AdWords is where you buy ads on Google and other websites and blogs that are part of Google’s ad network. This article explains what AdWords is along with typical results, cautions, costs and tips to save time and money.
How much does it cost to advertise on AdWords?
You control how much you want to spend every day or you can set an overall maximum budget for a campaign or a specific time frame. You can spend as little as $5 or thousands of dollars a day on Google AdWords. Most small businesses that are selling locally in a city or town set a limit of $20 to $200 a day for AdWords. Businesses that sell nationwide or that sell online spend more because they need to reach a larger audience and attract more visitors to their website.
Where do the ads appear?
Ads on Google sold through AdWords appear on the top of search results in both the tan area and in the right hand column.
TIP: If you’re selling locally, you see how important it is to get listed for free with Google so your business appears in search results. That’s called Google Places. You want to set up your free listing before you spend any money buying ads!
Google AdWords also allows you to buy ads on other websites and blogs that have been approved by Google to accept ads. In that way, AdWords is also what’s called an “ad network” because they sell ads on other websites. Advertisers can choose to place text ads (words only) or display ads (larger online ads like the one on this page).
What does it cost to buy an ad on Google AdWords?
The short answer: $.05 to more than $25 (depending on what you bid) when someone clicks on your ad.
AdWords sells ads on what’s called PPC (pay-per-click) or CPC (cost-per-click). You only pay when someone clicks the ad.
Ads on AdWords are sold through an auction system where people bid to advertise on particular search words (called keywords) like “dentist” or “dog collars” or “catering Naperville.” Each keyword is priced differently based on the competition among other advertisers who want their ad to appear for someone doing a search for that term. There are also other variables that Google considers in the pricing that you’ll need to understand if you want to buy ads on AdWords.
The key thing to know about AdWords is that you decide how much you want to pay per click and how much you want to spend each day or for a campaign or period of time. You can set a budget for $20 a day or $10,000 a day. That’s up to you.
How are ads sold on AdWords?
Search ads sold through AdWords are sold differently than other types of advertising. What’s different?
There isn’t a rate card like there is if you buy ads in a newspaper or magazine.
You can’t negotiate with Google for a lower or different price. The prices are determine through the bidding process along with other variables that Google considers.
All the ads are sold CPC which stands for cost-per-click. That means you only pay if someone clicks on a link in your ad to visit your website or blog. So if you’ve agreed to a price of $3.56 to place an ad for someone searching for “dentists”, then you only pay when someone clicks on your ad.
Know this: Someone clicking on your ad does not mean you will get a sale or even get someone’s contact information (name, email address, phone number) to be able to recontact them. Click-through rate means someone clicked on a link in your ad that you placed to run through Google AdWords.
With so many people using mobile phones with tiny screens, many people are clicking on search ads by mistake. It’s called “thumb slip” clicks. It’s like someone misdialing a phone number but in this case you are the one paying for their click.
There’s also what’s called “click fraud.” Click fraud, which is a felony, occurs when a person or computer program clicks on an ad for the purpose of generating a charge to the advertiser. It’s illegal but there’s a lot of controversy about it because the ad networks like Google AdWords get paid more if people click on ads so they’re not considered credible in overseeing click fraud abuse. A competitor (or any other person) can choose to click on your ad until they think they’ve exceeded your daily budget so your ad will not be displayed again until the next day. Google AdWords claims to have systems in place to catch this type of fraud but it does happen.
Ads on AdWords are sold through an auction system with bidding.
Like any auction, the cost differs based on the competition from other advertisers who want to place ads on specific words that people are searching for.
For instance, a chart from Google’s AdWords tool shows the costs for buying search ads for words related to “dentists”. Prices change constantly. The chart shows the range of costs for different ads for different search terms (keywords) related to the term “dentist” for the United States.
AdWords “local monthly searches” represents the total number of people in the U.S. The AdWords tool works where “local” represents a country, not a city or local town.
In this example (remember prices are always changing), the cost based on bidding to buy the keyword “dentist” was $4.72 and the cost was $9.08 for “dentist nyc.” If you agreed to this price, you would only pay it when someone clicked on your ad. Millions of people will have the “opportunity to see the ad” and won’t click on it, so there is some “brand awareness” value to AdWords that you don’t have to pay for.
In our example chart, “local monthly searches” was set for local to represent the U.S. The chart reveals that more than 7 million people searched for for the term “dentist”, compared to 49,600 people a month searched for “dentist nyc.” If you are a dentist in New York City, your ad is more likely to be clicked on by someone searching for “dentist nyc” so that ad is considered more valuable among advertisers and therefore costs more.
You are actually bidding to place your ad for specific keywords that people are searching for so every ad is a different price
What people are searching for is referred to as “keywords.” Examples of keywords in the example above are “dentist”, “dentist nyc.” Each keyword is priced differently based on the competition among advertisers who want to place their ad for someone searching for those terms.
You can also buy ads through AdWords for other sites and blogs that are part of Google’s “ad network”
You are in control whether you want your ads to only be placed on Google search results pages or if you also want your ads to appear on other websites and blogs that Google has approved to feature their search ads.
Can you only buy text ads?
Google text ads are limited to a specific number of words you can use and some words are not allowed. They don’t allow you to include any type of picture or graphic.
If you choose to buy ads within Google’s ad network through AdWords, then you can buy larger sized ads called display ads of different sizes that include a picture or graphic image along with links to your website or blog.
Do you pay more for better positioning of your ad on AdWords?
That depends. Google has a mathematical formula to figure that out.
Let’s say you want to be the first ad to appear above the regular search results. Or you want to be the first ad to appear on the right-hand column of search ads. Then, yes you can choose to bid a higher price to be listed in a more prominent position BUT Google has a rather complicated mathematical formula for determining if your ad will appear and where it will appear.
They want to place ads that will be most relevant to people doing a search so they don’t allow you to buy an ad for an irrelevant topic for what someone is searching for. They also penalize you if your ad has a low click-thru rate because they assume the ad isn’t very good if it’s not clicked on as much as other ads for that term.
Know this: This system of Google’s causes a lot of advertisers to make offers for something for free to get a higher click-thru rate on their ad which means they get a higher “ad quality” score and better positioning of their ad. So, any offer you make needs to be considered in your costs to run this type of advertising. You’re paying for the cost of the ad, the offer and then you have to get the person to do something once they click the ad! That generally means creating a custom “landing page” on your website with an offer that is relevant to the ad and will get someone to share their contact information (name, email address) with you.
Google determines an “ad quality” score that is used in combination with what an advertiser is willing to pay to determine if an ad appears on a particular search and where it is placed.
What is the typical click thru rate for Google AdWords?
1% to 3% (expect 1% if you are new to using AdWords)
That means you have to buy ads on a lot of keywords people are searching for to attract enough people to make the advertising worthwhile. Google AdWords has tools that help you to estimate the traffic (website visitors) you may attract for specific keywords.
What the typical return on investment with AdWords?
Well, that depends on many variables like your offer, the copy (or what you write) in the ad, what keywords you buy, and what your landing page is like for someone who clicks on your ad.
Google says businesses make an average of $2 in revenue for every $1 they spend on AdWords–that’s $1 profit. See how they calculate this.
Is Google the only seller of search ads?
For ads that appear on Google search results, yes. If you want to place search ads on Bing or Yahoo, they each have separate systems to buy ads from them.
Know this: 65% of the searches are done on Google, so focus on buying ads through them and then after you master that, expand to try and learn the ad buying systems for other search engines. Or, hire a freelancer or agency to do this for you.
How do you know what people are searching for?
That’s called “keyword research”. Google has several tools to help you learn what people are searching for related to what you are selling or offering. You put in a term like “dentist” and it comes back instantly with how many people are searching for that term, along with data on searches for other related terms.