How Does An Adwords Campaign Work, Then?

Adwords is constantly evolving, as Google try out new ideas – some will work, some won’t, and any book you read on Adwords will probably be out of date by the time you read it.

So, rather than try to list every single option that Adwords has available, I’m just going to focus on the main options. To be honest, this is the best option, anyway. New tools like CPA (cost per acquisition) and Budget Optimiser have, at time of writing, shown little sign of yielding better performance than a well-constructed PPC campaign. I will include a section at the end of the document, looking at the latest developments.

The first thing that you have to decide on is a daily budget. This is the maximum amount that you will spend on Adwords on average. Once a campaign’s making money, you can set this as high as you like, but in the initial stages of the campaign, a degree of caution would not be inappropriate.

Structure Of An Adwords Account.

You can set up a number of campaigns within your account – each can have its own daily budget, though you’ll be billed for them together. You should use campaigns if you have different budgets for different areas (geographically or product-wise). For example, if you want to spend up to £100 per day advertising in the USA, and £100 per day advertising in the UK, then you should assign different campaigns to the different countries. Similarly, if you are a mail-order company, and want to spend up to £50 per day advertising electronics, and £150 per day advertising clothing, then you can do this in the same way.

But you have to consider whether this makes sense – if you are making more money from electronics sales, then should you really be spending your money on clothing adverts? If you were to put them into the same campaign, you could still manage them effectively, and target your spend on the most profitable areas.

Within each campaign, you have a number of Adgroups – these are groups of keywords that display the same advert.

Structuring your keywords within these Adgroups is very important. If you sell electronics, you wouldn’t want the same advert to appear for computers, MP3 players and digital cameras. On the other hand, you probably would want the same advert for Sony Cyber-Shot DSC-T100S Camera and Sony Cyber-Shot DSC-T100S Digital Camera.

Bear in mind that an advert will always land the visitor on a specific page – and the correct landing page is critical if you want them to buy. In the above example, if the visitor landed on a page comprising a picture of the DSC-T100S, a description of its features, some reviews, a clear price and a “Buy Now” button, they’re more likely to buy than if they land on your home page, with a picture of some computers on offer, and a complicated navigation system.

So, grouping your keywords correctly is critical, then. And so is using the appropriate types of keyword matching. One of the features of Adwords is the ability to bid on the same keywords using different types of matching – specifically, Exact Match, Phrase Match and Broad Match.

If you were to bid on “Sony Cyber-Shot” on exact match only, your advert would only appear if the searcher was to search for the exact term “Sony Cyber-Shot”. If they searched for “Sony Cyber-Shot DSC-T100S Camera”, your advert would not appear.

If you were to bid on “Sony Cyber-Shot” on phrase match, your advert would appear if the search contained those words, even if there were other words before or afterwards. So, your advert would appear for “Sony Cyber-Shot DSC-T100S Camera”.

Broad Matching has two forms. Firstly, it’ll return your advert if people search for terms containing your words, even if there are other words in the middle, or the words were in a different order. So, if the search term was “Cyber-man Episode Of Doctor Who Shot On Sony Film”, your advert would appear (probably – more on that later). Secondly, Adwords will think of similar words (in its opinion), and bid on those on your behalf.

Once you’ve selected and grouped your keywords, you need to write adverts. You’re in a bit of a catch-22 situation here, since you want to catch people’s attention and impel them to click on your advert (since you want them to buy from you, rather than somebody else), but you also want to put off people that aren’t going to buy from you. For example, if you sell cheap sofas, you probably want to say “Cheap Sofas” in your advert, but if yours are actually quite expensive, you don’t want to say that, even if it generates more clicks.

Finally, you need to select a landing page. As I’ve said, selecting the right page is critical. If you don’t have an appropriate landing page, it may well be worth building one, if it’s going to get a lot of traffic through it. If you’re getting 500 visitors per day landing on a page, the impact of improving your conversion rate from 3% to 4% is an extra 5 sales per day, or 1825 sales per year. That’s a lot of sales, and a one-off spend to generate these extra sales is almost certainly worthwhile.

You need to set your bids next. With no prior history, it’s difficult to work out how much you can afford to pay for a click, but very quickly you will get a feel for the value of a sale and your site’s conversion rate (and hence an acceptable cost per click). Experimenting with different bids will give you some idea of how much traffic you’ll get in different positions in the search results, and what the clicks will cost.

Just be aware that when your daily budget runs out, your adverts disappear. Your money should not run out before the end of the day – if it does, you’re paying too much per click.

It makes sense, if you think about it. If you can afford £50 per day, and are getting 100 clicks at £0.50 by lunchtime, then cutting your bids to £0.25 will generate 200 clicks per day (and your adverts will appear all day, keeping your manager happy).

You can adjust your bids on an Adgroup by Adgroup basis, or on a keyword by keyword basis. In general, you should adjust your bids for individual keywords if they get enough traffic to tell whether they are working, and adjust the low-traffic keywords using the Adgroup level bids.

Page last updated by Steve Baker on June 19, 2008 at 11:22 am.

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2 Responses to “How Does An Adwords Campaign Work, Then?”

  1. casey

    If I lower my bids to .25 wouldn’t it just take me twice as long to get the 100 clicks instead of getting 200 clicks? How does that work? Can you explain that better?

  2. Steve Baker

    Hi Casey,

    If the budget is running out by lunchtime, then by reducing your bids, you’ll be able to get more clicks per day.

    Rather than an advert appearing for 12 hours per day, it’ll appear for 24 hours, so yes – it will take longer, but that’s not a problem.

    The point is that if you spend your full budget at a lower cost per click, you’ll get more clicks for your budget.

    Steve

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