An Overview of Online Advertising Using Google AdWords

So how does your organization tap into this resource effectively? Google makes its billions through offering advertising space on its website, which, if done effectively, can translate into real revenue for your organization. It’s called Google AdWords.

AdWords allows you to place ads on the Google website (along with its partner websites) based on searched keywords. Like an auction, you “bid” against companies on certain keyword combinations as to the placement of your ad on a Google search results page. You also set the amount you are willing to pay each time someone clicks on your ad. For instance, let’s say you are a catering company whose primary customers are wedding parties. If someone were looking for you on Google, they might enter keywords such as: catering, wedding, Lansing or catering, cake, receptions, and so on. Your goal is for your ad to appear next to those keyword combinations when someone searches them out (and in turn, clicks on it, taking them directly to your website).

To begin in AdWords, you create an overall campaign. In this instance: “Wedding Campaign.” Once created, you set the daily budget you wish to pay for that campaign. In this example, you wish to pay a total of (and no more than) $8 a day.

Next, create a series of keyword groups. In this example, two groups:

  1. catering, wedding, Lansing
  2. catering, cake, receptions

Here is where it gets interesting. For each group, set the price you wish to pay each time someone clicks on your ad when searching for those keywords (not to exceed your budget of $8 per day). For Group 1 you may only have to pay 10 cents per click, while Group 2 might dictate a minimum of $1 per click. The broader the search criteria, the more you’re likely to pay per click, as there will be more people competing. For instance, you’ll likely pay far less per click for Group 1 (localized for Lansing) than for Group 2 (which competes against the entire globe).

Picking the right keywords and keyword combinations is essential. The more targeted they are, the less likely people will search them out… yet the more interested they may be when they do. It’s very much like direct mail, where “shotgunning” may reach lots of people, but usually it’s lots of uninterested people. Like everything, having a niche is better than not having one. Find the niche in your keywords and take advantage of it.

Keep in mind when you’re bidding on your keywords that you don’t have to be number one, meaning you don’t have to be the first ad to appear. In a January article in iMedia Connection, research showed that an ad placed number eight on the page was clicked on equally to that of an ad placed number one on the page. My advice: Start low, track it, and work your way up to a price and placement that is cost effective.

Next, create your ads, one for each group. This is the last, critical component of your overall campaign. Think of these ads as though they were billboards: meaning be quick, be concise, and most important, call them to action.

Here’s an example for an ad for Group 1:

Lansing Wedding Catering

10%-Off Coupon on Our Website

Elegant, Full-Service, Since 1982

AdWords gives you a very limited number of characters to use for each of the three lines of your ad, plus your website address. Line one of the ad uses actual keywords (which will appear in bold) to increase their effectiveness. Line two uses a call-to-action to get them to your website, while line three tells a little about what you do and how long you’ve been in business.

You’ll want to create different ads for different groups and in some cases, different ads for the same group for testing purposes. Over the course of a few weeks, you can see what’s working and what’s not.

What are you willing to pay per click?

Based on your chosen keywords, ask yourself what should you pay in order for your ad to appear. Here’s a quick formula:

  1. Click conversion rate: AdWords will report to you how many times your ad has appeared and how many people have clicked on it. If you can determine that out of 500 people that clicked on your ad one will buy, then 500 is your click conversion rate.
  2. Average profit per sale: Minus advertising costs, what is your average profit per sale? For this example: $2,000.

To determine what your break-even cost should be for your Google AdWords campaign, divide the average profit per sale by the click conversion rate.

500 ¸ $2,000 = $4

This means $4 is your break-even price and the very maximum you should pay per click.

Google AdWords can be labor intensive, requiring constant care and testing as companies compete for relevant keywords. If successful, however, and with each component working together – your keywords, ads and website – it can be an extremely powerful revenue-generating tool in your sales and marketing program. It has been in mine.
John Forsberg is CEO of i2Integration, a full-service Web development and IT support company based in Lansing and western Michigan.








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