Advertising on Google Part 1: Understanding Google Adwords

Posted by Hedley Swann on 03 March, 2014 in Online Marketing , Small Business Strategy , Google

Google AdWords, Google's search advertising network, provides a timely and relevant advertising platform for small businesses. In part one, of this four part series, we find out what AdWords is and how it works.

Our four part Google AdWords video series will cover:

  1. Understanding Google AdWords and Pay-Per-Click (PPC) advertising.
  2. Keyword research and creating ads.
  3. Conversions and landing pages.
  4. Optimising campaigns for better return on investment (ROI).

In this episode, "Understanding Google AdWords", we deep dive into:

  • What is AdWords and PPC advertising?
  • How AdWords can drive leads and sales to your business.
  • Where ads are served, and how they're positioned.
  • How ads are chosen and their position determined.

Bonus landing page tips

Towards the end of this episode we provide tips for creating landing pages that will improve your ads "Landing Page Experience" score (part of your ad's Quality Score) and boost your conversion rate.

Glossary of terms:

This episode introduces some advertising terms for AdWords. Here's a quick reference guide.

Pay-Per-Click (PPC)

One of the most widely used billing models for AdWords campaigns. An advertiser is only charge when a user clicks on their ad.

Cost per thousand impressions (CPM)

The other billing model for AdWords campaigns. Ad campaigns are charged an advertising rate per 1000 times they are displayed.

Cost-Per-Click (CPC)

The amount an advertiser is charged for a single click of their ad.

AdRank

The score Google uses for determining whether an ad is displayed and where it's positioned on the search results page. An ad's AdRank is determined by its "Bid" and "Quality Score".

Bid

The maximum amount an advertiser is willing to pay for a click on their ad.

Quality Score

An aggregate score determined by the relevancy of your keywords and ad content to a user's search, the expected click-through rate of your ad, and the landing page experience of your ad's destination.

Landing page

The page a user arrives at having clicked on an advertiser's ad. The place on the web where a user can complete your Call To Action, and convert.

I'd love to receive your questions

Have a question about any of the topics we discussed in today's video? Ask me on Facebook or Twitter.


Full Video Transcript:

Hello Ladies and Gentleman. Welcome to our new blog series, “Advertising on Google: Small business Pay-Per-Click strategy guide”. In this multi-part series we’re going to take a look at what small businesses can do with the Google ad network called AdWords.

It’s something that we all have an understanding about, we know it exists, as small business owners and marketing managers, but it’s an advertising avenue that not a lot of people are taking advantage of, especially in Darwin. I think there are some really, really good opportunities for small businesses in the local area to be utilizing the Google search network to generate more leads for their business and drive customers to their online content.

Before we get on to what were going to be looking at in this series, a little bit about myself. That’s my ugly mug over there on the right-hand side of the screen. My name is Hedley Swann and I’m the co-founder of Dash Media. Within the wonderful world of web design and online marketing the two things that I really love are visual design and coming up with strategies and marketing tactics to help small business owners to do better. That’s why I’m really excited to bring this series to you on the Google ad network, AdWords, because it involves both of these things. Of course we have to be very strategic about how we do our ad campaigns, how we formulate them, how we target them, our keyword selection, all these things that we’re going to talk about over the next couple of videos. It also includes a lot of visual design around that strategy because we’re going to take this traffic that we generate through our ad campaigns and actually send it through to somewhere on the internet, send it to a webpage that we own and control. There are a lot of design elements to consider in this page, which is called a landing page, the page where we send our online advertising traffic, because it’s going to be the job of that page to actually convert that traffic into leads. Those are the two parts of the online world that I’m really passionate about, both involved in this top, so I’m really excited to bring this series to you.

What’s coming up?

Let’s have a look at what’s coming up over the next few weeks. Obviously, this topic is quite large and there’s a lot of detail to be covered to really take this deep dive into using AdWords, so I’ve broken it up into a 4-part series and we’ll be looking at some specific topics over the coming weeks. Let’s just talk a little bit about what we’ll be covering.

Today we’re going to start off with creating a fundamental understanding of AdWords and Pay-Per-Click strategy, understanding exactly the nature of the beast that we’re dealing with, with Google AdWords.

Then in part 2 of this series we’ll have a look at “how do we come up with our keywords?” and “how do we create ads?” and we’ll talk about tips and how-to’s and strategies for “how do I generate the list of keywords that I’m going to be targeting? How do I create campaigns and put them together?” and then, “how do I actually formulate the ads themselves?” and we’ll go through some best practices on what makes a good online ad and how we can make that highly targeted to the audience that we want to appeal to.

Then in part 3 we’re going to have a look at the landing page itself. This comes after somebody has actually clicked our add and you see we’re following this process through in a sequential order where we understand what AdWords is and then we find out what our keywords are going to be and we create our ads and our campaigns and then we formulate, “What are we going to do with the traffic that we generate from our advertising efforts?” Because there’s no point in sending a whole bunch of people to a place on the internet, to your landing page, if they don’t then do anything, if that landing page fails to covert them. We’ll have a good look through all that in part 3 about deciding what our conversions are going to be and how we can create a landing page that Google likes and that our traffic likes, our audience likes.

Then in part 4 we’ll look at one of the unique features of doing this form of advertising, which is the ability to continuously optimise our campaigns and the way we put our ads together and test and measure everything so that we can create a better return on investments, so we can get the absolute most out of our advertising dollars. That’s one of the really unique features of this sort of online marking, that it is 100% measurable. There are a ton of different things we can look at, a ton of different metrics to measure, that give us great insight into what ads are working, which aren’t, what can be improved, and we can test a whole bunch of stuff. Google’s done a really good job of giving us the tools to be able to get these insights into how people are using our ads and giving us the tools to be able to test new ads and improve our ROI.

So what are we having a look at today? Understanding AdWords, Pay-Per-Click search advertising. This is what we’re going to look at today. It’s really a fundamental understanding of what AdWords is, what’s the process of using it, and understanding how it works, because I think a lot of people have this idea of, they know that AdWords exists, they know that it’s a thing, they know that it’s something they can be using to generate new leads, but in terms of how it works and how ads are displayed and where they’re displayed, all those types of things can elude some of us. So we’ll take a really deep dive into understanding exactly what AdWords is, so that when we move on to actually using it, we know what were dealing with.

What’s on today?

We’ll have a look at the following sorts of questions and topics:

  • What is AdWords and PPC advertising?” That’s Pay-Per-Click, what is it?
  • How AdWords can create leads and drive sales in your small business. We know that it’s an advertising network, but what’s the process that a potential customer actually goes through, that might end up with them becoming a qualified lead that could result in a sale for our small business. We’ll look at that.

We’ll have a look at some bare bones concepts like:

  • Where ads are served.
  • How ads are chosen. This is where I want to spend a lot of time. How does Google figure out what ads to display? Where do they put it? What are the factors that influence where our ads end up, on a search results page? We’ll look at all those sorts of things.

What is AdWords?

AdWords is Google’s own ad network. It’s the name that Google’s given to this form of advertising, which are ads being paid for and displayed on search result pages. We’ve all had this experience, where we’ve searched for something on Google and we get a list of results and usually we can identify the results that are on the page that are paying money to be there. The billing model for Google AdWords, there are two major ways that people can pay for advertising on the Google search engine, and that is the PPC model or the Pay-Per-Click model, where you only pay money if somebody actually clicks one of your ads, or there’s also the Cost-Per-Thousand Impressions, M being the roman numeral for 1,000. The fundamental difference between the two, just to cover that quickly, is like we’re saying with Pay-Per-Click, when somebody clicks your ad, you’ll be charged a certain amount, and we’ll talk a little bit about that later in the series and Cost-Per-Thousand views, or CPM is based on a fixed cost per number of thousand times that your ad is displayed, whether or not somebody interacts with it or clicks on it or not, if that ad is served it will count toward the thousand views.

A few little interesting tidbits about AdWords. It reaches approximately 90% of internet users and that’s a big deal. If we’ve got about 2 billion users out there who are using the internet, a third of the worlds population, we’re reaching 90% or AdWords is being displayed to 90% of that market, so it has very wide saturation, which is good.

The other benefit of it over traditional advertising is that it’s highly trackable, testable and optimisable, that’s a lot of –ables in there. What we need to know is that we can continuously improve it. It’s not taking a shot in the dark and thinking about what might work and then creating something and putting it out there, paying for advertising and hoping that it does the job that we want. With AdWords, we can create our baseline, based on our knowledge of our industry and our target market and our customers and then continuously optimise and improve it to get better results. That’s the major topic that we’ll cover in part 4 of this series with increasing our return on investment from our advertising dollars.

The other big thing about AdWords, is that it’s a timely and relevant way for small business owners and marketing manager to be displaying their ads or advertising to their audience. In this day and age, I’m sure we’ve all had this experience, of “okay, I have a question or I need a product or service. I have some point that I need a solution for.” What do we do? We jump on the computer, we get out our iPad or tablet, or we get out our smartphone and we do a Google search and we see what comes up. You know that you’ve got good market saturation when your brand name becomes a verb for doing something. We’ll just google it.

Just a quick note, what we’re talking about here is AdWords. There is another way for small businesses to be advertising on Google, through what’s called the Google Display Network. This is a totally different beast altogether and it might be the topic of a series later on, but this 4-part series is focused on AdWords, focused on ads that appear when a user types a search query into the Google Search Engine.

How ads work

We’ve all seen ads, we’ve seen them come up, but let’s just run through the process that somebody might take within that AdWords system.

First up, someone has a question, a user, a member of your target audience has a question, or they’re looking for a product or service or they’re looking for reviews and information, they’re in research mode trying to find a good solution to their problem. They’re going to type a query into the Google Search Engine.

At that point, every time somebody does that, then Google runs an auction process through it’s ad network to decide which ads are going to be displayed on the results page for that users query. This is where we’ll get into, a little bit later, in this video, talking about AdRank, which is the name that Google gives to the calculations that determine where something is going to end up on that search results page.

The user has typed in a query and Google has run it’s ad auction and it decided which ads are going to be placed on that results page. So the user, very quickly, all this happens in under a second usually, displayed with a list of search results that Google thinks best match that query. On that page there are predetermined spots for adverts. Those adverts are positioned based on the AdRank for those ads. Like I said, we’ll talk about how that works.

Just to get a fundamental understanding, now we know how that part of the process works. The user puts a search query into Google, Google has decided what ads to display and it’s displayed them at different positions on that results page.

If a user then goes ahead and clicks one of those ad, within he PPC billing model, or the Pay-Per-Click billing model, then that advertiser gets charged for that click and is then taken to that advertisers landing page and a conversion opportunity is presented. That gives you an idea of the process that a user goes through from landing on Google to creating or making their own search query, to selecting an ad that they feel is relevant to their needs, and then ending up on your webpage that you control to talk about whatever it is that you’re advertising.

Ad Placements

Ad placements play a vital role in the success of your ads because there are a number of different places on a search results page that you’re ad can actually appear and of course they’re not all equal and this is where AdRank becomes important because that’s the factor that determines how you’re ad will be placed, where it will be placed on the page.

I’ve got here an abstract representation of your average Google search results page and let’s run through a few of them.

If we have a look at the big, bright circles numbered 1-3, these are the different elements of the page.

[15:15 - top center/left of the page, main column of content] #1, that’s our prime advertising real estate where the top three ads will be displayed for the users search query and of course, our goal is to be #1 in that primary list at the top of the page.

[15:37 - far right, thinner column] #2 is our secondary ad position. If your ad doesn’t make it into one of those top three spots, then it can be displayed on the side of the search engine, but research really shows that the vast majority of click-throughs of users clicking ads goes to those top three spots, so that’s really where we want to be.

[16:03 - Directly beneath #1, same column thickness] Then of course we have #3, our organic search results, which appear underneath our top three paid ads. This is where the fundamental difference between another term that you’ve probably heard SEO and what we’re looking at here, paid advertising. This is where they really differ. All of those organic results have been displayed based on the number of merits of the website, of the content on the website and of the search engine optimisation that has been done to those pages to make Google think they are the most relevant results for that user’s search query.

That’s a bit of a breakdown of the anatomy of a Google search results page and the two key positions where your ad may appear.

Keywords

Keywords are really going to be the subject of part two of this series, but before we move on it’s important that we have a fundamental understanding of what keywords are as they relate to our AdWords campaigns, our paid advertising campaigns, because keywords play a large part in how our ads are displayed and it’s based on the relevancy of those keywords to the users search query.

In terms of understanding them, you’ll hear people say that, “I have an ad that targets xyz keywords” and that’s true, it’s perfectly fine to say that, it’s a simpler way to say it, but what I want you to take away from this is to really wrap your head around the concept that keywords are the phrases that a user can include in a Google search query, that may trigger your ad to display. A recurring theme that we’ll see throughout the series is that we need to be thinking about everything that we do, from the point of view of our audience, what they might type into Google, what they’re looking for, what are the terms that they use. Yes while our campaigns are targeting certain keywords and keyword phrases, I want you to always keep that in the back of your mind that what we’re targeting are the search queries that somebody that might be interested in your product or service could type into Google when looking for said product or service. That’s how we actually select our keywords. We select our keywords based on what we think a potential customer may type into a Google search query. We’ll take a real deep dive into that in part 2 of this series. Now that we understand what keywords are.

AdRank: The Auction

Let’s move on to the auction that runs whenever a user types a search query into Google and it’s your AdRank that determines whether or not your ad will be displayed on the page and what position it will be displayed in. It’s important to understand that AdRank is calculated every time that a user makes a search and the two metrics that really make up your AdRank, are your bid and your quality score, the amount of money that you’re willing to pay for a click on your ad and your quality score. We’ll dive into what your quality score actually is.

Your Bid

Let’s talk about money. I think that’s fundamentally, something that we all really understand, that for paid advertising we are parting with our appetizing dollars for the privilege of somebody clicking out ad on Google. It’s important to understand exactly how the bid works, because it’s something that a lot of small business owners like yourself, have questions about. “How much am I going to pay? How can I make sure I’m bidding the right amount?” There are a whole bunch of questions there that you may have.

Your bid is the maximum that you’re willing to pay for a click on you’re ad. This doesn’t necessarily mean that you’re going to pay this amount for your click. What will actually happen is that you will pay the minimum amount necessary to get the best position. This is why different key phrases have different levels of competition and therefore they also have different prices per click. This is determined by the number of advertisers who are trying to get that prime position for a particular key phrase.

To run you through a small example of this, let’s say that you’ve been through setting up your campaigns and Google has recommended that you bid $0.30 for a click on your ad for your particular targeted key phrase, and you decide, “Well I’m actually willing to pay a little bit more than that. I’m willing to bid $0.40 for a click on my ad.” Somebody types in the keyword phrase that you’re targeting and for this example we’ll assume that the quality score on everything else is equal, if your competitor has put a ceiling on their bid of $0.35 and you’ve put a ceiling of $0.40, then what’s likely going to happen is you’re going to get the top spot on the search results page, you’re going to get the top spot and you’ll likely pay about $0.36 for a click on that ad. That’s how that really works, in a nutshell.

Quality Score

Quality score is the second point that goes into determining your ads AdRank and it’s a little bit more complicated. There are a few more factors that we need to pay attention to.

The first thing we need to look at within our quality score is our keyword relevancy. Does your targeted keyword and ad content closely match the search query of a user? The reason why people use Google and Google has been very successful is because it’s highly useful to people. Can you imagine what would happen if every time you went to make a search on the search engine, the results that it returned and the ads it displayed were of absolutely no help to you whatsoever? People would stop using it. Google is very concerned and very careful about serving the highest quality content and the most useful and trustable content to people who are using it’s search engine.

To give you an example of this, let’s say that someone’s running a campaign and their targeted keyword phrase is “leather jackets”. They’re looking for people that are searching for leather jackets. You have one ad that targets leather jackets by one advertiser and another advertiser is running their campaign, and their ad targets a longer key phrase called “buy leather jackets online” That’s the keyphrase they’re going for also. Advertiser A is targeting “leather jackets”, advertiser B is targeting “buy leather jackets online”. What happens here is if the user’s search query is exactly “buy leather jackets online”, if that’s what they type in than the keyword relevancy of the second ad, ad B is obviously higher than advertiser A, who is only targeting “leather jackets”.

Expected click-through rate is another aspect that goes into our quality score. It is “A keyword status that measures how likely it is that your ad will get clicked when shown for that keyword, irrespective of your ads position”, and that’s actually Google’s definition of what the expected click-through rate is. What it comes down to is, is your ad clickable? How clickable is your ad, it’s clickability is what they’re looking for here. It also does have an element of past performance of your ad, which can be used by Google to determine the clickability of your ad.

The third really big point here that makes up your quality score, is your landing page experience. We talked a little bit about how Google wants to serve useful, trustworthy, and relevant content to users making searches on it’s search engine. It wants to make sure that the landing page that the user ends up on after clicking your ad, is relevant to that user.

These are the three things that go into our quality score. Our keyword relevancy and the relevancy of our ad, the clickability of our ad, the expected click-through rate, and the experience of the page that we send our ad traffic to, after they’ve actually clicked our ad. We need to keep all of these things in mind because it’s quality score plus your bid, that actually gives your AdRank, which determines the position of your ad on the search results page.

More on landing pages

I just want to touch on landing pages because this idea of a landing page experience is the part of a lot of campaigns that I see actually fall down on. They might get their ad right, they’ve got their bid correct, it’s a good number, it’s a relevant number, their ad copy is great, they’ve got a great ad, it’s very clickable and then somebody clicks that ad and ends up on a landing page that then fails to convert that person into a customer.

Here are a few questions that I want you to ask yourself about the location that your sending your ad traffic to, your landing page.

  • Is the content on your landing page highly relevant to your ad? – This is why sending people to the home page of say, your wider company site is a bad idea. Because if your ad is about a specific product within your product range and people are interested in that product, that’s what they want, and they click your ad about that product and then they end up on a page that might talk a little bit about that product but then talks about everything else that your company does, well that’s not very highly relevant, is it? You’re much better off sending them to a page that is specifically for somebody coming from your Google advert, so it would be specifically focused on the product that your Google ad was advertising.

By the way, these questions, you not only have to ask yourself to make sure that your landing page is likely to convert a visitor into a customer, but these are also questions that Google is asking of your landing page, to help determine that landing page experience metric that makes up part of your quality score.

  • Is it easy for a user to find and use your Call To Action? – They’re actually encouraging you to try and make your landing page as good as it can be at converting users into leads. Google wants that to happen because if this person is highly interested in your product, say you’re advertising a product and they do a search query on Google about that product and then they click an ad about that product, they’re highly qualified to be somebody who wants that product, right? If they go to a landing page and there’s no easy way to get that product or make an inquiry about that product, then that page has not been useful to that person and it’s not been useful to growing your business either. You’re Call To Action is very important.
  • Google is also going to look at, “Is the content on your site original and useful?” – Originality, we don’t want to be copying and pasting content from other sources on the internet. Google can tell. It’s wants to see original content that’s been made by you.
  • Is contact information easy to find? – You want to put real details on your landing page, that will allow a potential customer or user to actually get in touch with you. That’s an aspect that makes up the trust worthiness of your page and that’s very important to Google.
  • Another part that goes into this trustworthiness is displaying a privacy policy. If your call to action involves taking some information from the user, whether it’s their name, email address, phone numbers, whatever it is, you need to be displaying a privacy policy that tells that user how you’re going to protect, store and use that information. Google’s going to look for a privacy policy as part of that landing page experience metric, to make sure that your page is in fact trustworthy.
  • Is this page optimised for the ads audience? – This is where we need to think about who is looking at this page. If we’ve set up an ad that’s going to be of particular interest to people who are using mobile devices, smartphones, or tablets, and we send them to a landing page that isn’t optimised to be viewed on a smaller screen and a touch-based screen, well then that page isn’t going to be useful to that user. We need to make sure that the page that we’re sending people to is optimised to the type of audience that we’re targeting.
  • The other thing that Google would like to see on your landing page, is “About us” information. They want you to tell users about who you are, what your business is, and what you do. This is all about establishing trust and Google’s very big on this trust factor.

If you can make sure that you’ve got a landing page that is highly relevant, has a clear Call To Action, is original and useful, and is optimised for the audience that is actually viewing that landing page, then your landing page experience score is going to be higher and your conversions are going to be higher. At this point it’s not even about what Google wants, it’s about the fact that doing these things is going to lead to driving more sales to your business.

Quality score affects ad prices

The other thing that quality score affects is ad price. I want you to read and then re-read this sentence from Google themselves. This is straight from Google, and they say:

“Even if your competition bids higher than you, you can still win a higher position – at a lower price – with highly relevant keywords and ads.”

Suddenly it’s not just about money. This shows Google’s dedication to providing their users with the best experience possible. If you wind up in a situation where your competitor has a higher bid than you, but they fail on everything to do with their quality score and yet your quality score is very high, you could find yourself paying less and being better positioned. That’s how important this quality score is to determining the position and price of your ads. It’s something we really need to lock down and get right in our campaigns.

What d’ya know Joe?

We’ve covered quite a bit today so I want to recap everything. What we’ve learned today is that AdWords is Google’s advertising network for search-based online advertising. We’ve learned that users everywhere are using the Google search engine to find solutions to their problems and we can pay for ads that are relevant to the searches that users are making.

We’ve learned that AdWords is an effective way to reach your target audience and drive them to your website. We know from both our personal experiences as well as what the industry is telling us, that AdWords is a timely and relevant way to get your audience to pay attention to your content, your products, and your services.

We had a look at how somebody actually goes through the process of making a search engine query,to clicking on an ad being displayed with a landing page and how the auction process actually decides where on the page ads are displayed and where they’re ranked, based on our AdRank, which is made up of our bid and our quality score.

And of course, quality score affects our CPC, our cost-per-click, and when it comes to optimizing our return on investment, everything we can do to make our bid price lower, to push our advertising dollars further, is definitely going to be worth doing. So we really need to be pay attention to that quality score so that when combined with our bid, it gives us the best AdRank possible for our campaigns.

Next Up

Next week is part 2. We’re going to have a look at tips, strategies, and best practices for finding and choosing keywords, as well as copy tips for you ads. This is going to be about, “How do I get started? I know what my product and service, I have an idea of who my audience is. How do I start actually putting together my AdWords campaigns and actually start using this form of advertising to drive sales to my business.

Questions? Ask us on social media!

That concludes part 1 of this 4-part series on Google AdWords. Hopefully you know have a great understanding of exactly what AdWords is and how it works. Of course, if you have any questions about today’s content, then I’d love to hear those and you can hit us up on Facebook at facebook.com/dashmediacomau you can also visit us on Google+. Of course if you are a small business owner or marketing manager who would like some help with driving more sales to your business using online marketing, then please feel free to visit our website dashmedia.com.au