Pay-per-click advertising isn’t like traditional display advertising. PPC advertising doesn’t buy discrete space on a given web page, nor does it allow for graphics-intensive advertisements. Instead, it’s all about getting a text ad onto a specific search results page.
A PPC advertiser purchases a particular keyword or phrase from the AdWords ad network. More precisely, the advertiser purchases ad space that appears on Google’s search results pages and other websites that relate to the keywords in question. The advertiser’s text ad is linked to that keyword in two different ways.
First, when a user enters a query on Google’s search site, the advertiser’s ad is displayed on the first page of the search results, in the “sponsored links” section that appears at the top or side of the page. As you can see in Figure 39.1, the ad is designed to look kind of like an organic search result.
The second place the ad appears is on third-party sites that belong to the AdWords ad network. The ad is placed on specific pages that have content that relates to the purchased keyword. These ads, also text-only (as you can see in Figure 39.2), can appear anywhere on the given page; the ad placement is up to the owner of the web page.
So, for example, if you sold printer ink cartridges, you might purchase the words “printer,” “ink,” and “cartridges.” When a consumer searches Google for any of these keywords, your ad appears. Your ad also appears when a consumer goes to a third-party website that features content containing these keywords.
The neat thing about PPC ads is that they use advanced search technology to serve content-focused ads—that is, an ad that relates to the underlying content of the host web page. And an ad that is somehow related to the content of a web page reaches a more targeted audience than a more broadly focused display ad.
You see, Google uses the same sophisticated algorithms that it uses to create its search index to determine the content of pages for sites that participate in its advertising program. It analyzes the keywords on the page, word frequency, font size, and the overall link structure to figure out, as closely as possible, what a page is about. Then it finds ads that closely match that page’s content, and feeds those ads to the page.
For example, my personal website (www.molehillgroup.com) is all about the books I’ve written. On the page for my book iPodpedia, Google AdWords serves up ads titled “iPod Copying Software” and “Rescue Your iPod Music;” on the page for The Complete Idiot’s Guide to Playing Drums, there are ads for “1,684 Video Drum Lessons” and “Yamaha DTX Drums 40% Off.” The right ads for the right content—which greatly benefits the advertisers.
The reason it’s called pay-per-click advertising is that an advertiser pays the ad network only when customers click on the link in the ad. (The link typically points to the advertiser’s website—or, most commonly, a special landing page on the website.) If no one clicks, the advertiser doesn’t pay anyone anything. The more clicks that are registered, the more the advertiser pays.
Ad rates are calculated on a cost-per-click (CPC) basis. That is, the advertiser is charged a particular fee for each click—anywhere from a few pennies to tens of dollars. The actual CPC rate is determined by the popularity of and competition for the keyword purchased, as well as the quality and quantity of traffic going to the site hosting the ad. As you can imagine, popular keywords have a higher CPC, while less popular keywords can be had for less.
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Pay-per-click advertising is in contrast to traditional cost-per-thousand-impressions (CPM) advertising, where rates are based on the number of potential viewers of the ad—whether they click through or not.
Advertisers typically bid on the most popular keywords. That is, you might say you’ll pay up to $5 for a given keyword. If you’re the high bidder among several advertisers, your ads will appear more frequently on pages that contain that keyword. If you’re not the high bidder, you won’t get as much visibility—if your ad appears at all.
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A given PPC ad probably won’t appear on every search engine results page for the keyword purchased. That’s because page inventory for a given keyword is limited, while advertisers are theoretically unlimited. That’s why AdWords rotates ads from multiple advertisers on its search results and third-party pages.
Here’s something interesting about PPC advertising; it’s not just Google that gets paid. Typically, any third-party site where the ad appears gets a cut of the ad revenues paid by the advertiser—which is why sites agree to put PPC ads on their web pages.
So, here’s the way it works:
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An advertiser creates an advertisement and contracts with Google AdWords to place that ad on the Internet.
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Google serves the ad in question to a number of appropriate websites.
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An interested customer sees the ad on a third-party site and clicks the link in the ad to receive more information.
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The advertiser pays Google, based on the CPC advertising rate.
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Google pays the host site a small percentage of the advertising fee paid.
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The Google Network includes all of Google’s sites (Google Maps, Gmail, YouTube, and the rest), the hundreds of thousands of small and medium-sized sites that participate in the Google AdSense program, and a number of major websites, including Amazon.com, AOL, and About.com.
If you’re interested in placing AdWords ads on your website or blog, you need to sign up for Google’s companion AdSense program. We’ll talk more about AdSense in Chapter 40, “Profiting from Google AdSense;” turn there for more information.
Advertising with Google AdWords isn’t like a traditional advertising buy; there are no contracts and deadlines and such. You pay a one-time $5.00 activation fee, and then are charged either on a cost-per-click (CPC) or cost-per-thousand-impressions (CPM) basis. (You can choose either payment method.) You control your costs by specifying how much you’re willing to pay (per click or per impression) and by setting a daily spending budget. Google will never exceed the costs you specify.
How much does AdWords cost? It’s your choice. If you go with the cost-per-click method, you can choose a maximum CPC click price from $0.01 to $100. If you go with the CPM method, there is a minimum cost of $0.25 per 1,000 impressions. Your daily budget can be as low as a penny, up to whatever you’re willing to pay.
If you go the CPC route, Google uses AdWords Discounter technology to match the price you pay with the price offered by competing advertisers for a given keyword. The AdWords Discounter automatically monitors your competition and lowers your CPC to one cent above what they’re willing to pay.
You can opt to prepay your advertising costs, or to pay after your ads start running. With this last option, Google charges you after 30 days or when you reach your initial credit limit of $50, whichever comes first. Even small advertisers can participate, as Google accepts payment via credit card, debit card, direct debit, or bank transfer.
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Just as Google is the largest search engine, Google AdWords is far and away the largest PPC ad network. Google sells ads on its own search results pages, throughout its entire network of sites, and on participating third-party sites. Google claims that its AdWords program reaches more than 80% of all Internet users; most advertisers confirm that AdWords generates the overwhelming majority of PPC traffic to their sites.
It’s surprisingly easy to create and activate an AdWords ad. You need to determine which keywords you want to buy upfront, of course, but from there, it’s a simple matter of filling in the appropriate web forms.
Here’s how it works:
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From the Google AdWords home page (adwords.google.com), click the Start Now button.
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When the next page appears, choose either the Starter Edition or Standard Edition option; then click Continue. (If this is your first time listing, I recommend going the Starter Edition route—which is what I’ll discuss throughout the rest of these numbered steps.)
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If you select the Starter Edition, select whether you do or don’t already have a web page.
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When the next page appears, enter your location and language.
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On the same page, scroll down to the Write Your Ad section, shown in Figure 39.3. Enter the following information: the URL of the website you want the add to link to, your ad’s title (25 characters max), and two lines of text (35 characters max each).
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Scroll to the Choose Keywords section and enter up to 20 keywords that you want your ad linked to. (Enter one keyword or phrase per line; a “keyword” can actually be a multiple-word phrase.)
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Scroll to the Choose Your Currency section and enter the currency you’ll be paying in.
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Scroll to the Set Your Budget section and select your monthly AdWords budget—$50, $100, $250, or a custom amount.
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When you’re done entering information on this page, click the Continue button.
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Google now prompts you to sign in to your Google account, or to create a new AdWords-specific account. Follow the onscreen instructions to proceed.
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Google will now email you with instructions on how to set up billing information for your account. Follow the instructions in this email to activate your account and launch your ads.
If you chose a Standard Edition campaign, you have a few more options to consider. In contrast to the Starter Edition, the Standard Edition lets you do the following:
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Create multiple ads (instead of the Starter Edition’s single ad).
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Choose from a variety of pricing options, including keyword-specific bidding, content bidding, ad position preference, and so on.
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Control how much you’re willing to pay per day, as well as the maximum you’re willing to pay when someone clicks your ad (the cost-per-click).
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Target specific websites for ad placement.
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Utilize a variety of advanced planning and reporting tools, including conversion tracking, the AdWords traffic estimator, and a variety of sophisticated statistics and reports.
As I said earlier, the Starter Edition is probably the best way to get started. Once you get a few ad campaigns under your belt, then you can graduate to the advanced options available with the Standard Edition.
Once your ad campaign is started, you can monitor performance from the main AdWords page. After you sign into this page, select the Campaign Management tab and then click Campaign Summary. As you can see in Figure 39.4, you can view the performance of each campaign you’ve created, in terms of impressions, clicks, cost per click (CPC), and total cost to-date.
To change the parameters of your campaign, click the Edit Settings button and proceed from there. Google also offers a variety of other tools you can use to enhance your ad’s performance; click the Tools link to see what’s available. Various reports and analyses are also available, by selecting the Reports and Analytics tabs. In short, Google offers a full range of services that help you create more effective online advertisements, and they’re all available free-of-charge to AdWords advertisers.
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AdWords is just the start of the Google advertising empire. Google has also acquired and incorporated a well-known Internet advertising firm, and offers all sorts of advertising services—including services that let you place radio, television, and traditional print ads. It’s all about the ads, baby!