An Introductory Guide to Google AdWords for Small Businesses

The Internet may have originally been developed as a military communications tool, but it has evolved to become a major player in commerce around the world. As a small business owner, you have an opportunity to take advantage of the Internet to reach customers in ways that were never before possible. One of the best tools for doing so is Google AdWords, a promotional tool that is both effective and affordable.

The concept behind Google AdWords is simple: target specific groups of potential customers with advertisements at the very moment they are searching for the products or services you offer. If it helps, think of it in terms of food. Let us assume you are walking down a busy London street searching for the nearest fish and chips vendor in order to satisfy your hungry stomach. As you scroll through the possibilities on your smartphone, a man steps out of a shop and invites you in for a meal. Mission accomplished! You get your fish and chips and the shop owner gains a new customer.

By targeting potential customers with the right ads at the right time, business owners are able to boost both web traffic and revenues. Google AdWords is a brilliantly efficient way to use the Internet to grow your small business.

How It Works

The strength of Google AdWords is the search engine itself. Google is by far the search engine leader, setting the standard by which all others are judged. As long as you are going to target web surfers using a search engine to find your products and services, you might as well go with the undisputed leader.

AdWords works by placing your ads in one of two places: next to search engine results on Google or on targeted Google partner sites that carry adverts. Google determines which ads show up at any given time by using their Ad Rank system. This system considers three components:

  • Your Bid – Every AdWords advertiser decides ahead of time how much he or she wants to spend on a per-click basis. This is known as the bid. When multiple advertisers construct ads using the same keywords, the first metric that separates them in terms of ranking is the bid amount. A higher bid will get a higher ranking.
  • Ad Quality – Google rates the quality of ads just as it does websites. A higher quality ad will receive a higher ranking and, thus, more exposure.
  • Ad Impact – Your ad will have an impact not only on your own site, but also on Google and the affiliate sites where it appears. Google attempts to anticipate this impact based on a range of factors. The greater the impact, the higher the ranking.

There are a number of benefits to the way Google’s Ad Rank system works. At the top of the list is the ability of business owners to control their own marketing budgets. You can decide beforehand how much you want to spend based on your budget. What’s more, you can stop or extend your campaigns as your budget allows.

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Business owners also have the ability to choose specific ad placements rather than allowing the Google algorithm to do it for them. In other words, if you know you want to target a specific audience that frequents just a small number of Google partner sites, you can target those sites for ad placement.

Determining Your Ultimate Cost

From a budget-friendly standpoint, it is hard to beat the value of Google AdWords. The system works on a pay-per-click basis, which means your account is only charged when a potential customer clicks on your ad. Nevertheless, here’s the beauty of it: you will not necessarily pay your maximum bid price for every click. Google uses something known as the Ad Auction to determine how much you ultimately pay.

The Ad Auction works as any other auction in that the highest bid wins. When you first set up your ads, you choose a maximum bid price, also known as ‘max CPC’. However, Max CPC and actual CPC may not be the same. We will illustrate this with a made-up price of 50 pence per click.

At that bid price, the most you would pay for a click on your ad is 50p. Let’s just say you are competing with 10 other advertisers also using the same keywords. Assuming you are the high bidder, you would only pay 50p if the second-highest bidder’s maximum CPC were 49p. Nonetheless, if his maximum CPC were 40p, your actual cost would end up being 41p.

Setting the system up this way ensures you will never exceed your budget as long as your maximum bid prices remain the same. As an added bonus, you could actually stretch your marketing budget further if your competitors are bidding less.

Creating Your Ads

Now that you know how the AdWords system works, let us talk about actually creating ads that will help your business. As any veteran in Google AdWords can tell you, it is all about keywords.

Keywords are those specific words and phrases your potential customers will connect with the products or services you sell. Using our previous example of fish and chips, you might ask yourself what your potential customers might be thinking about at the very moment they are trying to find your business. A customer may be asking himself:

  • Where can I find fish and chips in this town?
  • Who has the best fish and chips in this neighbourhood?
  • Where can I buy fish and chips at the lowest price?

You will notice we underlined a key phrase in each of the questions. These key phrases are what you would use to determine your keywords. To be fair, this is a rather simplistic example of what we are trying to illustrate, but it does serve the purpose.

When your ads are built around the right keywords and phrases, they will show up in the most advantageous places for your business. And that’s the goal. You want your ads to be presented to potential customers who you already know are looking for your products and services. You do that through keywords.

Google AdWords allows these keywords to be used in one of two ways. The first is to select keywords relevant to your products and services so that your ads show up on the Google sidebar or on any of the partner sites you have chosen. The second option is to use keywords to ensure your ads show up next to appropriate content on the Google Display Netbook. Both concepts work the same in principle, although implementation is slightly different depending on your strategy.

Choosing Your Keywords

Choosing the right keywords and phrases for a Google AdWords campaign is one of the most difficult parts of the process. Business owners may think they know how their customers use a search engine only to find out that they are paying a lot for ad clicks that do not produce paying customers. To avoid this, Google recommends the following:

  • Think Precisely – Inexperienced AdWords advertisers tend to use keywords that are far too broad. Google uses the example of the term ‘bags’ on their website. Using that keyword alone might attract people looking for teabags, rubbish bags, and shopping bags, even though you are trying to reach customers interested in vacuum bags. Choose your keywords precisely.
  • Group Keywords – Google recommends grouping keywords according to certain themes. For example, if you were a baker specialising in customised cakes then you could choose phrases including ‘wedding cakes’, ‘birthday cakes’ and ‘holiday cakes’. You could then create individual ads for each group in order to target a specific audience.
  • Track Results – No advertiser chooses the best keywords the first time, all the time. What’s more, search tendencies evolve over time. Therefore, it is important to take advantage of the analytics Google provides to track results. This lets you keep utilising the most effective keywords while disposing of those that are ineffective.

Once you have chosen your keywords and constructed your ads, the next step is to consider what is known as keyword bidding. As previously mentioned, keyword bidding is the process of setting the maximum bid price you are willing to pay for each click. The Ad Auction eventually determines your actual cost. Nevertheless, it does more than that.

Google’s system considers each individual ad auction in order to rate the quality of your ads in each instance. The system then develops a Quality Score based on the performance of your keywords and their relevance to the search terms they were applied to. The higher your score, the lower the bid requirement necessary to promote your ads.

New advertisers generally use Google’s automated bid process until they get a handle on Quality Score. Nonetheless, once you get a feel for how your keywords are working, you can control the bid process manually. This allows you to stretch your marketing budget even further.

Additional Keyword Information

There is a lot to understand about keywords and how these affect your AdWords performance. Without getting into too much detail, here is a brief overview of some of the other important things you need to know:

  • Negative Keywords – Google allows you to establish negative keywords for each ad campaign to prevent your ad from showing up where you do not want it to. Using negative keywords allows you to control your costs by minimising the number of times your ad appears to people unlikely to use your products or services.
  • Keyword Planner – Google offers a useful tool known as Keyword Planner to help you determine the best keywords and groupings for your business. This tool is an absolute must for running a successful ad campaign. Google has made it free for all AdWords advertisers.
  • Match Types – People search for things online in different ways. For example, some might use complete sentences with impeccable grammar while others just type in two or three words. Keyword Match Types allow AdWords users to account for these differences by matching keywords with various ways of searching them. Match Types makes it possible to trigger your ads based on user input.

Google explains all of these things in depth in their AdWords guide for advertisers. It is a good idea to read this guide through as many times as necessary to fully understand what it says. And of course, experience will go a long way toward teaching you all of the nuances of establishing and using keywords.

Ad Placement

The last thing you need to know about beginning a Google AdWords campaign is the idea of ad placement. Ad placement goes above and beyond the Google sidebar by allowing you to place ads on specific websites or mobile apps. While doing so represents an extra expense, it may be well worth it depending on the kinds of customers you are trying to reach.

For example, let us assume your target audience is the twenty-something university student crowd. Knowing that these kinds of customers prefer mobile devices to access the web, you would be wise to place ads on targeted websites and mobile apps.

Google offers what it calls its Display Network of sites and apps ready and willing to accept your ads. However, getting your ads to appear works the same way here as it does on the Google sidebar. You are competing against other advertisers through the bid process and your chosen keywords and phrases.

There is a lot to learn about Google AdWords and how to use it effectively. Unfortunately, this introductory guide can only provide so much information. If you would like to learn more, there is a plethora of resources all across the Internet offering very detailed explanations.

In the end, it comes down to this: the success or failure of your small business may rest in how well you utilise the Internet as a marketing tool. Google AdWords needs to be part of your Internet marketing toolbox if you want to successfully compete.

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