Google holds over 65% of the search market share in Australia and is by far the biggest search engine worldwide (Yahoo holds approximately 17% and Microsoft Live 15% market share in Australia). The primary revenue generator for Google is the advertising which appears when search results are returned; these adverts are called Adwords by Google (see the example further down this post).
How Adwords Works
Where a web page appears in the organic results returned by Google cannot be directly influenced (however efforts can be made to improve where in the search results a web page may be returned; this is called Search Engine Optimization – SEO). The positioning of adverts (Adwords) in returned search results can however be influenced directly.
Adwords ranks adverts (i.e. decides where to place an advert – with the best placement being on the first page of returned search results and near the top of the page) according to a combination of two basic variables;
- How much the advertiser is willing to pay for each click of the advert;
- The ratio of the number of times the advert has been clicked against how often it has been shown (the advertiser only pays Google for the advert when someone clicks on the advert therefore it is Google’s interests to show adverts which people are inclined to click). This is called the Click Through Rate (CTR).
As a combination of the two variables above determines advert placement it is possible to pay a higher cost than a competitor for each advert click even though your advert may not be positioned as high on the page as the competitor (in this case the competitor would have a higher CTR).
Can anyone Advertise on Google
Almost anyone is free to sign up for an Adwords account (exceptions include illegal content). Managing your adverts can however take up some time and does require a bit of a learning curve. The basics to getting up and running on Adwords are (please note that there are many more options than shown below however the steps are typical for a new Adwords user);
- Have a website
- Set up an Adwords account
- Specify the maximum you want to spend on advertising in total each day
- Determine when your advert is to appear (i.e. choose search terms relevant to your advert – this is important as it will have direct effect on CTR).
- Enter the maximum you are willing to pay for each click of your advert
- Detail the heading and content of your advert and the URL (website page) where you want people to be directed when your ad is clicked.
As can be seen from the points above, Adwords is ideal for all size organizations as one can specify a maximum daily spend. Where Adwords also beats traditional advertising including Yellow Pages and Newspaper Advertising is that you are able to determine daily, though the Adwords account, how many people clicked on your advert. Furthermore there is no cost to display the advert with Adwords as Google only charge when the advert is clicked by a viewer.
Getting up and Running with Adwords
Most organizations employ a consultancy to manage their Adwords spend. As mentioned before, Adwords is time consuming for those new to it and more often than not, decision makers in organizations do not have the available time or resources to spend on Adwords. My recommendation is to employ a consultant, at least initially. All organizations (even very small businesses) are likely to benefit from advertising on Google.
What to spend less on marketing and advertising and get a better result from your advertising spend? Contact me so I can meet with you to see how Adwords may benefit your organization.
The image below illustrates where Adwords are presented in Google search results. This example shows just how beneficial Adwords may be; In the search as illustrated, over 3400 organic results have been returned. It would be very difficult to get among the first few organic results returned for my search and it is very unlikely that many people would view more than the first few organic results returned.
With Adwords, it is possible to pay for a highly visible listing (and payment is made only when the Adword is clicked). It is unlikely to cost more than a few dollars per click to have an advert appear prominently.
An Adwords Case Study
My car mechanic specialises in LPG car conversions. Business was a bit quiet and Yellow Pages advertising wasn’t returning great results so he decided to hire an Adwords consultant (his advertising budget was $400 per month).
The consultant assisted with setting up a basic website and then managed the Adwords for the mechanic (bear in mind that the mechanic works by himself and doesn’t have the time to spend actively managing his advertising).
The response the mechanic received from the Google advertising was overwhelming and he has ceased any other advertising. Because the Google Adverts are targeted geographically and by keyword the mechanic is only getting genuinely interested people inquiring. He also only pays for adverts where the customer actively clicks the advert (as opposed to Yellow Pages where he pays to display the advert irrespective of whether people even see the advert).
The mechanic started his Google advertising campaign over a year and a half ago and still uses Adwords, through the Adwords consultant, as his sole advertising. He now spends a maximum of $500 a month on Google Advertising and has a waiting list of people wanting LPG conversions.