What Are Google AdWords

What Are Google AdWords
by Sarah Milstein, Rael Dornfest

AdWords
Google's text-based system for advertising on its site and its partner sites is called Adwords. The service allows you to create your own ads, choose keywords to help match your ads to your audience, and control the cost of your advertising—you pay only when people click on your ad (a cost per click plan). Anyone wishing to promote a product on Google can enroll in this program.

The AdWords concept is simple: you create ads that Google shows alongside regular search results. Your ads appear when somebody searches for keywords you’ve told Google you want to be associated with. For example, if you have a site that sells SpongeBob SquarePants scissors, you might want your ad to appear alongside Google results when people search for SpongeBob or children’s office supplies.

As with any advertising, you can create ads for your whole site (kiddie office supplies), for particular products you sell (Barney tape dispensers), or even for ideas (a comparison of political candidates’ education policies). But unlike traditional advertising, you don’t pay Google when it displays your ad (which is called an impression); instead you pay only when somebody clicks your ad (more on that later).

The true beauty of AdWords is that the sponsored links are every bit as relevant as the regular results. If somebody searches Google for Volvo safety, Google displays—alongside the Volvo safety reports and crash tests—Car Safety ads from Carfax.com and Volvo Auctions from CheapCarFinder.com. If somebody searches Google for your keywords, you know they’re looking for whatever you’re advertising. AdWords can thus be a great choice when you want to direct your ads to a narrow audience. (In fact, advertising gurus think of AdWords as a form of direct marketing, which means your message is delivered individually to each potential customer.)

AdWords may also be a good choice when you have just a few dollars for reaching your audience. You can advertise on Google for as little as $1.50 a month1. Google charges just $5 to sign up for AdWords, and after that, you can set a budget as low as five cents per day. It costs more to send five snail-mail letters a month.

The confusing part about AdWords is that Google doesn’t charge a set price for ads. Instead, the company lets you bid on the keywords that you want to trigger your ads. If you bid higher than everyone else who’s bid on the same keyword, your ad is likely to appear near the top of the sponsored links.

For example, if you set a maximum bid of 35 cents for the word stapler, and the next highest bid is 23 cents, Google gives your ad priority among the sponsored links it serves up when somebody searches for stapler. Even better, Google charges you only a penny more than the second-highest bidder, so you may never even have to pay the full 35 cents you bid. If you bid less than the highest bid, Google still lets you play, it just doesn’t show your ad as often as other people’s.

Note: When deciding who gets top billing among the sponsored links, Google factors in bids and how many people click through each ad, giving preference to the more effective ads. You can’t, therefore, buy the top spot outright. But you might be able to sneak up on a competitor with deeper pockets.

If that all sounds appealing, it should: Google has designed a seductively smart system, and joining takes just a few minutes. But make no mistake: AdWords is a demanding way to advertise on the Web. This chapter explains the challenges, but first you need to get your head around Google’s advertising terminology.

Direct Marketing: The Bigger Picture
Direct marketing—which includes junk mail like catalogs and charity appeals, plus telemarketing calls and spam—is a distinct type of advertising. It’s a cousin to mass marketing, which includes billboards, TV commercials, and magazine ads—all of which advertisers hope will influence consumers in a general way. Direct marketing, on the other hand, allows an advertiser to carefully choose who sees am ad and to gauge whether the ad led to a sale or other desired activity— like signing up for future mailings. Not surprisingly, direct marketers tend to be obsessed with measures like return on investment, which help them decide whether the sales generated by an ad justify the amount they spent on it.

AdWords is very much a direct marketing tool. And your competition may include not just a savvy Webmaster or two, but teams of marketing experts who know direct campaign angles inside out and work full-time to massage AdWords. That’s important to remember, because when you run a campaign, you have to pay close attention to your competition to make sure your ads are getting the positioning and clicks that make it worth doing in the first place.

Think of joining AdWords as a way of running a direct marketing campaign rather than a way of appearing on Google, and you’ll be in the right mindset.

From: http://www.oreillynet.com/pub/a/network/2005/07/22/WhatAreAdWords.html