Wednesday, May 27, 2009
INTRODUCTION
I currently have two posts discussing AdWords basics. The purpose of this post is to discuss the technical aspects of AdWords, i.e. key terms you need to know, and exactly what you’re trying to do to make your AdWords ads effective. My other AdWords Basics post discusses exactly how to use AdWords; how to create ads and how to optimize them for AdWords. The post s compliment each other and go hand in hand. If you’re a complete beginner, you should read both posts. I also have other more advanced posts on the topic, as well as an post on keyword analysis.
ADWORDS TERMS
Below is a list of basic terms you should know before using Google AdWords. If you’re going to be using AdWords, you need to be familiar with all of these terms.
1) Cost Per Click (CPC)
As the title implies, this is the amount you’re going to pay every time someone clicks on your AdWords ad. Different keywords (for more on keywords read “Keyword Analysis (Search Engine Optimization) In Internet Marketing” and my other AdWords Basics post”) are going to cost you different amounts for clicks depending on their popularity. The posts mentioned above discuss how to determine some cheaper keywords.
2) Impressions
This is the number of times your ad appears in the search results in Google. Your ad will be triggered to make an impression when someone searches for one of your keywords. Your ad won’t necessarily make an impression every time someone searches for one of your keywords, depending on your competition, i.e. how many other people are also using your keyword in their AdWords campaigns.
3) Clicks
The number of times someone has clicked on your ad.
4) Click Through Rate (CTR)
Your CTR will be used by Google to determine how successful, and hence with Google, how relevant your ads are. Your CTR is the number of times someone has clicked on your ad, divided by the number of impressions it has (your ad is less relevant to Google if it has appeared many times, but no one is clicking on it). Your CTR is extremely important. Google will reward you for relevancy; Google will give you better placement for less money, the better your CTR. Your goal in AdWords is essentially going to be to improve your CTR; this is going to be dependent on the quality of your ad. First and foremost, you want your keyword in your ad title (see my other AdWords Basics post for more details on this). Secondly, you just need to write quality ads; that is, ads that are going to attract readers’ attention. I don’t claim to be an expert on this subject, and there is a lot you can learn about this in Perry Marshall’s Definitive Guide to Google AdWords. You can dramatically improve your CTR however by split-testing your ads. Again, for more on this, see my other AdWords Basics post.
The exact formula Google uses to determine an ad’s relevancy isn’t known exactly by anyone. For example, Google will also use variables such as how long the average person stays on your page, or how relevant your page actually is to your ad (so make sure the content you’re advertizing is exactly what you’re linking to).
5) Cost Per Conversion
This is essentially just as important as your CTR. This is the amount of money you’re going to be paying per conversion. A conversion for you could be someone continuing to your next page, or it could be someone purchasing something. Obviously though, you don’t want to be paying more per conversion than you’re making per conversion. Google will track your Cost Per Conversion for you, but you have to insert some HTML code. Go to “Conversion Tracking”, and then “Create a new action”, then enter the information, and get the HTML code. This code should not go on your landing page, but the page on which a person would land after being converted, i.e. after they have purchased something, or done whatever you want them to do on your page. Your goal in AdWords, as well as raising your CTR, should be to lower your Cost Per Conversion.
6) Current Budget
This is the amount of money you want to spend on a campaign per day. Obviously if you have a set budget that you don’t want to go over, you should set this as your budget. If you don’t, you could get into huge trouble by spending more money than you have. Unfortunately, Google will pay more attention to you if you have a significant budget. If you’re only paying $5 a day or something like that, Google might not give you very much attention, and may not show your ad very much.
CONCLUSION
That is it for this post. Use this in combination with my other AdWords Basics post to get a good start with Google AdWords. I would highly recommend Perry Marshall’s Definitive Guide to Google AdWords to get more detail on the topics I’ve covered here. It is a document you will have to pay for, but it is worth it.
