The beginner’s guide to Google Adwords

This is a (freaken awesome) guest post by Alex Fredheim. His course for small businesses provides a video walkthrough of exactly how to get new customers and sales with Adwords. Click here to learn more.

Dan’s intro: Adwords is such a huge part of small business marketing that I really wanted to help people out with it. However I know very little about it and what I do know is that I suck at it. Good thing I know someone who rocks at it!

This is a very long guide but as someone who has been burnt by ‘investing’ in Adwords without really understanding it I can 100% guarantee you that it’s worth reading and worth referring back to as you build your campaign. Thanks Alex for the awesome post.

Goals and expectations

Before getting started with Adwords, there are a few questions that you need to ask:

Is Adwords right for my business? 

Despite Adwords’ many advantages over other advertising mediums, it’s not the best way of acquiring customers for all businesses. Some common scenarios where Adwords tends to be less effective include when:

• You’re advertising a product or service that the target market is unaware of (and therefore isn’t searching for online).
• You’re advertising to a very targeted niche market where it isn’t possible to target this market exclusively based on keywords (you’ll likely end up blowing your budget on clicks from non-qualified prospects who are not your target customer). This is particularly common in niche B2B markets.
• Your market is too competitive (and therefore expensive). If you’re paying $10 every time someone clicks on one of your ads, you’re going to want to be selling a high-value, high-margin product or service and be very confident about your conversion rate. In some industries like web design, Adwords is just too expensive to be cost-effective for most businesses.
• You have a horrible website (see below).

Conversely Adwords can work exceptionally well when everything is right. We’ve worked with clients who have achieved a return on investment (ROI) of over 1000% using Adwords (for every dollar spent on advertising, $10 comes back to the business in revenue).

What are my goals? 

It sounds simple, but so many businesses start advertising without taking the time beforehand to determine what their goals are. Once you’ve set clear, well-defined goals, you’ll be much better able to make decisions based on the performance of your advertising relative to these goals.

For an offline business, your goal might be to generate 50 new leads per month, at a cost of less than $500 ($10 cost per lead). For an ecommerce business, your goal might be to generate an additional $10,000 in revenue per month at an ROI of at least 350%.

Do I have a good website that has been designed to achieve these goals?  

It doesn’t matter how well-managed your Adwords account is, if you’re sending visitors to a website that hasn’t been designed with your business goals in mind, your advertising is unlikely to be profitable.

Common problems with many businesses’ websites include the absence of a clear value proposition (an explanation of why a prospective customer should buy your product or service), the absence of a clear call to action (the desired next step that you would like a visitor on your website to take) or too many calls to action.

A good online advertising/marketing consultant will be able to tell you if your website has been well designed to achieve your business goals.

Can I commit to Adwords advertising? 

One of the biggest advantages of Adwords as an advertising medium is that it allows you to get started very quickly and with very little initial investment. However, this often leads new advertisers to decide that “Adwords doesn’t work” after only a week of advertising because they’re not getting the results that they hoped for. Regardless of your budget (which we’ll be discussing later), you should commit to using Adwords for at least three months before deciding whether it’s right for your business.

Creating an Adwords account

To start advertising, you’ll need to create an Adwords account. You can find instructions from Google here.

New advertiser mistake #1 – Accepting Google’s “help”

Once you set up your account, you’ll likely start getting the occasional email from Google offering to “help” you by setting up your advertising for you. Accepting this offer is a common mistake that new advertisers make. The problem with this is that your objective is to maximise results (sales, leads, etc.) and minimise advertising spending, while Google’s objective is to maximise the amount of money that you spend on advertising.

Consequently, the advertising that they create for you will do the minimum necessary to get you started and spending your pre-determined budget as quickly as possible, without using a number of important techniques that minimize wasted advertising spending. If you’re at all committed to making Adwords work for your business (if you’re reading this, you qualify), you can do a lot better by setting everything up yourself (or working with a qualified non Google consultant).

Researching keywords

Proper keyword research and selection are crucial to the success of your Adwords advertising – if you don’t get this right you can be almost certain that your advertising won’t be profitable.

Building a Keyword List

1. Start With Your Website.

The best place to start building your keyword list will be your website, which will include the main terms that describe your business and its products/services.

Let’s use Aquila, an online retailer of men’s shoes and clothing, as an example.

Immediately we can see Aquila’s main product categories and associated keywords:

• Shoes (Business, Casual, Dress)
• Clothing (Business, Casual, Dress)
• Accessories

Digging deeper, within these main categories their website has a number of sub-categories in the drop-down menu.

For the Shoes category, these include:

• Lace-ups
• Slip-ons
• Boots etc

Create an Excel spreadsheet, and add these keywords to it as you’re reviewing your website, grouping them into the same categories that are used on your website:

2. Use Google’s Keyword Tool.

Once you’ve put together a basic list of keywords for your business’ products/services, you can use the Google Keyword Tool to find related terms and phrases to develop a more complete list of possible keywords. This is important, because your customers may use different words and phrases when looking for your products/services.

Start by entering each of the keywords from your website into the tool, being sure that Location under Advanced Options is set to the country that you will be targeting. Also if you want to just select individual keywords make sure the ‘Keyword Ideas’ tab is selected.

Google will generate a list of related keywords, along with information for each keyword such as Search Volume (the number of people searching for this keyword each month) and Average Cost Per Click (the average amount that advertisers are paying to display ads to people searching for this keyword), which will be useful later when it comes to choosing which keywords from our list to advertise on.

From the list of related keywords, select each that looks suitable for your business, and once done, click Download and “My keyword ideas” to save these to an Excel spreadsheet.

Choosing keywords

Ok, so you’ve put together an initial keyword list. This doesn’t mean that you should actually advertise on all of these keywords, however.

New advertiser mistake #2 – Not choosing keywords carefully

One of the biggest mistakes that new advertisers make is throwing any and all semi-relevant keywords into their account, on the basis that more keywords will result in more visitors and sales. There are a couple of reasons why you don’t want to do this:

Cost

If you’re using Adwords for the first time you probably have a limited advertising budget (if you don’t, you should, at least until you have proven that Adwords is a profitable advertising medium for your business). In general, the more keywords you have in your account, the more you’ll spend on advertising. It therefore makes sense to start with a smaller number of keywords that are most relevant to your business and most likely to be profitable, and then expand your keyword list

Quality score

Despite its importance, Quality Score is often one of the most difficult concepts to for new Adwords advertisers to understand. Essentially, the higher your Quality Score (on a scale of 1 to 10), the less you will have to pay per click for your ad to appear in a certain position on the search results page.

It’s therefore possible for an advertiser with an ad in the first position on the page to be paying less than a competitor in position 2, because of higher Quality Score. If you’re interested in learning more about how Quality Score works, read on – otherwise, you can skip the next paragraph.

Google wants searchers to click on Adwords ads – it’s how they make money. Naturally, some ads are more appealing to searchers than others, and therefore have a higher click-through-rate (CTR), which is the number of clicks that an ad receives divided by the number of times your ad is shown. Google likes ads that have a higher CTR, because ads that get clicked on more often make them more money. In order to display these ads more prominently, Google uses a number called Quality Score (primarily a reflection of CTR), which determines how much an advertiser has to pay for an ad to appear in a certain position. While a complete explanation of Quality Score is beyond the scope of this guide, Google essentially “rewards” ads with a higher CTR with a higher Quality Score, meaning that they have to pay less per click to display their ads. Conversely, ads with a lower CTR are “punished” with lower Quality Scores, meaning that they have to pay more per click. By starting your account with only the most relevant keywords for your business, your ads will be more appealing to searchers, and therefore more likely to be clicked on, leading to higher Quality Scores and lower cost-per-click (CPC). You can read more about Quality Score here.

So, we know that it’s important to choose our keywords carefully. But how do we do this?

Relevance

How relevant is the keyword to the products/services that your business offers? Using the example of Aquila, the keyword “mens dress shoes” would be a better choice than the more general keyword “mens shoes”, which would likely be used by some people searching for products that their business doesn’t offer, such as running shoes.

Search volume

While it’s important to focus on targeted keywords that are highly relevant to your business, you also need to strike a balance with search volume – how many people are actually searching for the keyword on Google. Generally, the more targeted a keyword is, the lower its search volume.

Cost

How much will you have to pay each time someone clicks on your ad after searching for this keyword? While not particularly accurate, the Keyword Tool’s Approximate CPC gives you some idea of how expensive a keyword is.

Choosing keyword match types

You’d think that by now we’d be done with keywords. Not quite. For each keyword in an Adwords account, a “match type” must also be chosen, which controls which search queries are eligible to trigger your ad. Correct match type selection can be the difference between a highly profitable Adwords account, and one that wastes money.

New advertiser mistake #3 – Using only broad match keywords

Most new advertisers make the mistake of using broad match (explained below) because this is the default setting in Adwords, and subsequently waste their advertising budget on clicks that will never convert. This illustrates an important point – always be wary of Google’s default settings, which are set with Google’s objectives in mind rather than your own.

What are my match type options?

Broad match

Broad match is the default option in Adwords, and allows you to reach the largest number of people, but provides the least control over when your ads are shown. For example, if you use the keyword “mens shoes”, your ad will be displayed to people searching for “mens shoes”, “shoes for men online”, and potentially a whole variety of irrelevant search queries such as “brown shoe polish”.

Phrase match

Phrase match provides more control than broad match, but reaches a smaller audience. For a phrase match keyword to display your ad, someone must enter a search into Google that contains your keyword in the same order that you typed it. For example, for the phrase match keyword “mens shoes”, your ad would be displayed to people searching for “mens shoes”, “cheap mens shoes” or “leather mens shoes sydney”.

Exact match

Exact match is the most targeted match type in Adwords, and consequently reaches the smallest number of people. For your ad to be displayed on an exact match keyword, someone must search for your keyword in Google, exactly as you have typed it.

Which match type should I use?

The answer to this question depends on two things – your budget and desired reach. If, like most advertisers, you are starting with a limited budget and want to make sure that your advertising is profitable as quickly as possible, you should start with mostly exact (and possibly phrase) match keywords.

These will give you the most control over when your ads are shown, reducing wasted ad spend on non-converting keywords. If you have a large budget and are willing to spend money to reach a larger number of people, you could start with all three match types.

Negative keywords

Negative keywords are different from regular keywords in that they prevent your ads from being shown when that keyword is included in a search query. For example, for the phrase match keyword “mens shoes”, an online store that sells a variety of men’s shoes, but does not sell designer shoes might include the negative keyword “designer” to prevent their ads from being displayed to people searching for “designer mens shoes”. If you are using phrase and broad match keywords in your account, in conjunction with these you should almost always be using negative keywords to increase your CTR and reduce wasted ad spending.

Creating your account structure

Correctly organising your Adwords account will make managing it far easier once you start advertising, and impact how it performs overall.

How many campaigns do I need?

There’s a number of reasons why you might want to create multiple campaigns. These include separating advertising based on:

• Different products or services
• Different budgets
• Geographical location
• Network (this guide focuses only on the Search Network, however when using the Display Network you should always use separate campaigns)

How many ad groups do I need?

Within each campaign, you’ll need to create at least one ad group, which is a collection of keywords and ads. As a general rule, you should aim for at least three ad groups per campaign.

New advertiser mistake #4 – Not creating enough campaigns and ad groups

One of the biggest mistakes that new advertisers make is not creating enough campaigns and ad groups, or worse, just using one campaign and ad group. There are a couple of problems with this:

First off your business probably offers a number of different products or services. By setting up your account in this way, you’ll be forced to use a more general ad across all of your products/services, which will be less appealing to a searcher than an ad that speaks directly to their specific search query.

For example, using the example of an online shoe retailer, which of the following ads would you be more likely to click on after searching for “men’s leather dress shoes” in Google?

Advertiser A has clearly taken the time to build their account into targeted campaigns and ad groups, and as result shows an ad that is very specific to the search query. In contrast, Advertiser B has probably created one campaign and ad group that advertises on all of their keywords for their entire product range. Not only will Advertiser B’s ad receive less clicks, it will also have a lower CTR, which as we learned earlier, will lead to a lower Quality Score and higher CPC. Don’t be this guy.

The other problem with using only one campaign and ad group is that you won’t be able to send visitors to the page on your website that is most likely to convert them into customers. Using the example above, Advertiser A would be able to send traffic to the pages on its website that are most relevant to each search query, such as the Men’s Leather Dress Shoes category page, while advertiser B would have to send visitors to its home page.

Creating your first campaign

Once you’ve chosen your keywords, and decided on an account structure, you’re ready to create your first campaign.

Campaign Type. You’ll be asked to choose from the following:

• Search & Display Networks
• Search Network Only
• Display Network Only

It’s important to understand the difference between the Search and Display Networks, because they function very differently. The Search Network is what you probably think of when you think about Adwords – advertisements displayed on a search results page when someone enters a search query into Google. The Display Network, in contrast, is Google’s network of more than a million websites where Adwords ads can be displayed.

The way that the two perform and function is very different, because Search advertising (when done correctly) targets people who are actively searching for your products or services, while Display advertising targets people who are browsing websites that contain content that is in some way related to what you are offering.

For new advertisers, your best bet is to start with the Search Network only. This guide doesn’t cover Display Network advertising.

Devices

*Note Google are making some changes here – see this article. At some stage in 2013 campaigns will run across all devices and you won’t be able to target mobile users specifically.

Here you’ll choose who your ads are shown to searchers based on what kind of device they’re using. You’ll have the choice of the following:

For most advertisers, targeting “All available devices” is recommended but always keep in mind your website should be a good experience across all devices.

Location

As the name suggests, this option determines in what geographical locations your ads will be shown. This is particularly important for local businesses who only service customers in a small geographical area.

Bidding and budget

Of all of the campaign settings, this is the most important because it will determine how much you spend on Adwords advertising. You’ll need to make two decisions:

Budget

Your budget is obviously how much you’re willing to spend on Adwords advertising. When deciding on your budget, it’s important to consider how much your business can afford to invest initially (remembering that you should plan on testing Adwords for at least three months) and how expensive your keywords are (you’ll recall that we looked at average CPC when researching and choosing keywords).

Adwords budgets are set on a daily basis. The easiest way to determine your total daily budget for Adwords is of course to divide your monthly budget by the number of days in a month. You’ll then need to decide how to allocate your total daily budget across each of your campaigns.

You can either split your daily budget evenly across each campaign, or allocate different budgets to each. In any case, you shouldn’t worry too much about how you choose to allocate your budgets across your campaigns, because you’ll be able to easily change this later once you see how each campaign is performing.

Bidding

Here you’ll have two options – manually setting your bids or allowing Adwords to set them automatically. For most new advertisers, the best option is manual bidding for clicks, because this will give you the most control over how your budget is being spent.

Writing compelling ads

Ok, we’re ready to start writing some ads. While a complete guide to ad copywriting is beyond the scope of this guide, there are a few things you should keep in mind when writing your ads:

Know your USP

Your USP, or Unique Selling Proposition, explains why a prospective customer should buy your product or service instead of a competitor’s. Including this in your ad will differentiate it from all of the other ads/search results around it.

Think like the searcher

Try to put yourself in the position of someone searching for one of your keywords in Google. What do they want to know about your product/service? What might their objections or concerns be? Answer these questions in your ad if you can.

Include your keyword

Ads that include the keyword, especially in the heading, tend to receive more clicks than ads that don’t. One reason for this is that when a keyword is included in ad text, Google highlights those words in bold, making it more eye-catching.

Include a call to action

A Call To Action tells the searcher what you want them to do once they arrive on your site. For an ecommerce website, this might be “Buy Online Now”. This also helps to filter out people who aren’t going to take the action that you require.

Ad rules

If your ad doesn’t meet Google’s rules, it will be disapproved. These include ad formatting rules and Google’s general advertising policies.

Setting up conversion tracking

Access to proper metrics is essential to managing your Adwords account – without them there is no way of knowing if you are achieving your goals, or which advertising (campaigns, ad groups and keywords) is profitable and which are not.

Adwords conversion tracking tool provides important data relating to what a searcher does after clicking on your ad (whether they purchase, submit an enquiry via a contact form, etc.), which allows you to make advertising decisions based on what is actually getting results.

Once you’ve add conversion tracking, you’ll have access to the following metrics:

• Cost Per Conversion (how much are you paying for a sale, phone call, etc.)
• Conversion Rate (what percentage of visitors are completing a transaction, contacting you, etc.)
• Total Conversions (total number of transactions, phone calls, etc.)

Once you have conversion tracking installed, you’ll be able to easily identify where you’re getting results and where you’re not, and then make changes accordingly. Without it, you’re essentially “flying blind”, almost certainly wasting money as a result.

We’ve worked with clients who have wasted thousands of dollars on Adwords (before hiring us) that could have been easily avoided had they been using conversion tracking.

In order to use the Adwords conversion tracking, you’ll need to add a piece of code to your website. You can find instructions from Google here.

Managing your Adwords account

That’s it! If you’ve been through all of the above, you’re finally ready to start advertising. It’s important to note however that your job is far from done – Adwords is not a “set and forget” platform, and it needs to be carefully monitored and managed, particularly when starting out.

If all of this seems like too much, consider engaging a professional to work with you to get the most out of Adwords for your business. While this guide outlines the best practices for new advertisers, we haven’t covered the enormous number of Adwords advanced features and techniques that the best advertisers are using every day to improve their Adwords ROI.

I’d love to know what you think!

I hope this guide was useful, if you have any feedback on the guide please feel free to ask questions below.