Google AdWords

Google AdWords is primarily a CPC (Cost per Click) advertising service. AdWords shows ads to people in the Google search results. This also includes 3rd party search engines powered by Google… The best part is that you are only charged when people actually click on your ads.

You get to set the price too! If you only want to spend a penny each time somebody clicks on your ad, you can… Just don’t expect thousands of visitors if you set that low of a bid. Your ad’s position is based on a bidding system; the higher the bid, the higher your ad places on the right side of the search results. If your ad places in a top position consistently, Google will start placing your ad in the coveted top section, ABOVE the normal “organic” search results. View the example below to notice where the advertisements are located on a Google search page:

Example of Google Search Results

Luckily for new AdWords users, Google has a feature to manage your bids for you based on a maximum cost per day that you specify. I stayed in this “newbie” stage for months before feeling confident enough to plunge into managing everything myself with hundreds of keywords and about 15 ads with various styles and formats.

Ok, let me get a little more in depth to explain this all properly…

CPC and Setting the maximum bid

It is true that you can set what ever price you want for your ads, you can even set a cost limit per day across all of your ads and their keywords. What you are actually bidding on are “keywords” that you imagine a person interested in your website will search for. You can set a max bid for as many keywords as you like. Here is an example of how this works…

Let’s say three companies place a bid on the same keyword, they are company “A”, “B”, and “C”. Who ever has the highest maximum bid is the one that goes at the top of the ad column on the right side of the search results and then the others will follow below it.

The actual cost for everyone will depend on their placement, the low bidder pays their max bid, the next bidder up will pay $.01 (one penny) more, the next highest bidder will pay an additional $.01 (one penny) more also.

Now lets say that the max bid for “A” was 20 cents per click, “B” was 10 cents per click and “C” was 30 cents per click. The cost to each website advertiser would be the following if a person clicked their ad:

“B” was the lowest bid, they must pay their max bid of 10 cents

“A” was the next highest bid at 20 cents per click, they pay a total of 11 cents (one penny more)

“C” was the next highest bid at 30 cents per click, they pay a total of 12 cents (one penny more)

Now, with only three people in the bidding process, the costs can be very low. Well, as long as all the max bids are low that is. The prices really start to skyrocket when there are many bidders on the same keywords and everyone is trying to out bid each other. Sure you are only paying the lowest max bid plus one penny for each placement above them.. but if all the bids are going high to out bid each other then the low max bid in turn will be going up along with them.

In order to get a feel for what your max bid should be, just start out low. If you are not happy, you can experiment with raising your max bid within your own personal allowance. You will find that Google AdWords is all about experimenting.

The Content Network

Just in case you thought you had it all figured out, there is also a content network that you may display ads on, this network runs completely different than the CPC ads. Don’t worry, its actually much less difficult to explain than CPC…

The “content network” is nothing more than a collection of websites that run Google’s AdSense, a service used by website owners in order to generate revenue by placing ads on thier site . In addition, this network also displays ads in Gmail, Google’s free email service.

One big difference is that you are not paying per click for these websites, you are paying a CPM (Cost per Thousand Impressions) . An impression is each time your ad shows up on a website. So, your costs for impressions will be the same if 10 people or 100 people click on your ads.

These types of ads are useful in two main ways… One, is that you are gaining exposure since your ad is showing on possibly thousands of pages out there. Two, is that your ads will ONLY appear on websites if the content of the site matches your ad.

For example: Let’s say you offered services to run other peoples AdWords campaigns for them. Your ads would show up on pages like this one, since this article is focused on that very topic. The way this works with Gmail is the same, your ads will also show up next to emails about the same topic.

Google will determine if your ad is appropriate based on a number of factors. One of which is what you actually say in your ad and another is what your website actually says when the user “lands” on your site after clicking your ad. You can chose any “landing” page you want for your ad.

A perfect example of what the ads look like and how the ads are targeted by subject matter is the ad box below, you can see ads about AdWords or similar services since that is what I am talking about in this very article:

Other Advertising Methods

AdWords has also branched out into other areas of advertising such as image ads, video ads, and recently radio ads. That\’s right, if you chose to, you can run a radio marketing campaign directly with AdWords now. AdWords is also recently experimenting with television advertising and printed ads in lifestyle an technology magazines as well… What\’s Next?

Google AdWords is a very flexible advertising service!

About the author

RJ Ponzio

RJ founded Shore Web Tech LLC in 2011. The mission of Shore Web Tech (SWT) is to help small and medium local businesses take advantage of today's affordable technology solutions. RJ currently holds Google's "AdWords Qualified Individual" certification.


1 ping

  1. Debbie Rella

    Thank you RJ I found the article very helpful. You are doing a great job, love the website too.

  2. Jamie Boyle

    Great website RJ.

    Very helpful in understanding fully how Google Adwords works. You explained it very well.


    Jamie Boyle

  1. What is Google AdWords? - ShoreWebTech.com » ShoreWebTech.com

    [...] with Google AdWords back in 2007.  If you want to read it, the original article can be found here.  The following information on this page has been updated to reflect the current AdWords [...]

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