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Google AdWords Explained: Growing Your Small Business with this Cost Effective Marketing Tool

by Caron_Beesley, Community Moderator

  • Created: March 24, 2010, 12:03 am
  • Updated: November 9, 2011, 12:02 pm
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36 comments

Pay-per-click advertising has been around for many years now, and is the mainstay of Google's revenues--earning the leading search engine over $20 billion in 2008. There's a reason why Google AdWords has been so successful. AdWords, the "Sponsored Links" that appear to the right of your main search results on Google, offer small businesses in particular a relatively low cost and flexible way to pitch their wares and generate traffic to their Web site. This post briefly explains pay-per-click advertising based on the Google AdWords model - how it works, discusses ways you can determine if it's right for your business, and offers lessons learned from other small business owners.

How does Google AdWords Work?

Essentially, the Google AdWords pay-per-click (PPC) advertising service allows you to create your own ads, after paying a $5 account set-up fee. The ads then run in the "Sponsored Links" column alongside regular search results. You pay when someone clicks your ad and gets directed to your Web site. In addition to charging for clicks, Google has adopted a bidding process, which lets you allocate funds for, or "bid" on, the keywords that you want to trigger your ad - much like bidding for an item on EBay. The more funds you allocate to a particular batch of keywords (or in Google language, "the higher you bid"), the more likely your ad is likely to appear at the top of the "sponsored links" column. Learn more about the *Google AdWord pricing structure.

You can control spending by setting a spend limit per day. But bear in mind that if you are using a highly competitive keyword, you will quickly blow through your budget. Once up and running, your ads will only appear when someone searches for the specific keywords or phrases that you have selected to be associated with your ad. Google AdWords offers a *Keyword Tool that can help you choose and assess the relevance and popularity of your chosen keywords. The more specific and targeted your choice of keywords is to your particular niche, the more relevance your ad will have. Local businesses can also "geo-target" by selecting to have ads appear only in certain metro areas, regions or countries - which can help keep the cost-per-click low.

Do Google Adworks Work?

Yes, but only if you use them properly. As with all marketing tactics, you will need to monitor your metrics and make changes as you go. Keep refining your keywords and monitor the results. Google provides performance reporting that includes data on where your ads appeared, conversion rates, cost, and so on. This data is your best friend because it lets you see who your ads run up against, what searches they are appearing in, and whether you are really getting your money's worth from those clicks.

There are many tactics for optimizing your PPC advertising campaigns, read *Targeting your Search Advertising for Success by Carrie Hill of *SearchEngineWatch.com, for more tips.

Are Google Adwords Right for Your Company?

Google AdWords and other PPC advertising services are not right for everyone. For example, if you offer a product or invention that is relatively new to market - consider whether potential consumers would even know to search for it?
But for most businesses - the sky is the limit when it comes to PPC advertising and when monitored and optimized regularly it really can complement your online marketing activities. I love PPC advertising when it's used locally. For example, if I need to find a plumber or organic pet food store in my area - I drop my usual cynicism about online advertising and appreciate the speed and directness that PPC advertising offers in delivering the right result without scrolling through pages of search results.

Lessons Learned from Google Adwords

If you are interested in using PPC advertising such as Google AdWords, read *Real-Life Lessons in Using Google AdWords. This New York Times article by Darren Dahl offers insights from small business owners about their experiences with Google AdWords and lessons learned that have saved them money on PPC advertising campaigns while increasing conversion rates.

Follow the Rules of the Road

Last but not least, if you plan to advertise online - whether you're buying ads on search engines or direct marketing through e-mail - you'll need to understand some basic government rules and regulations. SBA.gov explains these in its Guide to Online Advertising Law.

About the Author

Caron_Beesley's Profile Picture
Caron Beesley is a small business owner, a writer, and marketing communications consultant. Caron works with the SBA.gov team to promote essential government resources that help entrepreneurs and small business owners start-up, grow and succeed. Follow Caron on Twitter: @caronbeesley
Tags: Community Blogs, Small Business Matters

Comments

sharri | Window Shopper | 10/7/2012 - 3:25 pm

Google AdWords can be a great way to drive your business growth and can be an
asset to your business rather than relying on organic Google search results.
Professional Web Site: Cheap Accountants for Small Business

TheInfoGroup | Window Shopper | 8/10/2012 - 2:23 pm

If you don't think using Adwords should be a part of your online marketing
strategy, consider this new study on click through rates when the intent of
the searcher is commercial in nature.
http://www.wordstream.com/blog/ws/2012/07/17/google-advertising
Are you local and mobile? Your customers are!
Professional Web Site: The Info Group

KinseyStreet | Performer | 7/7/2011 - 8:34 pm

Jeff, your comment, "Adwords will end up costing way more per click than many small businesses can afford." is only correct when AdWords isn't being managed correctly. AdWords can provide an outstanding return on investment to the small business owner. Google AdWords is no different from any other advertising medium in the fact that it is only as good as it's implementation. The same applies to SEO. When properly implemented, it can show results. However, poorly implemented SEO can not only be expensive and ineffective, it can also be damaging. That is one of the reasons why Google has listed some tips and guidelines for things to look out for when dealing with SEO agencies http://www.google.com/support/webmasters/bin/answer.py?answer=35291
Professional Web Site: http://www.kinseystreet.com

KinseyStreet | Performer | 7/7/2011 - 8:13 pm

Great introductory to using Google AdWords, Caron. Really nice article.

jeffyablon | Window Shopper | 1/18/2011 - 9:05 am

As neat a description as this tries to be, it falls into the category of 'stuff that the poeple who need such information won't really be able to use'   Why? Because while the facts that are quoted are accurate, there's something important left out: Adwords will end up costing way more per click than many small businesses can afford.   By the way: when you pay $5 per click'”and this is a fair estimate of what traffic on the keywords you're likely to prosper from will cost'”it's a real bargain if you get good referrals for that amount of money. Unfortuneately, your five bucks will get you traffic, but A) that traffic still needs to be converted to prospects by way of them making real contact with you and B) you'll pay the $5 for lots of people who aren't even your business prospects. This could bankrupt you.   In other words, AdWords is a bad idea for more businesses than not.   Solution:    You need Organic traffic. This is made possible through Search Engine Optimization and Search Engine Marketing. You can do SEO/SEM yourself and it's usually a better investment than Adwords. Or you can farm it out to a company that does that kind of work for you (disclosure : mine is such a company).   Wishing you business success,   Jeff Yablon President & CEO Answer Guy Services http://answerguy.com

NicoleD | Former Moderator | 9/17/2010 - 7:48 am

As a reminder, please post questions and new discussion topics in the forums, where there's a greater chance they will be seen by more users.

NicoleD | Former Moderator | 9/17/2010 - 7:48 am

As a reminder, please post questions and new discussion topics in the forums, where there's a greater chance they will be seen by more users.

samrev12 | Window Shopper | 8/27/2010 - 5:28 am

Essentially, pay per click marketing is a reasonably minimal cost technique of producing elevated visitors to your website. This advertising is incredibly versatile and can provide an instantaneous return on investment. ~Sam PPC Ecademy ---This post was edited to remove a commercial link. Read our discussion policies for more Community best practices.
Professional Web Site: http://www.payperclickecademy.com

samrev12 | Window Shopper | 8/27/2010 - 5:28 am

Essentially, pay per click marketing is a reasonably minimal cost technique of producing elevated visitors to your website. This advertising is incredibly versatile and can provide an instantaneous return on investment. ~Sam PPC Ecademy ---This post was edited to remove a commercial link. Read our discussion policies for more Community best practices.

dawsonbarber | Performer | 4/21/2010 - 1:59 pm

Great article! Google Adwords - seemingly like 'all things Google' - is a fantastic. The control, ability to target, and exposure to a hungry market is quite astonishing by traditional advertising standards. Of course, the share of the click distribution that sponsored results gets is much smaller than the organic search results get, but, of course, the trade-off is that Adwords can land a listing on page one of Google within a few hours. One of the other areas that's of great importance - and I noticed that you referenced local business in your article - is Google's local business search. Because of Google's search engine's ability to detect 'local intent,' it's possible for local business results to show up on top of the organic search results on page one of Google (in the form of the 'local business seven-pack'). Moreover Google Maps - the Google search engine 'specific' to local business - gets around 50-60 million visitors every single month. The beauty of Google's Local Business Center is that creating or claiming a listing costs nothing and it can be a business' fast-track to a top position in Google. The problem is, in my experience, the vast majority of local businesses have done little or nothing with their Google Local Business listing. I published an article last week on the subject that readers might be benefit from. It's called Google Local Business Center - 5 Reasons You Must Put the Power of Google Behind Your Local Business (ezinearticles.com/?Google-Local-Business-Center---5-Reasons-You-Must-Put-the-Power-of-Google-Behind-Your-Local-Business&id=4105890). The link goes directly to Ezinearticles website - although a multi media version can be found on my website, a link to which appears in the resource box in the article - and is strictly an informational piece, so I think I'm in compliance with Business.gov community guidelines. Once again, great article! Cheers from cloudy Vancouver. Dawson *Dawson - I appreciate your comment and willingness to play by the dicussion rules! I edited your post to disable the link, but kept the text there as a resouce. Our Community Rules of Conduct restrict members from posting hyperlinks that point to non-government websites. Thanks! Nicole, Community Moderator