Marketing Podcast Chapter 6: Understanding Google Adwords
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Hello and welcome to Tactical Execution, an information series exploring innovative marketing and strategic business positioning for entrepreneurs and small businesses in an increasingly competitive world. My name is Patrick and I’m your host. You can find written versions of these podcasts at TacticalExecution.com and I encourage your candid feedback at the same location. Today, we’ll be talking about Google Adword campaigns so let’s get started.
In a recent chapter, we discussed the difficulty of getting anywhere near the top of a Google organic search result – in other words, coming up FIRST in a Google search. Indeed, there are thousands of people working hard to achieve that objective and most fall short. Now, as we discussed, all those efforts DO naturally improve those peoples’ websites but even a greatly improved website doesn’t bring you the kind of traffic a top search engine ranking would bring. Imagine the traffic your website would get if you came up first or second for one of your keywords!!
Research has shown that most people who use search engines only look at the first page of results. Not all but most. In fact, most of the traffic is directed at the first three or four listings. Few people ever get to the second page of listings, much less the third or forth. So, unless you can find a way of showing up on the first page, search engines won’t be getting you any traffic.
The good news is that there IS a way of getting your website to show up on the very first page, even if you haven’t done all the things we discussed in the chapter on search engine optimization. Of course, you can’t do it for free but you can definitely get it done. It’s called pay-per-click and it allows just about anyone to BUY their way onto the very first search results page – or the second or third. Google was the pioneer of this technology and they call their programs the Adwords and Adsense programs. We’ll focus on those programs here since they still represent the lion’s share of the market.
If you look at a Google search results page, you’ll notice a column of listings along the right-hand side of the page. At the top of the column, it says Sponsored Links. That means the listings displayed in that right-hand column were paid for. In other words, people or companies PAID Google to show up in that space. You’ll also notice an area across the top of the page that has a slightly different background color. It also says Sponsored Links and the listings displayed up there are also paid for. Those listings were PURCHASED through the Adwords program and here’s how it works.
Through this program, you can buy certain words called keywords. When someone uses those words in their search criteria, it would bring up YOUR listings. Now, showing up on the page does NOT incur a charge. You are only charged money when someone actually CLICKS on your listings and ends up on your site. So in effect, you’re paying money to get people to visit your website. If they don’t visit, it doesn’t cost you anything. But if they click on your listing and visit your website, you incur a charge. That’s why it’s called pay-per-click.
The price you pay for these words depends on the number of other people also wanting to buy the same word YOU want to buy. In my case as a Mortgage Broker, I once used the word “mortgage” and it cost me almost $7 per click!! Think about that for a second: $7 per click! So every time someone visited my site, it cost me $7. That’s a ton of money. Just ten people visiting my site cost me $70!! A hundred people visiting my site cost me $700! But the reason I had to pay so much for that word is because there were SO many other people trying to buy the exact same word.
You see, it acts just like an auction – like eBay. Once you enter the word you’d like to buy, you also have to enter a maximum amount you’re willing to pay for that word. Based on that information, Google allows the market to determine its own price at the time someone searches for that particular keyword. When someone uses that word in their search criterion, Google will place the person willing to pay the MOST in the first position. And it will order all the other listings according to who will pay the most, in descending order. Depending on the maximum budget you set, it will charge you JUST enough to beat the next person in line.
Google’s Adwords program also allows you to enter a daily budget such that your listing will continue being displayed until you’ve reached your daily budget and then your listing will disappear until the following day. These tools allow you to control how much you’re spending on the program.
It should be noted, by the way, that Google has put significant controls in place to ensure people don’t use the program in malicious ways. So, for example, you don’t have to worry about someone clicking on your ad a million times, costing you a fortune. Google tracks the clicks by IP address so the same person clicking on your ad twice will only cost you ONE pay-per-click charge. Now, make no mistake, these programs can cost you a LOT of money but there ARE controls in place to eliminate malicious activity.
The interesting thing is that you can dramatically improve your results while reducing your costs by approaching this strategically. In a previous chapter, we discussed long string versus short string as it relates to search criteria. In my case, anyone only putting in the word “mortgage” was unlikely to be a buyer. A person putting in just one word – and a word like mortgage – is only doing preliminary research. They don’t yet know what they want. They’re just trying to start the process. But if someone put “mortgage refinance jumbo California”, they’re more likely to be approaching a final decision. They obviously know what they’re looking for and are reflecting that in their search criteria. So one or two words is a short string and four or five words is a long string.
Well, as you might imagine, in the Google Adwords program, the demand is a lot higher for the word “mortgage” than it is for the string of words “mortgage refinance jumbo California”. It only makes sense. Just by including the word California, I’m eliminating the competition from the rest of the states. Nobody looking for a mortgage in Texas would put the word “California” in their search criteria. Also, by including the word “refinance”, I’m eliminating the competition that’s looking for purchase transactions.
You see, Google doesn’t require you to buy just one word in their Adwords program. You can buy an entire phrase. Now, by doing so, you restrict yourself to those people who put that entire phrase into a Google search but you’re also getting a much higher quality prospect because those people have already done their research and know exactly what they want. Will you miss some people? Probably, but the tradeoff is well worth it. So by including more words, I was attracting better quality prospects and the auction process resulted in a much lower cost. In other words, because I was using a longer string, the competition was much lower so the cost per click was also much lower. I got BETTER prospects for LESS money!
Now, the Google Adwords program continues to evolve and you can now select specific regions where your ad will appear. This is possible because your computer’s IP address allows Google to get a rough idea where you’re located. As a result, you no longer have to include a word like California if you don’t want to. You can simply select the region where your ad will run and select other keywords that might be used by your customers. Both approaches have the same effect. They both lessen the cost by lessening the competition for the words you choose.
Basically, the more words you include, the cheaper the pay-per-click rate BUT the fewer times your ad will appear. It makes sense. It’s far more likely someone will put in the word “mortgage” than the phrase “mortgage refinance jumbo”. In fact, it might make sense not to use the word “mortgage” at all. It’s obviously the primary word in the category and any phrase including that word will see more competition and command a higher price. It might make sense to use a different phrase like “bank loan refinance” that could isolate a similar audience but require a lower pay-per-click budget at the same time.
If you’re considering a Google Adwords program, ALWAYS use long string phrases. Think about the multiple words people might use to find EXACTLY what you offer. The easiest way to do this is to visit the websites of your best competitors, right click and select View Source. Make note of all the keywords listed in their meta tags. Make a huge list. Visit multiple sites and make a big long list. Using copy & paste, you could do this within an hour or less. Then go through the list and highlight the words you think most apply to your product or service offering. And after you have all your highlighted words in front of you, select a combination you think your ideal customer might enter into a Google search, trying to find someone exactly like you.
There’s a balancing act involved in this. If you use 8 words, it will cost you pennies per click but your ad will almost never appear. If you use 1 word, it will cost you a bunch and your ad will appear much more often. Try 3 or 4-word combinations and try it out. Keep track of the results and keep testing.
WordTracker.com is another great resource for this. WordTracker takes a keyword you enter and provides a list of related words. We talked about this service when we were discussing website development and writing content but it could just as easily be used for the pay-per-click process. The idea is to accumulate the largest list you can and begin trying different combinations. Selecting keywords has become a science. There are companies who have tested thousands of different keywords and have lists of combinations that work well for their business model. They also have certain words they’ve tested and will NEVER use again. That’s easily as important as knowing which words work best. There are some words (and I suspect “mortgage” is probably one of them) that simply cost too much and can’t contribute to a profitable campaign.
When you’re paying for website visitors through an Adwords program, you start to see why a “sticky” website is so important. When someone finally visits your site, you want them to STAY there for a while. You want them to be curious and what to learn more. At the end of the day, you want them to buy something. And it’s your gross margin combined with your conversion ratio – that’s the percentage of visitors who end up buying something – that must MORE than offset the cost of the campaign to leave you with a profit. In fact, this balance between gross margins and conversions on the one hand and cost-per-click on the other that forms the foundation of most online businesses.
Keep this in mind when you design your website. Review the chapter about becoming an expert and website development. Remember: you want to create something of VALUE and give it to them as soon as they reach your site. Figure out who your ideal audience is and create SOMETHING they would appreciate. That’s what they should see FIRST when they reach your site.
It’s worth noting that most ecommerce sites don’t try to make a profit on their pay-per-click programs, at least not at first. They’re just using that advertising vehicle to get people to visit their site and build an email list. If they break even, they’re happy. But with that email list in hand, they can market all kinds of other products and services in the future with no cost at all. That’s where the profit is. Many of these sites even LOSE money on their initial pay-per-click offering but the email list they’re left with makes the exercise worthwhile.
There’s another part of the Google program I’d like to cover before we finish this chapter and that’s Adsense. Have you ever visited a website and seen a section labeled “Ads by Google” with a bunch of listings? Well, that’s part of the Google Adsense program. This program allows websites to host pay-per-click Adword ads on THEIR websites. It allows Google to place these ads on their websites according to what the website is about. So if I signed up my mortgage website, Google would be allowed to place ads on MY site as long as they were related to mortgages. And in exchange for that, I would get part of the pay-per-click revenue if anyone visiting MY site clicked on one of those ads.
As it turns out, there are tons of websites that are specifically designed to get traffic and then profit from Adsense advertisements. Article databases are a good example. There are sites that accept articles for free and then position “Ads by Google” along each article. That way, if anyone visits the site and reads an article AND clicks on one of the ads, the site owner earns a small commission. We’ll talk about that more in the chapter on articles but it’s good to know the Adsense program can provide a new revenue source for any website that gets a lot of traffic and all you have to do is sign up for the program. If your site gets a lot of traffic, I would definitely look into it.
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