What Are Google AdWords
Pages: 1, 2, 3, 4, 5

The market research

If you decide to increase your visibility with AdWords, take the time now to do some market research:

  • Mix and match your keywords and phrases to learn which searches your competitors are associated with. Bear in mind that youíll have to pay more for popular keywords, and in many cases, youíll do better if you differentiate yourself with very specific keywords and effective, targeted ads. For example, if you have a small bookstore in Boise, Idaho, you can associate yourself with your locale and a specialty, like first-edition Jane Austen books. If all you have to say is "We also have books," no ad will help you compete against giants like BarnesandNoble. com or
  • Put yourself in the shoes of your potential customers when you think about what your ad might look like. What are they looking for? What enticing words might draw their attention from the search results and direct their eyeballs (and mice) to your ad? What would differentiate your ad from those above and below it? You certainly donít want to be just one of many advertisers sporting a "Hawaiian Shirts" title. Should you mention price (is your $39.95 pricing competitive)? Discount? Hard-to-find designs? Other matching merchandise? Keep these things in mind, and be prepared to tweak your ads to come up with the most effective copy.

figure 3
Top left: This chart shows you how much AdWords will cost you per day if you get 100,000 impressions at a click-through rate of one percent and a cost-per-click of ten cents.

Top right: This chart shows you how many sales you can expect to make based on the clicks youíll get multiplied by the conversion rate. The cost-persale is the total cost from the chart on the left multiplied by the units sold.

Bottom left and right: The same formulas, but with a different cost-per-click. You can also play with the impressions, the click-through rate, and the conversion rate to find different winning scenarios.

Tip: Your keywords might bring up ads unrelated to your products and services. For example, if you sell video camera parts, your keywords might pull up ads for video-rental services. Even if those advertisers arenít your competitors, youíll still be competing with them for peopleís attention. Accordingly, plan ads that will help distinguish your offerings from the rest of the crowd. Think, too, about finding less obvious keywords that might have fewer advertisersóand lower costs.

The Web is littered with sites that failed to plan ahead and lost scads of time and money to AdWords. Donít let it happen to you.

A Few Final Words of Warning

To run an AdWords campaign that makes you more money than it costs (or draws enough readers to justify the costs, if thatís your goal), you must be prepared to spend a good deal of time, maybe hundreds of hours, honing your ads. And you must be incredibly organized and methodical as you try out hundreds or thousands of different combinations of ad copy, keywords, keyword details (Hello Kitty vs. "Hello Kitty"), landing pages (the place on your site where somebody goes when they click your ad), and daily budgets. And thatís just for a small campaign.

Although Google automates a number of processes in AdWords (like lowering high bids for clicks to a penny above your competitorsí), you have to manually juggle a lot of variables, each of which has many possibilities. Furthermore, you have to try perhaps dozens of strategies to figure out what combinations of variables lead to clicks and cost-effective ads. Moreover, some of the factors (like a keywordís cost-per-click) can change over the course of a single day. Itís not for the faint of time or patience.

In addition, while you can spend as little as five cents a day in theory, and you can definitely set your own daily budget, in practice you may find it difficult to spend within your limits and still reach potential customers. Small-scale spending was easier when Google first introduced its cost-per-click system in early 2002. But as more and more advertisers join the program, the keyword bidding gets more competitive, and costs go up incrementally. As a result, today many potential advertisers are nearly priced out of the market.

All that said, AdWords is a great Web-marketing tool for a lot advertisers, and it may be for you, too.

1Footnote: AdWords is new enough that Google adds new features every few weeks, which makes writing a book about the program like trying to nail Jell-O to a tree. This chapter covers all the features that exist at the time of this writing.

Editor's note: This article was excerpted from Google: The Missing Manual. For everything you need to know to become a Google guru, be sure to check out the latest edition.

Sarah Milstein writes, speaks, and teaches frequently on Twitter. She is also co-founder of, a site for lively, work-related workshops. Previously, she was on the senior editorial staff at O'Reilly, where she founded the Tools of Change for Publishing conference (TOC) and led the development of the Missing Manuals, a best-selling series of computer books for non-geeks. She's written for the series, too, co-authoring "Google: The Missing Manual." Before joining O'Reilly, Sarah was a freelance writer and editor, and a regular contributor to The New York Times. She was also a program founder for Just Food, a local-food-and-farms non-profit, and co-founder of Two Tomatoes Records, a label that distributes and promotes the work of children's musician Laurie Berkner.

Rael Dornfest is Founder and CEO of Portland, Oregon-based Values of n. Rael leads the Values of n charge with passion, unearthly creativity, and a repertoire of puns and jokes — some of which are actually good. Prior to founding Values of n, he was O'Reilly's Chief Technical Officer, program chair for the O'Reilly Emerging Technology Conference (which he continues to chair), series editor of the bestselling Hacks book series, and instigator of O'Reilly's Rough Cuts early access program. He built Meerkat, the first web-based feed aggregator, was champion and co-author of the RSS 1.0 specification, and has written and contributed to six O'Reilly books. Rael's programmatic pride and joy is the nimble, open source blogging application Blosxom, the principles of which you'll find in the Values of n philosophy and embodied in Stikkit: Little yellow notes that think.

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