Google Adwords: What is it and How Does it Work?

Adwords is an advertising platform created by Google, which allows individuals and businesses to target and promote their products/services to 90% of internet users.

The text or display ads submitted to Adwords will appear in Google search and their advertising network.

One mistake most entrepreneurs seem to be doing is investing money in industries they know nothing about as soon as they start making some money from their own business. This is not what you should be doing.

Instead, you must focus on promoting your products/services to an even larger audience than before. And what better way to do it than by using Adwords. It lets you present your brand to billions of people who are using Google search every month.

How does the AdWords auction work?

Adwords is based on an auction model that’s proven to be profitable for both Google as well as the advertisers since it’s integrated with Google search, the most used website in the world.

Here, you can decide when to show the ads and when to not, what keywords to target, what country to target and etc. But how does it work though?

Let’s take a real-life auction as an example. Items are put on sale with a starting price. The auctioneer then starts collecting bids from the audience to see who’s willing to pay the most for the item. The person who pays the most gets the item, simple as that.

In Adwords however, the items are the placements of display or text ads that appear on Google search and their advertising network. And the audience here are the people who bidding for the same keywords or key-phrases.

The more you are willing to pay, the higher you will appear in paid search results for the terms you bid on.

But don’t be mistaken. Your bid isn’t the only thing that determines how often your ad is shown, its placement/position in paid search results and the amount you have to pay per click. Your ad quality score will be accounted for as well. We will get into that later.

What is Pay-per-click (PPC)?

PPC or Pay Per Click is the revenue model used by Adwords to charge customers a certain amount of money every time a visitor clicks on their ad. This is different from CPM where you have to pay for every 1,000 impressions, even if there were no clicks at all.

This PPC model was able to make millions of businesses that were once skeptical about spending money in online advertisements, adopt and use Adwords on a regular basis.

The main reasons being lower risks and high conversion rates. Besides, you only have to pay if and when a visitor clicks on your ad.

You also have the option of bidding for impressions. This model is known as CPM or Cost Per Impression where you have to pay every time your ads gets seen 1,000 times, instead of paying for clicks.

If your ad is well-optimized and if you have low bidding competition this may be a better choice but if not, I would bet my money on PPC since it’s relieving to know that you are paying for a click and not just for impressions.

Factors that affect the placement of your ad

According to Google, there are three factors that affect the placement of your ads; bid, quality score and expected impact of the ad.

The bid is the maximum amount of money a business or individual is willing to pay for every 1,000 impressions.

The quality score is determined by several sub-factors such as the click through rate of your ad, historical Adwords performance, the quality & relevancy of the ad text, the quality & relevancy of target keywords, and the quality & relevancy of the ad destination.

The expected impact of your ad is measured by the ad extensions and formats you use.

Ad extensions allow you to add additional pieces of information to your ad such as a phone number, map location or price list. Formats are the different types of ads available such as text ads, call-only ads and responsive ads.

Basically, Adwords is set up in a way that it’s possible for a new business to outrank a much older one if the quality score and expected impact is higher, even if the bid amount is lower.

Keep in mind that CTR or Click Through Rate is also a part of the algorithm that measures the impact an ad makes.

How much does Adwords cost?

Now that you know what PPC is and how it works, let’s dive into the costs associated with Adwords. The exact cost depends on what keywords you wish to target.

While the average CPC of keywords range between $1-$2 on Google search and under $1 on Google’s advertising network, some keywords are very expensive to bid on due to the competitiveness in the market.

The pie chart below shows 20 of the most expensive keywords a business can target in Google Adwords.

Google rewards advertisers with a high quality score by making them pay a lower CPC for their ad. You can increase the quality score by adding ad extensions, optimizing the ad text and making sure the destination is relevant and has quality content.

Why aren’t certain ads approved?

There may be several reasons but the most common one is targeting keywords that have little to no relevancy with the ad’s content or the page the visitors are taken to when the ad is clicked.

Adwords certification program

It’s a program created by Google to recognize and certify the individuals who know their way around Adwords well.

In order to get certified, you would have to pass two exams; the primary exam and one of the five secondary exams.

Once you pass both the exams, you will be given a personalized certificate and appear in Google Partners public profile page.

The majority of big companies and corporations have made Google Adwords certification a requirement when hiring entry-level Search Engine Marketing officers since a certificate given directly by Google is far more valuable and credible than what you learnt in school.

The process involved with obtaining an Adwords certificate is fairly straightforward. First, choose the email address you wish to tie the certification with. This can either be your work email address or personal one.

After logging in to your gmail account, join the Google Partners program. Next, work on completing the profile by filling out the missing fields if Google hasn’t already done it for you.

If you signed up as an individual and the company you work for has a Google Partner profile listing, you have the option to request to be affiliated with the company. The administrator of the company’s Google Partner profile would then have to approve it.

Earlier I mentioned about two exams, right? The primary exam is compulsory and there are no options to choose from. The secondary exam however, allows you to choose between five exams; search, display, video, mobile and shopping.

And even if you fail the exam, don’t worry. The only penalty you would receive is having to wait a few days before you can retry.

In case you passed the first exam but failed the second, you could try one of the four remaining secondary exams while or without having to wait to retry the failed one.

Adwords Express

Think of Adwords Express as a simplified automated version of Google Adwords, created specifically for one-person marketing teams or small businesses that don’t require all the features of Adwords.

Here, you don’t need to choose keywords, implement marketing strategies or continuously monitor and improve your ads. You just have to create the ad and Google will take care of the rest, including when, where and how they should be displayed and for what keywords.

This is beneficial because it allows you to spent less time on online marketing and more time with your customers.

Adwords Manager Accounts (My Client Center)

Massive organizations such as holdings and group of companies may require multiple Adwords accounts for different purposes.

My client center or manager accounts allows you to link, monitor and manage multiple accounts from a single dashboard.

You won’t have to enter passwords to link to your Adwords accounts, you just need to give the required permissions.

This results in cross-account campaign management, ad optimizations, reporting, access control and billing.

You can either view, manage or edit accounts and campaigns separately or all at once. This gives you so much flexibility and convenience.

For example, lets say you want to update the daily budget of your ads in multiple accounts or pause certain campaigns for the time being. Well now you can do those things without ever having to log out and log in multiple times and repeating the same steps.

Finally, manager accounts allow big-time advertisers to combine multiple invoices from multiple accounts into a single monthly invoice to make payments streamlined and consolidated.

How Adwords affects SEO

Adwords gives paid exposure to your brand, which in turn boosts the CTR of your organic results.

“How?” you may ask. The person who clicked your ad probably remembers or at least is familiar with the name and logo of your site.

Therefore, when they see your site again in SERPs for any keyword, they are more likely to click on your website because they are already familiar with the brand.

This results in higher Click Through Rates for your organic results. And the higher the CTR, the more likely Google will rank your pages higher for the relevant keywords.

After all, if a certain page seems to be getting more clicks than others, it shows that people prefer that result more.

Paid ads also lead to new backlinks. The more traffic you get from paid ads, the more likely someone will share your content on social media or mention your brand in a forum or website. This leads to new backlinks, which is one of the main factors of SEO on Google.

Adwords best practices

• Don’t place device-specific call-to-actions or offers since expanded text ads will show up on all devices such as desktops, mobiles and tablets alike. Previously however, you were able to create mobile preferred ads to show a variation of an ad to mobile users.

• Include top-level keywords in the two path fields that make up your display URL for the ad. It will reassure viewers that they will be taken to a relevant page and make them more inclined to click your ad. Apart from that, you would be showing Google that your ad is highly relevant to the target keywords, resulting in a higher ad quality score.

• Google doesn’t allow the same text or info to be used in an ad extension more than once. So when you make new ads, be sure to include new details in the ad extensions, or update the old ones.

• Start small. If you are just getting started I highly recommend starting off with the least amount of money possible. Even $25 would be a great start. When you are more familiar you can start investing larger amounts.

• Link your Adwords account to your Google Analytics account so that you can track what the visitors are doing after they click the ad and land on your site. This is the best way to estimate the return on investment.

• Build a list of negative keywords and phrases to which your ads won’t be shown. Having a comprehensive list of negative keywords will make your ads highly concentrated on your target audience and will in turn increase the CTRs.

• Enable Accelerated Delivery Method to tell Google not to hold back on displaying your ads. This is not recommended if your budget is small or medium.

• Create separate campaigns for each country. Don’t target multiple countries with ads on the same campaign.

Conclusion

Adwords is by far the most cost-effective tool to generate potential leads to your website from all over the world.

Creating a campaign can be a very difficult, time-consuming and confusing process but if you follow the right steps and get the basics down, it’s really not that complicated.

Once your ad campaign is running, take the time to carefully figure out what other keywords you should be targeting, how much you wish to pay per click, what time of the day you would want your ads to be displayed, what extensions would suit the ad and etc.

The more optimized your ad is, the better the CTR and lower the costs. Not only your campaigns, make sure the landing page is properly optimized and responsive as well.

Your Adwords ads are able to improve your organic rankings indirectly. The more money you spend, the more eyeballs your ad will appear in front of.

Therefore, users will be inclined to click your listing even for organic results. This will also increase the likelihood of someone sharing or mentioning your brand/website on social media, forums, blogs and other websites.

If you are a one-person marketing team, I highly recommend using Adwords Express, a nearly automated version of Adwords where Google takes care of optimizing and running the campaigns. You would just have to setup the ads.

Finally, organizations that use multiple Adwords accounts can make use of Google Manager Accounts to bring those accounts under a single integrated dashboard.

Do you have any other questions regarding Google Adwords? Let me know in the comments section below.