Networks

AdWords is an advertising system based on an auction model. Every time a user enters a search query, the AdWords system runs a new auction to decide which ads to show and where to put them. 

There are two networks within AdWords; the Search Network and the Display Network. The Search Network runs the paid ads that show up on Google.com and the Google equivalent in foreign countries.  The ads shown on the search network are primarily text ads. 

The Google Display Network runs ads that show up on other sites like news sites, blogs, and niche sites along with a few popular Google properties like YouTube and Gmail.

Through the Display Network you can display text ads, image ads, video ads, and ads on mobile websites as well as apps.

Between the two networks, you can gain a huge amount of exposure for your business. And as long as your ads are making you a profit, it's a reasonable advertising source for small businesses. Even with limited budgets.

Bidding Terms

The following is a list of terms you need to know to start understanding how the AdWords bidding system works so you can pass the AdWords Fundamentals Exam.

• Click   A click is measured any time an ad is clicked on. Clicks indicate that users are interested in doing business with you.
• CTR  (click through rate)   The CTR is the number of times your ad is clicked on divided by the number of times it's shown (impressions). AdWords shows your CTR as a percentage so they multiple the result of the equation by 100.
• Costs   The AdWords system is essentially an auction where you pick what you want to spend. The amount you pay determines where your ad shows up on the search results. The more you pay, the higher your ad will be positioned. The higher your position on the search results pages, the more it's likely people will see and possibly interact with your ad.
• CPC (cost per click)   With the CPC bidding model you pay when a visitor clicks on your ad. CPC drives traffic to your web pages.  CPC is the typical bidding option in AdWords.
  You'll be able to set a maximum CPC bid which can be as high or as low as you'd like it to be.  That maximum is the highest amount you'll pay anytime someone clicks on your ad.  Often you'll be charged less because you really only need to pay higher than the bidder below you. What you pay is called your actual CPC.
• CPA (cost per acquisition)   With the CPA bidding model you pay when people take a particular action on your website after they click on your ad. This might be when they sign up to your newsletter or purchase a product from your site.
• CPM (cost per thousand impressions)   With the CPM bidding model you pay when your ad is shown, not when it's clicked. CPM increases awareness of your brand. It's only available for ads running on the Display network.
• Relevance   You'll want to target your ads to users based on their interests, what they search for, and possibly even their location, language, and demographic. The main point is your ads shouldn't be shown to just anyone, but to relevant users.
• ROI (return on your investment)   The ROI is your measurable profit from the amount of money you're spending on your ads. If you spend $1 and make $10, you're getting a $9 return on your investment which is a profit. An ad campaign with this type of ROI is probably worth scaling up.
• Keyword   These are terms or phrases you want your ad to appear for. The keywords you bid on should be relevant to the product or service you're advertising with AdWords.
• Placement   Placements are typically websites where you'd like your ad to appear.  These should be relevant to your product or service and have an audience with an interest in what you offer.
• Quality Score   This score estimates how relevant your ads, keywords, and your landing pages are.  The higher the quality score, the more relevant your ad is thought to be to someone viewing it.

When you improve the quality score of a keyword, the keyword may earn the ad a higher average position in an AdWords auction for a lower bid. You can end up paying less for better positioning if you have a higher quality score. 

Keywords with very low clickthrough rates (CTR) will usually receive a low quality score.  Your quality score is evaluated every time someone does a search that triggers your ad.

Bidding Basics

Although there are different bidding models you can choose from, in most cases, keywords trigger your AdWords ads to show. 

For example, if you're advertising on the Google Search Network for the keyphrase, 'dog training course', when a visitor types that phrase into the search box at Google, the results page will show your ad.

Your maximum cost-per-click (CPC) will determine where on the search page your ad shows in relation to other bidders. And you'll be charged each time a visitor clicks on your ad. Your charge will typically be less than your maximum CPC because you only pay what it takes to beat the bidder just below you.

The better you get at figuring out the exact keyphrases your target visitors type into the search engines to find products or services like yours, the better results you'll see.

Ad Rank

AdWords uses a process called 'Ad Rank' to determine the order of their paid ads.

Ad Rank is based on your bid and your quality score.  Ad rank takes your maximum CPC and multiples it by your quality score which again is the perceived relevance of your keyword, landing page, and your ad.

Due to ad rank, a higher quality score can lead to lower costs and better ad positions. So the more relevant your ads, keywords, and landing pages are, the less you'll pay to gain a higher position. This can help increase the return on your investment, so it's worth learning how to improve your quality score.

Budgets

You can control your costs by setting a daily budget. Your daily budget is the amount you're willing to spend each day.  It's possible to see a daily spend of as much as 20% times your daily budget.  AdWords refers to this as over delivery. Although you can see slightly higher per day spends, within any given month your charges will not go over 30.4 x your daily budget.

When you're first setting up a campaign, it's difficult to know what to choose for your daily budget.  AdWords gives you a recommended budget (that you can choose to use or ignore). They calculate this recommended budget by looking at the potential number of impressions and your CTR.

In addition to your daily budget, you control your spend by setting a maximum CPC bid for your ads. You'll never pay more than your maximum CPC. Usually, you'll pay less since AdWords is an auction, which means you only pay just enough to beat the bidder right below you.

By selecting high quality keywords, that are relevant for your ads and your landing pages you'll provide your visitors with a good experience. AdWords rewards you for this by giving you a higher quality score which means you can pay less for a higher position than another similar bidder with a lower quality score.

The Google Networks

As mentioned earlier, there are two main types of advertising options within the Google Network. These include the Search Network and the Display Network. You can use both or choose just one network to advertise on. 

Search Network

The search network consists mainly of the traditional ads running on Google.com. Text ads are primarily used on the Search Network.

Ads placed in this network run on more than just Google.com. They may also run at Google shopping, Google Images, Google Maps, and Google Groups along with other search sites that partner with Google search like AOL.

You decide if you want your ads to run on search partner sites or if you just want them to run on the Google-owned sites.  The default setting allows your ads to run everywhere within the Search Network. 

If you want to change this you'll have to go to your campaign's settings page.

Display Network

Google sites like YouTube, Blogger, and Gmail are all part of the Display Network. In addition to these Google owned sites, there are a ton of other websites you can choose to advertise on. These partner up through the Adsense program.

In addition to all these sites, mobile sites and even apps run through the Display Network.

If you choose to run your ads on the Display Network, you select which sites or web pages you want your ads to appear on (these are called placements) and the audiences you want to show your ads to. 

For instance, you can choose to show you ads on mobile sites only.

You can also select keywords for the Display Network and AdWords will find the best websites and webpages to run your ads on.

You can use text, image, video, or rich media formats (including ads with animation or motion) in the Display Network. It's not just text ads like those allowed in the Search Network.  Video and image ads can really boost the performance of online campaigns on the Display Network.

You can also choose from CPC or CPM bidding in the Display Network.  If you run placement targeted ads on the Display Network using CPM bidding, your Quality Score is based only on the quality of your landing page (AdWords doesn't care about the ad for CPM bidding because they don't get paid when visitors click on your ad, they get paid whenever the ad is shown).

There are a massive amount of websites you can choose to run your ad on in the Display Network. Therefore, it's important to pick the sites your target prospects visit. Otherwise you'll just spend a lot of money that won't translate into sales. 

There are a few ways to do this including:

• Contextual targeting: That's where you reach users by keywords or topics.  AdWords will find the best websites and even web pages to display your ads based on the keywords or topics you choose.
• Managed placements: Choose specific sites, webpages, online videos, games, RSS feeds, mobile sites and apps that are the best match for your offers and your ad. Block those that aren't relevant.
• Remarketing campaigns: Find customers who are already interested in your offers.  You can reach the people who already visited your site once before or people interested in specific categories.

You can decide to exclude both parked domains and error pages from your campaign if you'd like. So you have complete control over where your ads will be placed.

You can measure the effectiveness of your Display Network ads through your AdWords reports. These reports will allow you to see exactly where your ads ran. You'll also be able to see the ads resulting in the most clicks and the sites giving you most sales for the lowest cost.

Based on what you see in the reports you can adjust your strategy.

If your performance history shows that a particular Display Network page is less likely to turn into clicks and sales, AdWords may reduce your bid (and you'll be charged less for the same click). This is called smart pricing. 

Display Network Targeting Methods

With the Display Network you get full control over which countries or regions your ads target, which websites they're displayed on, and which audiences you'd like to reach with your ads.

You can choose one of the following targeting methods to display your ads on the Display Network:

• Keywords: Ads appear based on your keyword list; contextual targeting matches keywords to webpage content.
• Placements: Ads appear on managed placements; sites or placements you hand pick.
• Audiences: Ads are shown to specific audiences. You can use the remarketing feature or add interest categories.
• Topics: Ads appear on multiple pages about a specific topic. You can use contextual targeting to match your ad to relevant pages about the specific topics you select.  Topics are themes or categories.
• Mobile devices: Ads are shown to customers using mobile devices like the iPhone and even those using mobile apps.

Contextual Targeting

Contextual targeting is a feature used only for ads on the Display Network.  This type of targeting will be triggered automatically when an ad group has keywords or topics within it.

Contextual targeting finds relevant webpages to show your ads based on the keywords or topics you've chosen in your ad group. So you don't have to choose placements.  Instead, you select keywords or topics related to your product or service and AdWords goes out and finds the most relevant webpages to show your ads on.

To use it you need to use one of the following campaign types:

• Search and display, all features
• Display only, all features
• Display only, remarketing

AdWords analyzes all the webpages and URL's in the display network and considers text, linking, page structure, and more. They figure out the central theme of the webpage and match this to the theme of your ad using your keywords and topic selections. They'll also look at language and location targeting.  Your ads may also show up when keywords match the content on the pages a person has recently browsed.

Contextual targeting is considered an automatic placement because AdWords automatically places your ad on sites based on your keywords.  These are not manual like managed placements where you select the specific website or webpages your ad will show on.

In addition to keywords you can use topics as the trigger for contextual targeting. If you choose to use topics, AdWords will match your ad to a page's concept, not just the individual terms they use on the page.

To get even better targeting, AdWords allows you to also add in exclusions. You can exclude specific sites or types of sites that may not perform well for you.