Googles AdWords Program

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Trust Google to take the pay-per-click concept to the next level. Many of the protocols inherent to Google's AdWords program are now being adopted (or copied) by other services. (LookSmart and Overture come to mind.)

Is AdWords better than your average PPC?

In some ways, it's better and more flexible. And in some other ways, it's worse. The AdWords program is definitely much harder to wrap your head around, and it's definitely a lot easier to lose money at! However, once you do grasp its power, you will become a convert! So what makes AdWords different?

On a typical Pay-Per-Click SE, it's pretty easy to figure out where you are going to appear in the rankings for your selected keywords. All you have to do is determine your bid level, and the corresponding position is yours until someone outbids you. Ultimately, your involvement depends on your budget.

The AdWords program isn't nearly so transparent as you'll see in a moment. Nonetheless, depending upon the keywords and the market you are targeting, it may be a viable alternative to Overture.

Let's lay out its positive and negative points to help you decide, beginning with the former...

• The initial activation fee for an AdWords account is $5 (compared that to Overture's $30). Bids start at $0.05 per click, half of the $0.10 per click required by Overture.

• Overture has a monthly minimum charge of $20. AdWords has no minimum.

• The AdWords program offers extremely targeted advertising. For example, you could advertise to Canadians searching in French. You are also able to select whether you want your ad to be displayed for broad matches, phrase matches or exact keyword matches on Google's partner engines, AdSense sites, or only on Google and its regional domains.

• The AdWords program is extremely flexible. You can set up several campaigns, each one consisting of multiple ad groups with different keywords and bids associated with each group. AdWords will then give you detailed information for each individual ad, and each keyword associated with that ad.

• Daily and monthly budget limits are under the control of the advertiser. Estimated daily advertising costs and approximate click throughs are reported for all selected keywords.

• Google's AdWords go live immediately and are reviewed shortly afterwards (usually within a few hours). At Overture, you'll be waiting 3-5 business days.

• AdWords' accounts are activated via credit card after they are completely set up. In other words, you can proceed to set up an entire campaign, and only activate it if you like what you see.

• The AdWords program allows you to display and link to two different URLs. As an affiliate, you could promote your merchant partner's Web site without displaying your affiliate code. This is a moot point, since affiliates do have to identify themselves in the AdWords text (by placing the abbreviation "aff" in brackets, at the end of their text ads).

• Google provides tools that enable you to determine the Conversion Rate of your advertising campaigns.

OK, those are AdWords' positive aspects. Now for the negative.

• Bidding at your run-of-the-mill PPC is easy. Just build a list of keywords, determine the maximum you're willing to bid per click, and grab the corresponding search position. In contrast, setting your bids on AdWords isn't quite that intuitive.

All you can do is set your maximum bid. Google sets the minimum bidding amount based on the popularity of that particular keyword which Google determines, of course! If you are bidding on a popular term, Google may force you to pay much more than $0.05 per click through, even if there is relatively little competition for that search term.

• On Overture, the Webmaster with the highest bid gets the top position. Not so with AdWords. According to Danny Sullivan (of SearchEngineWatch.com), Google ranks AdWords by multiplying the cost-per-click of the ad with its click through percentage. Danny calls the resulting figure the "CVR," or the ClickValue Rate. A quick illustration might be helpful at this point...

Site A bids 10 cents a keyword and has a 2% Click Through Rate...

10 cents per click X 2% Click Through Rate = 20 CVR

Site B bids 7 cents a keyword and has a 3% Click Through Rate...

7 cents per click X 3% Click Through Rate = 21 CVR

As a result, Site B's ad will appear above Site A's since it has a higher ClickValue Rate, even though they are bidding less money. This is Google's attempt to ensure that only the most relevant ads appear for various search terms. Google defines relevancy by CTR (Click Through Rate). Ads that get clicked on frequently are more likely to be relevant to that search term, and tend to rise to the top of the results list.

The natural tendency when trying to increase your CTR is either to appeal to a broader market, or to "oversell" or hype your products or services. Don't do this.

Broadening your target audience will only increase your cost-per-click, decrease your CTR, and increase the number of untargeted visitors to your site. Instead, narrow the focus of your campaign. As it becomes more focused, your ads becomes more and more relevant.

This increases the number of click throughs your ads generate, thus decreasing your cost-per-click. Hyping your products might get the click through (if Google's

staff will even approve your ad). But an alienated audience won't buy from you so you're no further ahead.

• Ranking AdWords by a combination of bid amount and CTR means that Webmasters who run ads that generate only moderate interest will have to pay through the nose for a top spot. There's not much point in paying big dollars to obtain greater exposure for an ad that does not generate interest.

For example, let's assume that a competitor of Sites A and B above (Site C) bids 5 cents per click on an ad that only garners a 1% CTR...

In order to obtain the top position for this keyword, Site C has to up the bid -- not to 11 cents per click (as you might expect) but to 22 cents per click...

Believe it or not, without increasing their click through percentage, bidding 22 cents for that keyword is the only way Site C can obtain a ClickValue Rate higher than either Site A or B. This, of course, works to further encourage Webmasters to address the bottom line... relevant ads and listings only.

Google will prevent your ad from showing up for certain keywords if it does not generate at least a 0.5% CTR. Again, this is another attempt by Google to improve ad relevancy. If your ad doesn't generate this minimum rate, Google feels it can't be relevant to that particular search term.

Your account is also monitored for activity to ensure the 0.5% minimum is met. When it is not, you'll receive a warning to make changes, and to deactivate under-performing keywords. Receive three warnings, and your account is suspended (you can reactivate it by paying another $5 fee). In contrast, when you advertise on the PPCs, all keywords approved by the editorial staff remain active as long as your account is in good standing.

• Google will not allow you to send visitors to any pages that contain a pop-up. Overture will allow this, as long as you pop-up a single window.

Bottom line?

Despite the drawbacks, the AdWords program does have benefits over your average Pay-Per-Click SE. It does take a little a longer to get into the swing of

things with AdWords, but once you do, the flexibility of the program and its ability to serve up ads to an extremely targeted audience are powerful positives indeed (not to mention Google's huge search network)!

So proceed through the sign-up process, set up a test campaign, and try to determine whether this service is right for you (no purchase, or intent to purchase is necessary)...

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