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The Google AdWords service offers you both a marketing media and a laboratory to test your marketing ideas and even the potential direction and viability of your start-up business. For a comparatively small cost, you can quickly get enormously valuable insights into your actual or potential market.

Most people are probably aware of Google AdWords these days.  These are the paid advertisements that appear at various places in a return from a Google search.  You pay varying amounts of money depending on the popularity of your keyword and how long you want to run it for.

You may think of Google AdWords primarily as an advertising media intended to draw more buyers to your website.  That is certainly the normal use of the methodology.  It may be expensive, but if your sales are sufficient to offset that cost, then it can be a handy advertising media.

There is a second novel use of Google AdWords to test the viability of proposed new business directions using the internet.  Properly used, AdWords can bring buyers to test pages where you are testing new products, methods, prices and any other variable that you are uncertain about (see AdWords for Strategy article).

Having brought people to your page, you can measure the results and make quick decisions on whether the proposed changes are financially viable.  In this way, you can use A/B Testing (see A/B Testing article) to quickly ratchet through several alternative solutions to marketing your product on the web to arrive fairly quickly at the more economically viable.

This is an introduction to AdWords and to its conventional use as a marketing tool.  You can read more about its use for strategic decision making in our AdWords for Strategy article once you are familiar with these basic principles.

Get Ready

We often mention the 80/20 principle in Profit Savvy (see the Amazing 80/20 Rule article).  But AdWords advertising is rather more like a 90/10 game.  People are so fixated on the first few search results on the first page of a Google search, that they often do not go past these when searching.

This also applies to AdWords.  If you are not near the top of the first page, you may not get found very often.  Certainly, if you are a fair way down the first, or any following pages, your click through will decrease.

If you are using AdWords as an exploration tool, this doesn't matter too much.  If you want to maximise your income, then clearly being on the best piece of real estate will generate you the most leads and therefore likely the most profit.  Experts suggest that 2% of the advertisers in AdWords get 50% of the traffic.

Ideally, you will want to be at the top of an AdWords display on the first page.  Depending on what your product is, you may have a great deal of competition and therefore must pay a great deal of money to achieve this place.  The advertising expense may not leave you a sufficient return to make the exercise profitable.

If you can't be the big fish in the big pond, shrink the size of the pond so that you end up being a big fish in the rather smaller pond.  Eventually you will achieve good ranking on the front page at a lower price and you can begin to reap the benefits.

Once you have established a beachhead in the niche of your choosing, you can then spend time refining your beachhead so that your number of clicks remains the same or grows but your expense continues to drop.

You achieve this by experimenting with different combinations of text in your advertisements and mercilessly rejecting the ones with poor performance.  You will gradually ratchet up the results you get from your advertisements - often at no extra cost.  This is known as A/B Testing (see A/B Testing article).

Get an AdWords Account

The first step to using AdWords to test various hypotheses about your proposed website and the product that you intend to sell is to open a Google AdWords account.
The accounts themselves are free, but you will need to put money in on a credit card to pay for the advertising clicks.

If you have a Google Analytics account to monitor your website, you can connect the two tools together to make the Analytics even more powerful.

Select Your Keywords

You want to make a broad search through the keywords that potential customers are likely to use to find you.

Let’s say that, for example, you are selling safety equipment.

People will probably search for various specific types of safety equipment so the keyword “safety equipment” is likely far too broad to be of much use.

Write down 8 to 10 types of safety equipment products that you think are likely to be the best sellers and use them as the basis to refine your AdWords campaign.  You may draw the list of the most important items from the products that already sell best in your retail store and hope that they are also best sellers on the internet.

For our safety equipment example, we might have product keywords like:

  • First aid kit.
  • Safety signage.
  • Safety footwear.
  • Safety clothing.
  • Sun protection equipment.

Assemble Your Keywords

We now want to begin to determine which of these keywords are likely to sell well and therefore to keep them in your portfolio.

Build Groups

You do not want to keep keywords that do not sell well and potentially you do not want to keep keywords that are very expensive.

But it is impossible for you to know in advance which keywords are going to work best, so we suggest that you setup an AdWords group for each of these principle keywords that you identified in the previous step.

Keyword Search

Enter each of these principal keywords into Google Keyword Planner and you will begin to see the frequency and popularity of various search terms drawn from each of your principle keywords.

At this step, note 10-12 of the most suitable keywords for each principal keyword/group for further experimentation.

Keep in mind that you need to consider some combination of popularity and the price you must pay.  The more popular the term, the more you must pay unless you fortuitously land upon a niche where there isn't very much competitive pressure.  This might be the case if you have a very localised search in mind.

Use an 80/20 approach to shortlist the chosen group of keyword variations for each of your principal keywords.

Decide Your Budget

Initially you are experimenting to find out what are the most successful keyword permutations of your product.  Because you have no idea if something will be a runaway success, you do not want to have an unlimited budget, or you might wake up to a very large bill!

At least initially, set your budget comparatively low so that you can gather information upon what is likely to be successful and what is not.

Over time use A/B Testing to gradually improve your success rate.

As people begin to buy from you, you are generating revenue from your keywords which in turn allows you to pay more for your best-selling keywords.

The actual amount that you are prepared to pay for a keyword is very much a management choice based on your particular circumstances.  There is no simple formula for this.

Get Set: Setting Up Your First Campaign

Google offers a range of campaign types but for simplicity you should start with "Search Network Only" as this will limit the appearance of your ad to Google's results.

Geographic Cover

Select your preferred geographic location.  This should be the final area of coverage that you hope your web business will reach out to.

If you initially choose a larger or smaller geographic selection than you finally intend to target, your results may not reflect the real information for your final geographic area.

Set Daily Budget

AdWords can become expensive if you happen to hit on a popular area with a lot of competing advertisers who bid up the per click price.

They can also become expensive if you have a combination that a lot of people search for and therefore your keyword is frequently displayed.

To begin with, you might be wise to apply a throttle about how many ads you will run daily and how much you want to spend on any day.  Until you begin the process, it is probably difficult to work out how much it will cost you.

By setting a maximum amount to spend each day, you can avoid any nasty surprises from a runaway successful AdWords.

Start with a comparatively small daily budget and bid price according to what you think is affordable

If you find no-one bids at that price, gradually up your bid until you start to get a moderate number of "nibbles" so that you can start to generate the statistical data that you are looking for.

Draft Your Advertisements

Your Google Ad is rather like a miniature web page in its own right.

It ideally has an eye-catching headline and a short amount of descriptive text that explains the benefits of what you have to offer, then a Call to Action to click on a link to visit the landing page specifically designed for this combination

Experts recommend putting the keyword in the heading of your advertisement as that is what people have searched for.  When the keyword appears in your advertisement this further locks in what you are offering.

There are two remaining lines available for each advertisement.  Experts suggest you will be more successful if you put a benefit on the second line and a feature or offer on the third line.  Remember, you have no real idea of which combination of the wording on these lines is likely to work.  Spend a lot of time devoted to improving your advertisements to get better and better results.

Also, you have the option to run more than one advertisement for each of those combinationsA/B Testing tells us that you should be running at least 2 versions of your ad for each of these combinations, otherwise you have no way of determining how successful your ad is compared to other possible versions.  A/B Testing is your friend here.

Landing Pages

There is space for you to put a URL to your website.  You can put your home page address of your website but this is likely to be a less than perfect solution.

You would be wiser to create a "landing page" for each of the major keywords that you have in mind.  That way, when a person clicks on your AdWord and lands on the landing page they are landing on a page that is rich in the keyword that they searched for.

With our example of safety products, if someone lands on your home page of your website and can't immediately see, for example, first aid kits, they may not take the time to move around your site and find the first aid kits.  Therefore, you have paid for the eyeball to visit you but failed to reap the benefit.

Constructing a landing page for first aid kits that is very rich in information on them, and that a potential buyer will find useful, means that you keep their attention for as long as possible.

Elsewhere in Profit Savvy, we discuss writing copy for web pages and if you are uncertain about how to go about this, you might read more on that (see Kaizen articleArticle).

Reduce Wasted Searches

Rather than spray your money around indiscriminately, we can take a few steps to focus what AdWords you buy.

Low Popularity

When searching through Google for potential keyword search terms, bear in mind that Google aggregates a very large number of searches.

If they don't show the search term you are considering as very popular, then you are not going to get very many people searching for it no matter what you do.

This is not a problem if you have a highly focused product range, and in fact would be an advantage, as your competition is not too great.

However, if it is a search term for something that is very widely in demand, like our first aid kits, then a low number of searches is likely to mean that nobody searches with those terms.

Negative Terms

You can also improve the focus of your AdWords by identifying negative keywords where you do not want to pay for clicks.

With our safety example, you might identify the search term "safety pins" as a negative keyword because it is a product that you do not sell.

If you are selling safety boots, you might identify other types of shoes and boots such as slippers, dress shoes, stilettos and so on as negative keywords so that you do not end up paying for those as well.

Exact Match

If you would like an exact match, you can put that phrase in square brackets [ ].

For example, if we want a swimmer’s first aid kit only, we would write [swimming first aid kit].  That will mean that people adding any term to the search phrase swimming first aid kit, such as the word red, will never be shown your advertisement because it is not an exact match.  Therefore, using too many exact matches can dramatically reduce the number of people who see your ad.

Exact matches might be good for advertising brand names if people are searching on e.g. Bose speakers.

Alternatively, you can use a phrase match which is identified by putting your search term in inverted commas e.g. "swimming first aid kit".  In this case, it will show up for anyone typing “swimming first aid kit” and any other phrases around that core search term.

You can also use a modified broad match approach. In this instance, you use a plus sign (+) against any one or more terms that must appear in the search.  In our first aid example, we might put the plus sign in front of first so that we have “+first aid” kit.

In this example, your ads will get shown whenever first aid appears in a search term.  Clearly, this is not a very good outcome for us, in this instance, because we will get a lot of other first aid kit inquiries rather than just swimming ones which we are trying to focus on.  It does, however, give an example of how it would work.

If you are just starting out with your campaign, you probably don't want this level of sophistication because you are still at the sledge hammer stage of testing as much as you can as quickly as you can.  Later, you can become more precise in your search terms as you better understand what does and does not work.

It is best not to use the phrase match or broad match for keywords that only have one word.  If you only put one word, then you aren't giving Google very much to work with and the results could be very distorted.

Lots of Combinations

Now you have formed a collection of keyword groups and for each of these several permutations of search phrases that people might use.

You have probably also realised, that you can end up with many potential keywords that you are running for clicks.  With our Safety Store example, if you have 8 principle products and 4 principle variations on each you have a family of 32 keyword groups in operation.  We always want to A/B Test the advertisements.  If we have two ads, we have something in the order of 64 advertisements running for our Online Safety Store example.

If you find that a bit overwhelming, from the point of view of the time or budget involved, you could reduce the number of principle keywords.

You probably do not want to reduce the number of search terms or the A/B Testing of the ads because having that range of data is how you arrive at a somewhat optimal solution.

It is better to limit the number of principal keyword groups initially (first aid kits, boots, signage) and perfect the ones that you think are the most likely best sellers.
Having cut through to a point where you have a reasonable ad campaign for that limited number of products, you could then add more products once your original ones are earning enough money from sales to cover your future expanded AdWords campaign.

Go: Tweaking

We are now ready to test the life out of your starting point.

Without doubt you can improve on the results of your first campaign.  We will cover how to do that in this section.  This process of incremental improvement is often referred to as “Kaizen” (see the Kaizen article for more general information).

As you study the results of your campaign, you will be making small tweaks to your keyword selection and your advertisements.

Small Improvements, Big Impact

It is quite remarkable how a small improvement can add up to a very significant impact.

For example, assume you are running an ad that gets a 2.2% click through success rate.  You make a change that moves you to a 3% success rate.  That 0.8% improvement doesn't sound very much but when you consider that it is equivalent to an improvement of 36% (0.8/2.2=36.3), or well over 1/3, that is quite impressive.

Costs Might Fall

Incidentally, the more focused your keywords are, the more likely that you will move up the page for that specific search without paying any more money.  By reducing the size of your niche, you also reduce the number of competitors and therefore your ad has a better chance of rising to the top without paying any more.

In fact, it is entirely possible that you may pay less because the competition from first aid kits, other than sports or swimming ones, (even better if you limit to just swimming ones), is reduced and you do not need to spend as much money.

One of the other reasons why this tightening on the focus of your keywords is likely to work is that you will be putting those particular keywords in the first line of your advertisements, people are increasingly focused on swimming first aid kits rather than the more generic first aid kits.

Tweak Your Keywords

Promote Best Performers

As you start to get data on the results of running your AdWords campaigns, you might find that several different keywords produce rather similar results.

From our first aid kit example, it might be that school first aid kits and sports first aid kits both pull very well and a lot better than the others.  This is the well-known 80/20 Rule coming into effect (see The Amazing 80/20 Rule article).

While these high flyers remain buried among the other keywords for first aid kits, they are going to be lost in the masses.

Experience suggests that you should pull out these comparatively well performing but different keywords and start a new keyword category for them.

If we took sports first aid kits, for example, we might put other keywords around them to do with the type of sports.

For example, as the contents of the first aid kit may differ between football and swimming you would change your advertisements accordingly and you are likely to further increase the pulling power of your ads.

This is also part of the process of learning just what works for customers.

You can also quickly ratchet up the success rate of your ads by this process.

If our original “sports first aid kit” had a success rate of 2.2% click through and when we broke it out to be the more specific “swimming first aid kit” it had a 5% success rate, that means you have improved the click through rate by almost 100%; a very impressive result!

Demote Poor Performers

You want to keep focusing on the keyword groups and their keywords that do well.

This is the 80/20 Rule at work and you can afford to be pretty tough on the stragglers because you won’t be losing too many clicks without them.

You may be tempted to pause poorly performing keywords.  Unfortunately, if you do so, all the data that has been collected for that keyword will be removed and you will not be able to go back to it in the future.  A better approach might be to reduce the pay per click to a very low figure so that the data stays there but the ad does not show as it is too low a value for Google to ever display.  If things get too cluttered, you could extract the data into a spreadsheet and preserve it there.

Tweak Your Ads

Earlier we recommended that you always run at least two ads for each keyword group.

If you run just one, you have no idea if that is the best worded advert because you have no comparative benchmark.  Enter A/B Testing (see A/B Testing article for more).

No one has a clue what viewers will best respond to so this is a process of experimentation.

  • As you get results for each adverts’ performance (the A and B versions), if you are lucky you will find one works better than the other (in this case A).
  • Pause the B and create a new B based on the best performer (A) but playing around with some of the wording.
  • Run them both again and look for the winner.
  • Repeat the process.

If they both have similar results, pause one and try a very different advert as the new B to try to break this logjam.  Another similar one will also get similar results so you are not improving.

Tweak Your Landing Pages

You have created a custom landing page for each keyword group.

Your AdWords Analytics will tell you how many people landed on it and then engaged in some next step (registration, purchase, inquiry etc.).

Until they engage in a next step, your landing page is not compelling enough.

A/B test your landing page to develop a more compelling reason for visitors to click off around the rest of your site.

See the next section for the tasks that a good landing page has to accomplish.

Tweak for Your Visitors

Not all people searching for first aid kits (in our example) have the same intention.

The classic “sales funnel” (see Sales Funnel article), tells us that people are at various stages of the sales cycle.

Browsers

Some of them will be browsing for generic information on first aid kits with no real intention to buy one now.  Perhaps some small proportion of those people might convert to shoppers on the spot but it is not likely to be significant.

These people may have some future value to you so you could attempt to direct them to an information page where you collect their email address to send a newsletter from time to time.  That email marketing system keeps "tickling" or "drip feeding" them so that when the light bulb to consume does go on, they will remember you.

Shoppers

A second group are shopping but they are still researching what it is that they want to buy.

You certainly want to keep in the front of the minds of these people so that, if and when they do purchase at some future date, you might be considered as a potential supplier.

Buyers

The third group are ready to buy right now.

Naturally, you want these people to purchase off your site.

If you are getting a lot of visitors but not so many buyers, consider revising your keywords using the following keyword filtering techniques so that you only attract those most interested in buying.

Adapting for the Visitor

Interestingly, the search terms that people use will vary according to their preparedness to buy.

Continuing with our first aid kit example, browsers might respond to the simple search term first aid kits.  They may further subset their search by a type of first aid kit, such as for swimmers.

Those that are shopping will be rather more specific in what they are looking for so that they may specify a particular type of first aid kit, such as football or swimming, or they may specify a particular brand of first aid kit if there are well known brands.

The third group, our buyers, will be very specific in what product they are searching for and are likely to have some "action" tag in their search term as well, like the words "order", "buy", or "best price".

Depending on the purpose of your website, and if you want to economise on your expenditure, you might use search terms that are most likely to be entered by buyers.

If you have a buyer oriented landing page, such as an order form, your AdWords and Google Analytics combined can give you a very clear indication of which combination of keywords and advertising copy is delivering the most actual buyers.

Normally the Google AdWords and Analytics data collection systems will be sufficient for you to manage your AdWords campaign.  However, there are plenty of other software applications that you can choose from that might give you data from a different slant or collect different types of data.  Examples of such other management systems include SpyFu, WordStream, Wordtracker and AdGooroo.

Rinse and Repeat

This cycle of test, select the best/demote the worst, test again can go on indefinitely.

If you monitor the incremental improvement of your tweaking, at some point the growth curve will start to flatten out.

Continuing to tweak after this point is akin to the evil multitasking (see Multitasking article) and is not an effective use of your time.

It may well be better to tweak less frequently and wait for another bright idea to float into your mind while in the shower.  A brand new angle can give you a major improvement rather than the increasingly smaller gain from rehashing the same old keywords.

See Also

AdWords and also be used for market research and testing business startup ideas.  See Adwords for Strategy article.

Resources

A very good book to read about AdWords is the "Ultimate Guide to Google AdWords: How to Access 100 Million People" by Perry Marshall.  Perry has also written similar books on Facebook.  If you would like to know whether your business is likely to qualify for Facebook advertising, visit Perry's free website tool at www.isfbforme.com.  For a similar guide to whether your business is a likely candidate for AdWords, visit his webpage with the free assessment tool at www.isawforme.com.  If you are potentially interested in advertising on Facebook, see "The Ultimate Guide to Facebook Advertising" by the same author.

Richard Stokes: "Ultimate Guide to Pay-Per-Click Advertising" (2010).

Howie Jacobson book “AdWords for Dummies” is highly recommended on Amazon.

Wikipedia: In marketing and business intelligence, A/B testing is a term for a randomised experiment with two variants, A and B, which are the control and variation in the controlled experiment. Read more about A/B testing at Wikipedia.

Google AdWords training in Youtube: "Best Google AdWords Tutorial Ever October 2016!" by Jerry Banfield (Oct 9, 2016). Watch this video to see how to make ads in Google AdWords for search network, display network, and YouTube videos in the newest interface including expanded text and responsive image ads!

Google Website: Welcome to the Adwords Help Centre. Topics covered are: setup and basics, manage ads, measure results, billing, learn (guide to Adwords, new Adwords features, account walk throughs).

Google Adwords: Get your ad on google today, start now!! Information on How it Works, Pricing, Marketing Goals, Tools, Resources.

Google Keyword Planner training in Youtube: "Tutorial 2016 - HOW TO Use GOOGLE KEYWORD PLANNER | 2016 The Best Way" by Bogdan Cariman (Feb 26, 2016). Listen to the tutorial here.

Google Website: It is worth checking the Google website for current information. See here for information on Keyword Planner.

 

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