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

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

By Caron_Beesley, Contributor
Published: March 24, 2010 Updated: November 9, 2011

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
Caron Beesley

Contributor

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

Comments:

More businesses have found benefit from spending initial marketing dollars on Search Engine Optimisation and improving the readability of their website. In the least businesses should spend time looking at how they can maximise the interactions between the organisation and the customer. Pay Per Click advertising is most effective when there is a compelling offer and the company can drive people through to a definite purchase. Service providers and people that offer something that can't be easily 'categorised' will struggle to find great value in PPC advertising.--This post was edited to remove a commercial link. Read our discussion policies for more Community best practices. Message Edited by NicoleD on 02-05-2010 09:43 AM
You provide some sound advice and provide many good pointers in this article. You are particularly correct about advertisers with Google needing to measure all the metrics of any campaign. You'd be amazed at the number of people I talk with that are frustrated with not being able to make money with AdWords. On looking into their account I find hundreds of keywords collecting up thousands of clicks and no means of seeing which keywords are actually converting. These people are throwing money at Google which they are naturally taking from them with a smile and a big thank you. Conversion tracking is the first metric that every AdWords advertiser should monitor right from the start. Adrian KeyEditor of the AdWords Adviser, making AdWords more profitable for you.-- This post was edited to remove a commercial link. Read our discussion policies for more Community best practices. Message Edited by NicoleD on 02-05-2010 09:42 AM
I found that the Adwords system was too much of a black box that seemed to consistency extract money from me in too consistent a manner?... Eventually I stopped when it became apparent that the return on investment was not there... You need to monitor your account and long term you need to have a organic flow of visitors to your website... Kevinhttp://www.onlinecorporatedocs.comMessage Edited by NicoleD on 01-26-2010 05:06 PM
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 YablonPresident & CEOAnswer Guy Serviceshttp://answerguy.com
My experience has been mixed with Adwords.  In my opinion putting more effort towards SEO has a more long term effect.  Yes, it is very time consuming but, there is no better feeling than seeing your site rank #1 for the keywords you set out to target.  
You should be very careful while using google adword. it can be very risky if not properly managed. To the best of my knowledge, there is no short court in getting traffic. Play the game by the rule and you will stand to enjoy organic traffic for free. Find out who invented Velcro and read more about biometric Heart monitors.
You provide some sound advice and provide many good pointers in this article. You are particularly correct about advertisers with Google needing to measure all the metrics of any campaign. You'd be amazed at the number of people I talk with that are frustrated with not being able to make money with AdWords. On looking into their account I find hundreds of keywords collecting up thousands of clicks and no means of seeing which keywords are actually converting. These people are throwing money at Google which they are naturally taking from them with a smile and a big thank you. Conversion tracking is the first metric that every AdWords advertiser should monitor right from the start. Adrian KeyEditor of the AdWords Adviser, making AdWords more profitable for you.-- This post was edited to remove a commercial link. Read our discussion policies for more Community best practices. Message Edited by NicoleD on 02-05-2010 09:42 AM
I found that the Adwords system was too much of a black box that seemed to consistency extract money from me in too consistent a manner?... Eventually I stopped when it became apparent that the return on investment was not there... You need to monitor your account and long term you need to have a organic flow of visitors to your website... Kevinhttp://www.onlinecorporatedocs.comMessage Edited by NicoleD on 01-26-2010 05:06 PM
You need to make sure you understand good SEO so that you get clicks and you need to br prepared to use some mone. You also need to have a good rate of visitors daily or you are likely to see your money disappear quickly.
My experience has been mixed with Adwords.  In my opinion putting more effort towards SEO has a more long term effect.  Yes, it is very time consuming but, there is no better feeling than seeing your site rank #1 for the keywords you set out to target.  

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