Google AdWords Tips 101: How Does This Little Money-Sucking Machine Work?

You may be wondering why do I call this system a little machine for sucking our money. Well that’s because it’s usually a good description of our first experience with Google AdWords.

The schema is simple. You create an account, transfer some money, set a campaign, launch it, get up the next morning and your money is gone. You don’t know what happened to it, and you don’t know whether this expense was worth it or not (did it bring any benefits).

Sounds familiar, doesn’t it?

Here’s one for ya: Did you know that the color scheme of current AdWords user interface is designed the way it is, in order to soothe out nerves and kill all negative emotions? Interesting, isn’t it? This interface was designed that way to make us feel good and calm when we lose all our money. 😉

Here’s a short story about how does this little machine work

The story begins when you’ve already created the campaign, wrote the ads, chose the keywords, and set costs per click, it’s the moment when your campaign is being launched.

As the first one of these Google AdWords tips let me tell you that this little machine is basically an online auction system. It works similarly to eBay (to some extent). It sells stuff (in this case clicks) to people who are willing to pay the biggest amount of money for this stuff.

Naturally Google sells clicks to more than one person, so the amount we are ready to give away is the major factor determining the position of our ad. In general, when someone pays more than we do, then his ad is displayed on a higher position than ours.

“I decide what’s the cost per click”-myth

This whole mechanism seems to be quite simple. Well that’s at least what Google wants us to think … “Land of happiness (AdWords) where everybody can choose the maximum cost per click he’s willing to pay, and Google will happily bring traffic within the budget.” … nice story but let’s go back to the reality. If you think that it’s really you who decides what the price per click is, then think again. And if you’re new in this game and want to learn AdWords, then it’s a good place to start.

AdWords is no different from the real world. If I want to buy a brand new BMW then no matter how hard I try it won’t be possible to get it for $1000. Same thing with AdWords – not all the keywords are created equal, and some are more expensive to target than the others. Here’s an example. Most expensive keyword in AdWords these days is: “mesothelioma treatment options”. Every single click costs about $70 (literally: seventy American dollars).

The market defines costs per click, not you. You either agree to these prices, and enter the market, or leave. The way it works is simple. If you want to target the keyword “lose weight” and suddenly ten other competitors show up, and they’re all ready to pay $10 for a single click, then most likely you will also have to pay this amount if you want your ad to be shown on the first page of Google. BUT

Money is not everything

AdWords is a cunning little machine, and it’s not that easy to trick it with high cost per click only. And that’s because there’s something called the Quality Score.

Here’s how Google comes up with our quality score, and why should we pay particular attention to this process (one of the most important Google AdWords tips here).

During the time when we’re setting up our campaign Google sits quietly, and carefully observes everything. It notes our keywords and compares them with contents of our ads. And if it decides that one has nothing to do with the other, it will immediately give us a poor quality score.

When can Google come to such conclusion? For example when we’ve chosen a keyword like “programming in c++” and our ad says something like “Meet Beautiful Girls; Go Out On a Date w/ a Beauty Queen; More Than 3000 Girls”. Although this way of promoting dating websites might be interesting, it won’t work in this case.

When Google finishes its work with our ads and keywords, it adds another element to this couple – our landing page.

Again. If we’re targeting the keyword “lose weight”, and our ad starts with “Lose Weight Fast”, and it sends the traffic to the website http://loseweightfast.com (just an example, I don’t know whether domain like this exists), then there better be some lose weight related information there, and if there’s none … poor quality score.

Long story short – Google doesn’t let you make a fool out of itself that easily. If you want a good quality score, you have to make sure that your keywords, ad copy, and content on your landing page all work together and create a consistent image. (That’s why in most cases it’s not a good idea to use your homepage as the landing page, but let’s leave that issue for some other time.)

There’s one more thing that has its impact on the quality score – the click through rate (CTR). It’s a percentage ratio of your clicks to impressions. The bigger the better.

Just like in other sports, there’s competition here as well

Of course we’re not alone in this game. There are usually several or more people who will display their ads for the same keyword as we do.

So here’s what this whole good quality score thing gives us in such situation. Let’s look at another example. Suppose that your “lose weight” campaign is running for quite some time now and out of the blue a competitor shows up. He’s ready to pay even 10 times more for a single click than you are. In this case he should have his ad displayed above yours… that would be congruent with the whole auction rule. But that’s not always the case. And that’s a good thing!

If your competitor has worse quality score than you do (the ad contains none of his keywords, the CTR is not very good, you know, all the things I’ve said before), then he will not get a higher spot than you currently have, even though he is paying 10 times more than you are! Isn’t this great?! That means that you can pay significantly less money and still have a better position, and it’s all thanks to your quality score. That’s its true power. So don’t ignore it.

Of course there’s a drawback as well. If you are the one with a poor quality score then you can kiss the cheap clicks goodbye, and some day you will probably see information saying that if you want your ad to be displayed you will have to pay e.g. $5 a click (sometimes even $15), even though your competition pays just $0.30 for the same clicks.

Google and its “moods”

AdWords is a very moody little machine. As soon as it notices that there’s something not quite right with your campaign (bad keywords, bad ads, bad landing page, anything really… even bad domain) it will let you know, and say something like this: “hey there, from now on I will not display any of your ads unless you pay me $10 for a click, have a nice day” … this is what we call a “Google Slap”. So if you want your marriage with AdWords to be a happy one, then you will have to put some work into it.

That’s pretty much it for my “Google AdWords Tips 101”. If I had to summarize this post in a single paragraph, then I would say something like this:

Choose the right keywords and set a real (according to the market) cost per click. Write your ads in a way that they contain your keywords. Send the traffic to a landing page that is consistent with your keywords and ads. And last but not least – test and improve your campaigns constantly until you get “good” or “great” quality score, and then test some more.

In the next post I will say something about the stuff that Google is not telling you when it comes to setting up your campaign. So stay tuned if you’re interested in this topic and want to learn AdWords. See you in the comments.

Here’s a list of articles you may also enjoy: