When someone searches for a particular keyword, your ad displays on the Google results page if you've selected that keyword (or a close variation) as a trigger for your ad. For the ad shown in Figure 1-1, if someone enters kids asthma prevention in Google, they can view the ad somewhere on the top or right of the results page (see Figure 1-2).

Figure 1-2. AdWords results are labeled Sponsored Links at the top and right.

Your ads can also show on Google's search partners' network. Companies such as AOL and EarthLink incorporate Google's results into their search pages, as in Figure 1-3.

A partial list of Google search partners includes

Additionally, hundreds of thousands of Web sites show AdWords ads on their pages as part of the AdSense program, which pays Web site owners to show AdWords ads on their sites. (See Figure 1-4 for an example.) Think of an online version of a newspaper or magazine, with ads next to the editorial content. The content of the page determines which ads are shown. On sites devoted to weightlifting, for example, Google shows ads for workout programs and muscle-building supplements, rather than knitting and quilting supplies. Google lets you choose whether to show your ads on this Content network, or just stick to the search networks.

Although anyone with a Web site can use the AdSense program, Google has a special relationship with some of the most popular content sites on the Web, including

Figure 1-3. AdWords ads shown by EarthLink, a Google search partner.

Figure 1-4. AdWords ads on a Web page.

Gmail is Google's Web mail service. It displays AdWords results to the right of the e-mail you receive. If you choose to syndicate your ads, your prospects who use Gmail may see them if the text of the e-mail is deemed relevant to your offer. For example, Figure 1-5 shows an e-mail that I (almost) sent to the MacArthur Foundation, humbly explaining why I should receive one of their "genius grants." To the right, you can see ads for small business grants, a Cow Ringtone, triggered by my mention of a self-esteem program for cows, and two resources for college grant-seekers.

Figure 1-5. Google's AdSense program places AdWords ads to the right of a Gmail e-mail.

Because your prospects are doing what you want them to do (or not), you can measure the effectiveness of each call to action. For example, say you sell juggling equipment to left-handed people. You show your ad to 30,000 people in one week. Your ad attracts 450 prospects to your Web site, at an average CPC of $0.40. Your landing page offers a 5% off coupon in exchange for a valid e-mail address, and by the end of the week, your mailing list has 90 leads — 20% of all visitors. You follow up with an e-mail offer that compels 10 sales totaling $600.00.

The following table shows an example of an AdWords ad campaign's overall metrics.

What does this horrific flashback to SAT prep mean to your business? These numbers give you control over your advertising spending, allow you to predict cash flow (just play a game of Monopoly with my daughter if you don't appreciate the value of positive cash flow!), and enable you to assess additional market opportunities by comparing them to this pipeline. (If you're not rubbing your hands together and going, "Muahahaha" like a cartoon villain, I still have some explaining to do.)

In this hypothetical case, you have found a gumball machine that gives you $1.33 every time you drop 40 cents into the machine. You've set it up once, and it happens automatically as long as Google likes your credit card. ROI is a metric that simply converts your input amount to a single dollar, so you can easily compare ROI for different campaigns and markets. ROI answers the question, if you put a dollar into this machine, how much comes out? ROI of 333% means that you get $3.33 out for every dollar you put in. If you found a gumball machine that managed that trick, you'd never go back to slot machines again.

Now suppose the market becomes more competitive, and your CPC rises. If you were advertising in your local newspaper and the ad rep told you that prices were going up by 25 percent, what would you do? Would you keep advertising at the same level, cut back, or stop showing your ads in that paper completely? Unless you're measuring the ROI of your ads, you have no way to make a rational decision.

Say your AdWords CPC from the example shown in the preceding table increases by 25 percent. Now your cost per visitor is 50 cents. Do you keep advertising? Of course — you're still paying less for a lead than the value of that lead — 83 cents less. Your ROI is down from 333% to a still respectable 267% (total advertising cost is now 450 × $0.50 = $225, and $600 ÷ $225 = 267%).

But wait — there's more! (Did I mention how much I enjoy a good infomercial?) AdWords makes it simple not only to see your metrics but also to improve your profitability by conducting tests. The ability to test different elements of your sales process is the next important element of direct marketing.

So far in this chapter, I've only discussed inputs (how much you pay to advertise and how many Web site visitors) and outputs (how much you receive in sales). But it's really the intermediate metrics (called throughputs by people like me who sometimes find it useful to pretend we went to business school) that give us an opportunity to make huge improvements in our profitability.

For example, imagine you improve the CTR of your ad from 1.5% to 2.2% without lowering the quality of your leads. Big whoop, right? An improvement of 0.7% — who cares? Actually, it's an improvement of 68% — for the same $180 advertising spend, you now get 660 visitors instead of 450. If everything else stays the same, your visitor value of $1.33 means your sales increase to $880, for an ROI of 489%.

But wait — there's more! What's to stop you from improving your landing page by 20 percent by testing different versions? Instead of getting 20 leads out of 100, you're now collecting 24. Six hundred sixty visitors now translate into 158 leads. If 11 percent of them make a purchase from your e-mail offer, that's 17 sales. At an average of $60 per sale, you've now made $1,020.

But wait — there's more! How about testing your e-mail offer too? Let's say you get a 36 percent improvement, and now 15 percent of e-mail recipients make a $60 purchase. That's 23 sales at $60, for a new total of $1,380.

Thanks to the miracle of compounding, the three improvements (68% × 20% × 36%) give you a total improvement of 230%. This isn't pie-in-the-sky math, either — when you test the elements of your sales process scientifically, it's hard not to make significant improvements. See Chapter 13 for the stunningly simple explanation of how to do it. And Chapter 14 shows you how to consistently improve the ability of your Web site to turn visitors into paying customers.

In case you got a little lost in the numbers in the previous section, I want to make sure you got the moral of that direct marketing story: It's a process of multiple steps. Seth Godin (marketing guru and author) compares direct marketing to dating. You wouldn't walk up to a stranger in a museum and propose marriage. (If you did, and you're happily married 17 years later, please don't take offense; I'm not talking about you.) In fact, there are a lot of things you wouldn't suggest to a stranger in a museum that you might very well suggest to someone who knew you a little better. (If you're not sure what these are, check out Dr. Ruth's contribution to the For Dummies series.)

Direct marketing operates on the premise that you have to earn your prospects' trust before they become your customers. As with dating, you demonstrate your trustworthiness and likeability by asking for small commitments with low-downside risk. Your ad, the first step in the AdWords dating game, makes a promise of some sort while posing no risk. Your visitor can click away from your Web site with no hassle or hard feelings. AdWords' Editorial Guidelines commit you to playing nice on your landing page: an accurate display URL, no pop-ups, and a working Back button so your visitors can hightail it back to their search results if they don't like your site.

Your landing page makes a second offer that involves getting permission from your prospects to communicate with them. Here's the deal you're offering: "I'll give you something of value if you let me contact you. And any time you want me to stop contacting you, just let me know and I'll stop. And I'll never share your contact information with anybody else who might try to contact you."

Sometimes you can go right for the sale on the landing page, and sometimes it's better to focus on turning your visitor into a lead — someone with whom you can follow up later. Chapter 10 offers guidelines for creating an effective landing page.

When your prospect gets to know you and trusts you, you increase the value you provide while asking for larger and larger commitments. Depending on your business, your sales/dating process could consist of surveys, reports, free samples, try-before-you-buy promotions, teleseminars, e-mails, live chat, software downloads, and more. When you ask for the sale, you in effect, are proposing marriage — or a long-term relationship, anyway.

Direct marketing focuses on prospects — people who raise their hands and tell you they're interested in what you have. When folks click your AdWords ad, they've just identified themselves to you as someone worth developing a relationship with. Returning to the dating analogy, this is like a stranger smiling at you at the museum. You respond by striking up a conversation about the artwork you're both looking at ("Do you think the green splotch in the upper-left-hand corner represents a rebirth of hope or an exploding drummer?") If the two of you hit it off, you don't want to leave the building without getting a phone number.

In dating, the phone number is the litmus test of interest. If you can't get the phone number, or if you call it and discover you've really been given the number for the West Orange Morgue (now why are you assuming that actually happened to me?), you know that relationship has no future.

Your prospect has the online attention span of a guppy. When we go online, we typically multitask, we have multiple windows open, we're checking e-mail, IMing, watching videos, listening to MP3s, and searching and browsing and surfing. Not to mention answering the phone, opening the mail, eating and drinking, and dealing with other people. How many times have you visited a Web page, been distracted, and never found it again? How many times have you bookmarked a Web page, intending to visit again, and haven't gotten around to it?

Get the prospect's e-mail address as soon as you can. Before they get distracted. Before they browse back to Google and click one of your competitors' ads. Before they spill a cappuccino latte all over the keyboard.

With their e-mail address and permission to follow up, you've done all you can to inoculate yourself from the short Internet attention span. You now have a chance of continuing the conversation until it leads to a sale.