You’ve heard the name everywhere, and you’ve probably even used it without even knowing, but you don’t really understand what it is, or why it should matter to your business. It’s not quite magic, but it can be a mystery – I’m talking about Google AdWords.

Let’s be brutally honest here – with any new business tool, everything pretty much boils down to three main questions – what is it, how does it work, and what do I need to do so that it starts making my business more money? They’re simple questions, and you deserve a simple answer – so lets get stuck into it:

how google adwords works - How Does Google AdWords Work?

1) What is Google AdWords?

Google AdWords is a sponsored (paid) Search Results platform – where businesses pay Google money to have their search results placed above everyone else’s for certain. It’s the main way that Google makes its revenue (USD$42.5 billion in 2012 according to Wikipedia), and works on a ‘Cost Per Click’ basis.

understanding how google adwords quality score works 288x300 - How Does Google AdWords Work?That is, rather than with a TV Advertisement where you’re paying for an expected audience size, Google only charges you when someone actively clicks on your paid search result.

In order to ensure that Businesses use only quality advertisements for relevant products and services, they also integrate a ‘quality score‘ calculator – the more that Google believes your website helps visitors and is showing potential customers what it is they’re looking for, Google will give you a discount on how much that ‘cost per click’ actually is.

Of course, if your ad is talking about hairdressing, but links to a page about carpentry – expect Google to give you a heavy penalty (sometimes in excess of a 1,000% surcharge – wowzer!).

This helps keep Google’s searchers happy (Good for Google) and gives honest businesses a chance to save money and generate more leads (Good for Businesses too).

2) How Does Google AdWords Work (and what does it look like)?

It’s little surprise that Google likes people more when they give them money (I can certainly see the appeal), but there’s a little bit more to it than that, as there are rules regarding how this sort of thing can work that try and make sure that things remain fair for everyone.

When creating a Google AdWords advertisement, Businesses write a subject, two short lines of text for the body, and select a URL that they want to point their advertisement to. There’s a few rules, character limits, and restrictions on how many symbols you can have, but in the end – it’s all about making sure your point is memorable, easy to understand, and makes people want to click it.

Once that is done, you then need to select a series of “keywords” (things people search for – such as “hairdresser sunshine coast”) that you want your ad to show up on. This is where things start to get a little tricky, because knowing the right keywords can make or break your campaign.

Finally, you nominate how much you’re willing to pay as a maximum ‘per click’ for these keywords, as well as a total monthly/daily budget.

Google AdWord’s Cost-Per-Click billing system relies on an automated silent auction (a little like buying things on ebay).

An Example:

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– Google AdWords Example (Click For Larger Image)

While there are several other factors that affect the price, such as your Website & Advertisement Quality Score, whether you’re both targeting the same ‘spot’ on the search results (like if you wanted to be 3rd on the list, rather than 1st), and so on, for the sake of simplicity in this example – we’ll assume that both companies have similar advertisements and websites, are both aiming for 1st place, and neither have blown their AdWords budget yet.

If you had two hair dressers (“SnipSnip Inc.” & “Example Cuts“) are bidding on the same keyword to the same target audience (we’ll stick the “hairdresser sunshine coast” phrase for this), Google will have both Businesses silently bid against each other to work out who’s ad is at the top.

This means that if SnipSnip Inc. set their maximum bid on “hairdresser sunshine coast” at $1.50/click, but Example Cuts sets their maximum as $2.00, assuming all other factors are the same, Example Cuts will most likely get the first place position for around $1.55/click.

The real formulas are a lot more advanced than that, there is almost always more than just two companies competing, and there is generally ‘room’ for around 10 different Google AdWords results on each Google Search Results page, but that’s pretty much the crux of it all.

3) How Can Google AdWords Make Your Business More Money?

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While Search Engine Optimisation works through the gradual process of building your websites online reputation, becoming the trusted authority on a subject as your website starts to slowly raise through the ranks of Google towards the front page, this incredibly vital SEO process does have one downside:

As a long term project focused on your website’s future, SEO isn’t an rapid-deployment solution to get you more traffic ‘today’.

When you need quality targeted traffic from search engines quickly, and have an understanding as to what each lead is worth to your business in monetary terms, then Google AdWords is for you.

Marketing theProduct can help you design, write, test, track, measure, and consistently improve your Google AdWords campaign – giving you the leads you want, in the time frame you need, within a fixed budget you can set.

With Google AdWords Campaign Management Services ranging from as little as a few hundred to tens of thousands of dollars per month, you can be sure that Marketing theProduct have options to suit every budget.

Remember, while Google AdWords is a fantastic compliment to any Search Engine Optimisation campaign, it isn’t a replacement. To ensure you’re getting the best AdWords Quality Score (and thus the best pricing per click), you need to make sure your website is also well optimised.

Inversely, having an AdWords Campaign actually helps your organic SEO campaign as well, as research has indicated that Google actually provides a ‘boost’ to your organic search results while you are also running a paid campaign (when we said Google likes people more who pay them money – we weren’t kidding).

If you want to find out how your website or online business can benefit from an effective Google AdWords & SEO Campaign, Contact Marketing theProduct on (07) 5370 2400 or complete the form below.

how does google adwords work - How Does Google AdWords Work?