Adwords for Beginners. [ PDF Version ]

It is possible, albeit very time and labour-intensive, to maintain your own Adwords account, but you need to be aware of the various elements of Adwords to manage it effectively. We have provided this information guide as a (moderately!) brief overview on how best to optimise your account. We would recommend that, for peak performance, you have Hollowpoint manage the Adwords account on your behalf, to save time and ensure that your ads are running at their optimum.

1. Account structure

It is far better to run one campaign where possible (unless you have a specific need to only spend a certain amount per day on each type of business, have multiple businesses, want to split your campaigns geographically or want to run only one campaign in the content or search partner network). I will use the example of someone selling bikes, cars, and trucks. You can then split your keywords and ads up into Ad Groups (groups of keywords and ads that are closely associated with each other)

Campaign One
- Ad group Bikes
- Ad group Cars
- Ad group Trucks

This allows you to 'group' together keywords and produce ads which very closely match those keywords. For example, if you were selling bikes, cars and trucks, you would have 3 separate ad groups, with keywords related only to that ad group, more or less as follows:

Campaign One
- Ad Group Bikes
keywords: bikes, motorbikes, motorcycles, motor bikes, motor cycles
ad: Doug's Bike Sale - Come and see Doug's Bikes for the best deals on motor cycles. www.dougsbikes.com.au

2. Ads

Then we can start creating new ads that specifically target people looking for bikes, making ads more user-friendly and appropriate, thus more likely to be clicked on. We can run multiple ads for the same keywords. We can create many ads, and have them either a) rotate/show up evenly or b) have the best performing ads show up the most often. We will create two ads here:

Dougs Bike Sale
Come and see Doug's Motorcycles
for the best deals on Motor Bikes
www.dougsbikes.com.au

Doug's Bikes
For all your motorcycling needs
All in one easy to find location
www.dougsbikes.com.au

We can do this in order to test which ad a) is the cheapest to run because it has the best quality score (a testament to how well it matches the search criteria) and b) is the most clicked on, or has the best conversion rate. An ad that repeats the search term is going to have a better quality score than one that does not. Remember though that the key to an effective ad is to exactly match what someone is searching for, and deliver content relevant to the ad.

So, we now have an ad group, some keywords and some ads. Let's refine the keywords a bit.

3. Keywords

The problem Doug has is that because the search terms are 'broad match', they will trigger for anything that contains those terms. If someone were to search for 'kid falls off his bike movie', his ads would appear, because they trigger for the term Bike. So, there are two ways we can stop that from happening.

1. Use negative keywords - keywords which, if used in a search, stop your ad from showing, such as 'kids, push, pushbike, tricycle' and so on, and
2. Use phrase or exact match - match types which means that, in the case of phrase match, the search must contain a particular phrase in order to show up in searches. That phrase might be 'motor bike' or 'motor cycle'. If someone types 'cycle' without the 'motor', the ad will not appear.

4. The Keyword Tool

We now need to look at the search volume of those keywords. It is no point targetting specific keywords if there is not enough traffic to support it. We can use the keyword tool in adwords to look at the search volume for all associated keywords, plus the competition level (how many advertisers there are for a given search) then determine if those search terms are relevant for your business. For Doug, the search volume may look like this:

Keyword/Phrase Competition (no. advertisers) Volume (no of searches per month on avg.)

bikes very high 10,000
motorbikes medium 5,000
motorcycles very high 15,000
motor cycles medium 13,000

We can now see that the search term 'motorcycles' receives the most searches, but the competition is very high, so it makes sense to go after the term 'motor cycles' (with the space) because the search volume is also high, but the competition is lower, thus potentially cheaper to advertise. This tool is invaluable in setting up your campaign and should be used often, as search volumes change over time.

5. Bidding Strategy

Presuming that the campaign uses a bidding strategy of 'maximum cost per click', meaning that you bid for position by entering the maximum that you are willing to pay for a click on any given keyword search, then it is important to understand that this is an auction system, with a small but significant difference - quality score. Quality score is determined by Google, and the formula is not made public. They use a mathematical equation to determine if your ad can enter the bidding at a lower cost per click than a competitor. If your ad matches your keywords, and matches your website, then you probably will have a good quality score. So, the next thing is setting a max cost per click (how much you are prepared to pay to appear in the sponsored links). This is far too detailed to go into here, but you will need to consider a few things:

1. Do I need to appear in a certain position? For example, positions 1-3
2. How much am I prepared to pay to have one person visit my website?
3. What are my competitors prepared to pay?

As an example, the top 4 in the search for 'motor bikes' shows:

Position 1 - Fred Nurk's Motorbike Shop
Position 2 - Bill Buckleys Bike Bazar
Position 3 - Steves Cycle Repairs
Position 4 - Doug's Bikes

If Doug is paying $1 per click at the moment for Position 4, but he is receiving only a fraction of the click-thru's, he may want to increase his position. He raises his cost per click to $1.50, and gets into position 3, where he finds his click-thru rate is much higher (but so is his cost per click). It isn't using up his daily budget (we will tackle budget last) so he increases it to $1.60... and stays in position 3. He can guestimate that Bill Buckley is paying at least $1.60 max cpc (cost per click) so he increases his to $2.50... and achieves position 2! Now his click thru rate is a fraction higher. He decides he wants position 1, so increases his bid to $4, but Fred Nurk is still in this position. Doug realises that any more than $4 cost per click, and he would need a VERY high conversion rate of clicks to sales to ensure the ad makes money for him, so he elects to stay in position 2.

This is one of the most important things... that as a business you need to have an idea what a customer is worth to you, thus you need to know how many customers you would get if you received a certain number of visits to your website. If you sold a product worth $1,000, with a margin of $200, then you need to ensure your advertising is not going to chew up all of your profits. If you wanted to allocate 10% at most into customer acquisition, then if it takes 10 website visitors to equal 1 sale (on average) then 10 clicks must be cheaper than $20 in advertising. That means that 1 click must be less than $2 cost per click. So we now have an idea of the MOST you should bid for any given position. Doug has elected to pay more than that, because for him it is also about branding (being Front of Mind), and in order to be recognised, he must consistently be in a high position. So he apportions part of the cost per click to direct sales, and a portion to branding, thus meaning that he is paying a premium to ensure that he is remembered and thought of when people think motor bikes.

There is also which network to appear in to consider...

1. Google Search - this shows your ads in google. the most effective method by far
2. Content Network - this shows your ads on other people's websites who run ads and get paid by google to do so - much lower cost and also click thru rate
3. Search Partners - we don't use this at all...

So how much spend is enough? This brings us to the final part...

6. Budget

There are so many schools of thought when it comes to budgets (some people will put their budget right up to get the most possible clicks, some people have a tight budget they have to stick to, most people are somewhere in between) but there is one fundamental truth - the number of searches being done in any given day for a given keyword are finite. It is no point having a budget of $1000 per day with a max cpc of $2, if there are only 100 searches being done in a given day. It is also pointless setting a budget of $10 per day with a max cpc of $1 if there are, say, 100,000 searches per day, as you would just not show up enough to be noticed at all. There is a balance, and it takes time, experience and patience to find this balance. A good rule of thumb though is to look at your click thru rate (the number of clicks you receive compared to the number of impressions it takes to get those clicks) and factor in the search volume. If there are 1000 searches per day, and you know your click-thru rate is 5%, then you know you could get around 200 clicks per day. You would then know that if the average cost per click is $2, you could spend around $400 per day as a maximum to show up most of the time. These figures will vary, but the key is to know your past performance and use this information to make the most of your account.