It did so with the launch of a keyword-targeted advertising
program aimed more towards bigger companies. However it was
not until later in the year when Google launched the Google
Adwords program that they became a mainstream player
available to even the smallest of businesses.

The original Adwords program worked well enough, however it
worked on the basis of payment by impressions which didn't
guarantee the advertiser a single click so in February 2002
it received a major overhaul with the introduction of the
Google Adwords Select program (nowadays it's usually just
known as Google Adwords as the original program has been
discontinued).

What is Google Adwords?
Adwords is Googles version of the pay-per-click advertising
model. It allows you to display ads which link directly to
your website when searches are done for your chosen keywords
or keyphrases. These ads are located to the right of the
results which Google gives you for a search and they're
also displayed on Googles many partner sites which include
AOL, Earthlink, HowStuffWorks and blogger. Recently with the
launch of Googles Adsense program your ads could also be
displayed on websites related to your keywords.

When you create a Google Adwords ad, you choose keywords for
which your ad will appear and specify the maximum amount
you're willing to pay for each click. Remember Googles
Adwords program uses a PPC model so you only pay when
someone actually clicks on your ad and hence visits your
website.

Adwords enables you to save money as its program Discounter
automatically reduces the actual cost per click you pay to
the lowest cost needed ($0.01 above competition) to maintain
your ads position on the results page.

Google is competing well in this arena, in fact they now
dominate the market, pulling more advertisers and revenue
than former industry leader Overture.com does. I don't know
how long this will last though as Yahoo INC! has just bought
Overture. What has Yahoo got up its sleeve?

Advantages of the Google Adwords program
Just as the popularity of Googles search engine is derived
from its strong technologically advanced features and
results so too is its advertising program Adwords. Google
Adwords has many advantages over similar programs such as
Overture.com and Findwhat.com.

One of these has been mentioned already, it's the Adwords
Discounter feature which will lower your cost per click
price to one cent above your nearest competitor to allow to
stay ahead of his or her ad. This means that you don't have
to be constantly checking if your competitors have lowered
their bids in order for you to minimize your price, Google
does this for you.

The way Google Adwords positions your ads is also another
great advantage of the program. In Adwords the position of a
certain ad is determined by multiplying your CPC (cost per
click) by your CTR (click through rate) and not simply by
CPC alone as this would allow the big fish to win all the
time.

Googles stipulation that your ads must have a CTR of at
least .05% means that a company with deep pockets simply
can't outbid the competition. They also have to outwit them
by using good ad copy and appropriate keywords. Even if your
competition is willing to pay sky high prices for clicks
this still won't save them, as if they can't write good
pulling ads they will be dropped from the program, leaving
you to move up a position.

Other advantages which Googles program has over similar ones
include setup time and specific country / language
targeting. With Adwords your ads can be live on Google
within five minutes of creating them so you can potentially
begin to see results immediately, ads on Overture usually go
live after a three to five day waiting period. Adwords
allows you to choose who should see your ads from among 250+
countries and 14 languages, this means you have more control
over your ads so you can be sure they're only shown to a
highly targeted audience which means your more likely to be
successful.

How to profit with Google Adwords
Now you know why Google Adwords is such a good thing, let's
move onto how to actually use it in order for your business
to make profit. First things first, you should determine how
much you can afford to pay for a click. Doing this is
important as it enables you to better understand the amount
of money you can bid on keywords in Adwords while still
remaining profitable. To do this your conversion ratio is
needed, calculate your conversion ratio by dividing your
monthly unique visitors by your monthly sales, then convert
your answer into a percentage by multiplying by 100.

Imagine in a month you get 20000 visitors and sell 500
products each with a gross profit for you of $50. Your
conversion ratio simply put is (500/20000)*100 = 2.5%. This
means that for every 100 people who visit your site 2.5 buy
your product.

Your gross profit per 100 visitors is calculated by multiply
the gross profit on your product by your conversion ratio,
to continue with the previous example - $50 x 2.5 = $125.
Divide your gross profit per 100 visitors figure by 100 to
determine how much you can bid in Adwords.

In this case you could afford to pay up to $1.25 for a
visitor and still break even. Rarely will you have to pay
this much for a click, remember that the minimum CPC on
Google Adwords is only 5 cent so play your cards right and
you can have high profits.

Choosing your Google Adwords keywords
Next on to picking your keywords. These are the words which
when searched for will trigger the appearance of your ad
next to the search results. Choosing the right keywords is
imperative to the success of your campaign. A good approach
to choosing the right words is to imagine what you'd search
for if you were looking to buy a product similar to your
own.

Remember as with Overture, the more popular a word or phrase
is the higher CPC you'll have to pay and generally clicks
from general words convert to sales far less often than
clicks from specific terms so it's always better to have a
few highly focused keyphrases that get clicks than to be
number one for the most general word or phrase in your
industry. In Googles own words:

"General or broad keywords will generate many impressions
with few results."

Do you want "few results"? You certainly don't so avoid
the expensive popular words and stick with the less popular
but more profitable keywords. Finding such specific
keyphrases can be time consuming, but it's worth it as
research has shown that although much cheaper using specific
phrases helps get more highly targeted people to your site
and hence helps you get more sales.

On Googles Adwords website they recommend using spelling
variations and plural versions of your keywords to reach
everyone in your target audience. I think this is a good
approach as not everyone of your potential customers will
search a keyword in the same way, some will use plural
versions and others will use singular versions. Similarly
some may use American English rather than traditional
English, this of course only applies to certain words
whereby Americans use different spelling than British, Irish
and other English speaking people would.

Adwords keyword matching options allow you to refine further
when your ads are shown by allowing you to choose whether
your ads are shown for certain types of searches on your
keywords. There are four types of keyword matching options
available, these are broad, exact, phrase and negative.
Assume your keyphrase is 'marketing course'.

With broad matching your ad shows when users search on the
keywords 'marketing' and 'course', regardless of other
search terms used or of the order in which they are entered.
Broad matching is the default, you don't have to do
anything extra to use it.

Exact matching requires you to place square brackets around
your keywords, like the following: [marketing course]
Your ad will show when users search only on the phrase
'marketing course' and will not show if other words are
included or the words are entered in a different order.

The third matching option is the phrase option, this is
similar to exact search in the sense that the keywords must
all be present and in the right order however your ad will
still show even if other words are present in the search. To
use phrase matching you must include your keywords in
quotes, for example "marketing course".

Negative matching is the fourth option available. It allows
you to block your ad being shown if a certain word is
present in the search query. If your keyword is 'marketing
course' but your marketing course is to do with offline
marketing and not internet marketing then by using negative
matching you can choose not to have your ad shown for
'internet marketing course' as people searching for this
are looking for something different than what you offer. In
this case 'internet' is your negative keyword. You simply
place a dash before your negative keyword to use this option
(ie '-internet marketing course'). Now if a user searches
for 'marketing course' on Google your ad will be shown, it
will not however be shown when the term 'internet marketing
course' is entered as the query.

Using exact, phrase or negative keyword matching gives you
more control over who sees your ads so you won't pay for
clicks that are unlikely to produce well-targeted results so
always try and use these options, doing so could result in
lower CPC, higher CTR and higher ROI. To demonstrate this
fact I conducted a dummy ad to find the prices using broad,
exact and phrase keyword matching options for the term
'internet marketing'. The currency I used was the Euro, I
left the maximum CPC at the default of €5. The results are
as follows:

internet marketing 11.0 €2.65 - Default broad search cost
€2.65 a click and expected clicks is only 11.

"internet marketing" 30.0 €0.74 - With phrase matching
expected clicks per day was 30 and cost €.74.

[internet marketing] 37.0 €2.41 - Exact matching cost €2.41
a click and expected clicks was 37 a day.

You can see from above that using both exact and phrase
matching options resulted in a lower cost per click rate
than simply using the default broad match option. I highly
recommend using keyword matching options.

As mentioned earlier Google Adwords allows you to block your
ads showing for searches conducted by people from certain
countries and people who speak a certain language. There's
no point in letting your ad be seen by people who won't
understand it. Likewise if your product is only sold to a
specific country than that country's residents should be
the only people who get to see your ad, as if your company
only sells products within America then any other nationals
clicking on your ad are simply costing you money for
nothing.

Creating your Google Adwords ad
Knowing which keywords to use and how to format them with
keyword matching options alone will not make your Adwords
campaign a success, you must of course also write a good ad
which generates interest among those who will see it. To do
this your ad must use attention grabbing copy such as
'free', 'new', 'sale', 'tips', 'limited offer' and
give the advantages of your product at the same time. This
however isn't easy as Google allows you a headline of at
most 25 characters including spaces and only two other lines
of at most 35 characters including spaces, so stick to the
point as room is limited. Sticking to the point means
avoiding using words like 'on', 'at', 'of' and 'an'
unless you really have to.

Your ad should target your keywords, by this I mean it
should include them. Always include your exact keywords in
the title of the ad as this is proven to boost your click
through rate immensely, the reasoning behind this I believe
is that when users see the keywords they've just searched
for in an ad particularly in the title of the ad they
immediately associate that ad with a good find and will be
more likely to click on it.

After just reading the previous paragraph you may be tempted
to simply repeat your keywords somewhere else in the ad in
an attempt to raise your CTR, however on Googles editorial
guidelines page they state that they will not allow
repetition of words or phrases in ads as ads without
repetition are clearer. This doesn't however mean that you
can't use closely related words similar to your keywords
which you have used in your ad title, these similar words
will help back up the searchers believe that he or she has
found a very relevant ad. Avoid what's known as
superlatives, these are phrases such as 'the best' and
'we're number 1', these serve no other purpose than to
make you appear cheap and tacky, which will turn most
potential visitors off.

Apart from letting the searcher know your ad is relevant
using your keywords in your ad has another advantage, namely
that of making your ad stand out among the other ads also on
the page. Your ad stands out as Google will highlight in
bold any occurrences of the search terms not just within the
main search results but on the page as a whole including
within any Adwords ads present.

Try if you can to include a call-to-action phrase. A
call-to-action phrase is a phrase that which as the name
suggests provokes the reader to do something, in this case
click on the ad and go to your site. Unlike a banner type
advertisement you can't use generic call-to-action phrases
such as 'click here' or 'visit this site' as this does
nothing to help the searcher make up his or her mind as to
click on your ad or not. To quote Google again:

"The limited text space should be used for concise,
informative language that sets you apart from your
competition."

'Click here' or 'visit this site' is not informative
language, it's language that simply wastes space and that
does nothing to help you, the searcher or indeed Google for
that fact. Take Googles advice into mind and

"Use a call-to-action unique to the service or product you
provide."

Examples of unique call-to-actions include: "Join now for
20% discount", "Register for membership now", "Download
free trial now" and "Order now for free shipping".

Remember your Adwords ad space consists of just a headline
and two lines of text, you need to use this space
efficiently to have a chance at success, so to recap I
believe the best strategy to use this limited space is to
include your exact keywords with or without other words in
your headline, give a brief line about your product using
words similar to your keywords in the first of the two 35
character lines and use a unique call-to-action phrase in
the second.

All that's left to do as far as creating your ad is
concerned is to enter destination and display URL. Not
really much I can talk about here, except to point out that
your destination URL should be a landing page specific to
the product or service dealt with in your ad and not simply
your home page. Remember users have clicked on your ad
because they're interested in what the ad offered and not
necessary interested in what your company offers as a whole.
Landing pages will always convert more clicks to customers
than if you had simply linked to your home page.

Other Google Adwords issues
This section of the article will cover briefly other Adwords
related issues such as money issues, adgroups, tracking and
testing.

As with any advertising campaign budget management is very
important, without it you could quickly find yourself in
trouble. In Adwords after you have chosen all your keywords
and maximum cost per click amount Google will suggest an
amount for you to set your daily budget. This amount is
usually about right, and I would suggest sticking with it in
most cases, however depending on how deep your companies
pockets are, it may be a good idea to raise this suggested
amount a little at the start of a new campaign as your ad
will be shown much more and you will be better able to view
how your ads are performing, then if after analysis of click
through rates you decide it would be better to lower your
daily budget do so.

Don't let being in position one dominate your mind when
deciding what cost per click to pay for keywords. Doing so
may mean your spending more than you really need to, when
Google gives you the average position of your ad based on
your current cost per click settle for 1,2 or 3 as all these
ads will be above the fold (the fold is the point on a page
where you have to start using the scroll bar to continue
reading).

Remember your position is based on CPC and CTR at all times
except the very start of a new ad, so if you use the advice
given in this article already you should be able to obtain
high click through rates and hence your ad should rise above
other peoples ads without you having to spend a cent more
than them.

Now onto adgroups, adgroups is a campaign management feature
which allows you to group keywords together in order for you
to have an ad shown for a number of different keywords
rather than the usual one ad for one keyword method. I
rarely use adgroups as I find using the one ad for one
keyword way produces much better results as ads are highly
targeted to the specific search terms used and hence more
likely to be clicked on.

Trying to write an ad that can achieve a high CTR for 20
different keywords is impossible. Hence if you do decide to
use adgroups in your campaign keep them as small as possible
at five or less keywords.

Using adgroups sacrifices the single most effective thing
you can do to increase an ads CTR and that's having your
exact keywords in your ads title, remember with adgroups the
same ad is shown for all keywords in that group. To use the
one ad for one keyword approach you will need to create a
new ad for each keyword manually as by default all ads are
put into the same adgroup when you sign up.

I know, I know, using adgroups saves time, sometimes it
saves a lot of time however I'm not in business to make
time, I'm in business to make profit and lots of it and so
are you for that fact, so if it takes some time to properly
setup a good Adwords campaign well then so be it, hence I
recommend avoiding the widespread use of adgroups for all
but the very largest of campaigns.

Adwords should be no different than any other advertising
campaign in the sense that you need to track everything and
be continuously testing. Adwords will automatically track
clicks, impressions and clicks through rates from when your
ad goes live until either you or Google pull it. You should
constantly analyze these stats for all your ads, discontinue
the ones that are performing badly and raise your daily
budget for the ones that are doing well so as to multiply
your success.

However tracking CTR is only half the battle, you'll also
want to track conversion rates from certain ads, that is how
many people that clicked through from one of your ads
actually bought the product the ad offered. This can be done
using affiliate software whereby you could set up a specific
tracking URL for each ad and then refer to your affiliate
stats to determine conversion rates that way. This specific
tracking URL would be entered as your destination URL.

You could also as Google suggests attach an identifying
parameter by putting '?referrer=source' at the end of your
destination URL. Imagine your normal destination URL was
http://www.yoursite.com/product simply turn that into
http://www.yoursite.com/product?referrer=source. The source
would be your keywords to enable you to uniquely identify
the ad from which the visitor came. You could then use a web
statistics program to determine how many people that bought
your product where referred by a particular source / ad.

Testing has been the backbone of many great advertising
campaigns on the Internet to date. In Adwords you should
test different copy, keywords, CPC and daily budgets on a
constant basis in an effort to attain the highest click
through rates possible.

Run similar ads together for the same keywords to see what
little differences can do to an ads CTR, keep the ads with
high CTR's and pull the ones with low CTR's, create more
and more ads to run against previously successful ones and
again drop the ads with lower CTR's (unless of course the
CTR's of these ads is extremely good too but your others
are just better). Don't forget to test different things on
your landing page too, to try and boost your conversion
rate.

Google Adwords guide - Conclusion
Google Adwords when utilized correctly can be a great source
of new customers for your business at a very low price.
Google doesn't charge you a cent until your daily budget
has been reached so you could in theory start to profit
without spending anything. I fully endorse Adwords and
highly recommend you use it.

Well that's another article finished, its seems to take me
longer and longer to put articles together these days,
anyway it's all good. You have just read approximately
25,000 bytes of thoroughly researched information regarding
the different aspects of Googles award winning Adwords
program. Others charge for information like this, but not
me. Till next time.

Article by David Callan
David is the webmaster of http://www.akamarketing.com.
Visit his site for free articles and tutorials focusing on
Internet marketing and website development issues. AKA
Marketing also includes free ebooks, webmaster community
forums and the latest news from the Internet world.