Why is Google Ads so popular

How do AdWords work

How do AdWords work? The basic process is very simple:

The steps in detail:

  1. A user enters a search query on Google.
  2. Your ad will appear on the search results page.
  3. The user clicks on this ad.
  4. It lands on your website and carries out the desired conversion there.

Google supports you by automatically displaying all values ​​in your AdWords account - how often an ad was shown, how often it was clicked, which keyword triggered this display, at which average position it was triggered. You only need an extension for tracking the conversion data presented.

All of these numbers are not an end in themselves. You can use it to discover weaknesses and strengths in your campaigns, and identify improvements and deteriorations. They thus form the basis for your optimizations. Because the numbers are collected for every element and level - campaign, ad group, keyword, and ad - your efforts can be very detailed and focused.

Search queries

Users who search on Google can do so for numerous reasons - they are looking for products, services, information or even solutions to a problem. Worldwide, 3.6 billion search queries are made on Google every day (source: http://adwords-de.blogspot.com/2011/01/der-wahre-wert-der-suche.html). For you as a provider of a certain service, of course, not all of them are of equal relevance, the majority are completely irrelevant.

For example, if you operate a delivery service for pizzas, you will be particularly interested in users who are looking for “pizza taxi” or “pizza delivery”. Search queries such as »home delivery« are less suitable for your service. It can mean pizzas, but also all other types of food. Your ad appears completely unsuitable when users search specifically for the »Pizzeria Pavarotti«, for »Keeping a diet« or for something completely different such as the »TV program«.

It is therefore a tremendous advantage that you can determine for yourself which of your AdWords campaigns Search queries You want your ads to appear.

Keywords

This is done using what are known as Keywords. For example, if you have stored the keyword “pizza taxi” and a user is looking for it, your ad will appear. If, on the other hand, he searches for "keep a diet", your advertisement will not appear.

Keywords are the words and word combinations that are used to find your product or service. More precisely: with which users are likely to search for your product or service.

Why is this clarification important? If you deliver pizzas, one of your keywords is, for example, »pizza taxi«. The fact that you consider your pizzas to be a special delicacy and therefore prefer to call yourself a “gourmet taxi” will not keep people hungry for pizza looking for one. If, on the other hand, a search is actually made for “gourmet taxi”, the user probably wasn't thinking of a pizza. Your ad will appear, but in the best case scenario it will go unnoticed.

Google Suggest

Go to Google and enter one of your keywords in the search field, so you will receive completions and suggestions as you type. This functionality is called »Google Suggest« and shows particularly popular and often searched search terms.

One of your most important tasks at AdWords will be to determine the right keywords for you and to be present in the search queries of your target group. Ideally, your ad exactly meets the searcher's result expectation and is not perceived as an annoying advertisement, but as a helpful service.

display

On the Google results page, you can only advertise with text ads - no videos, no images, no other formats. Each display is structured according to the same pattern:

  • A heading with a maximum of 25 characters
  • Two lines of text with a maximum of 35 characters each
  • An ad URL with a maximum of 35 characters

Invisible to the reader is the actual target URL, which you use to determine where the user will be linked to after their click. So you don't have a lot of space to convince a user of yourself. In addition, there are numerous “editorial guidelines” from Google that define what is allowed in the text and what is not. Nevertheless, you have to design your message in such a way that a user feels addressed, wants to see your offer and therefore clicks.

There is one thing you should take to heart - and this affects all of your AdWords efforts: Only promise what you can actually redeem on the website. There's no point in promoting the best spaghetti in town when you only have pizzas on offer. Not only does it not bring you anything, it even harms you - because you pay for clicks that will never lead to orders.

Ad position

The ad position indicates where you appear in the AdWords ad spaces. This positioning results from the ad rank, which in turn is calculated from the quality factor and the bid price.

The top position does not necessarily have to be the most successful. With highly competitive keywords, top positions can only be achieved with high click prices. If these are higher than the value of the visitor you have won, you lose money with every click.

Impressions

Impressions are advertisements or visual contacts. If your campaign reaches 1,000 impressions, your ads were shown 1,000 times on Google. In other words: 1,000 Google users searched for a keyword that you had stored in a certain period of time and therefore saw your ad. You can tell how many you were actually able to convince with your ad by the reaction of the users - namely by how often your ad was clicked.

Google Instant

“Google Instant” is the name of a function that displays search results while you are typing the search query.

Here, too, impressions can arise if a user

  • click anywhere on the search results page while typing,
  • clicks the search button, presses Enter or selects one of the suggestions or
  • stops typing and the displays remain on for at least three seconds.

Clicks

With AdWords in the search network, you will only be charged costs if a user clicks on your ad and thus comes to your website as a visitor. This billing model is called Cost-per-click or CPC. The advantage is obvious: you only have to pay if a user has been successfully referred to you by Google.

This model is significantly more success-oriented than advertising that is billed according to visual contacts (CPM, cost-per-1000 impressions, or CPM, thousand-contact price). Because you have no guarantee that someone will actually be brought to your site for your money. The goals for CPM models are therefore branding and reach in particular.

Click rate

The Click through rate (CTR) calculate. If 100 of the 1,000 users click on your ad, you have a click rate of 10%.

CTR = (number of clicks / number of impressions) * 100

The higher the click rate, the better. This realization is not as shallow as it seems at first. After all, with AdWords you pay per click, not per impression. As such, you might not really care how often your ad is shown. You might even think "the more often the better" - because this way more users can see your advertising.

In reality, however, the click-through rate for Google is one Component of the quality factor - and a very important one. The mindset behind this is simple: the more people click your ad, the better and more relevant it has to be. As you know from the quality model explained at the beginning, Google rewards relevance. Your “reward” in this case would be a better ad position and / or a lower actual click price to be paid. Conversely, the »punishment« is a worse position and / or a higher click price.

There are cases in which advertisers actually want to achieve as many free ads as possible by using bad texts to prevent clicks. If this approach is already incorrect per se, it will of course only work for a short time: The Google rating is getting worse and worse, so that the ad slips further and further back. Sooner or later it will therefore disappear from the relevant and visible area of ​​the results and can only be lifted back to the first page with an exorbitantly high bid price. In the end, the ad may not show at all due to poor quality.

So don't try to outsmart Google where Google makes the rules. Free impressions are all well and good - but ultimately Google wants your money, of course, and therefore devalues ​​advertisements without clicks.

Click price

The price per click is called Cost-per-click, CPC or simply Click price. What is the maximum cost of such a click, you set yourself with the maximum click price (maximum CPC or bid price). You tell Google what you are willing to pay for every single keyword. Google never exceeds this amount.

Since you set a maximum click price in AdWords, you have probably already expected that the actual price that Google charges you will be lower. The basis of the calculation is the so-called AdWords discounter. Here is a simple example:

  • For your keyword "pizza taxi" you choose a maximum click price of 0.20 euros, whereas your competitor chooses 0.15 euros. This puts you ahead of this competitor.
  • To take this position, however, 0.16 euros would have been enough as the maximum click price. And you only pay this 0.16 euros.
  • If your competitor increases his maximum CPC to 0.19 euros, you will now pay 0.20 euros - always exactly the amount that is required to hold your position.
  • However, if your competitor is now ready to pay 0.24 euros, he will "overtake" you in terms of ad placement. It slides up one position, displacing you one place down. Your new click price will in turn be calculated in such a way that you hold exactly this new, one place worse positioning - thus one cent higher than what was previously placed two places below you.

If Google were to only allocate its ad spaces according to this principle, it would be a pure auction in which those willing to pay are regularly positioned at the top - even with ads that do not match the user's search query well.

But you will remember that it is in Google's own interest that it is very important to provide its users with the most relevant results possible. Therefore, the calculation of both the ad placement and the actual click price is made up of two components: the bid price and the quality factor, which takes relevance into account. Through this Quality factor it becomes possible that you are ranked ahead of your competitors even at lower costs.

Landing page

The page to which your ad leads the user is called the landing page or target page. It is the first page that the user sees from you after clicking on your advertisement on Google. Move the mouse pointer over the double arrow next to the search results (Instant preview), you will get a preview of the target page without actually having to click. So it's not surprising that that first impression is vital.

You decide where you link your new visitor to when you create your ad. You can set a different landing page for each individual ad and even for each individual keyword.

You basically have two options: Either you lead the user to an existing page on your website or you create a new landing page specially designed for this purpose. Even if landing pages only seem to touch on the topic of »AdWords«: They not only influence the quality factor, but also make a significant difference to the success and failure of your advertising campaigns.

Conversions

Why do you run AdWords? Most of the time, you don't just want to greet as many new visitors as possible on your website. Rather, you want these visitors to perform a certain action: buy a product, download a price list, fill out an inquiry form, sign up for a newsletter and much more. This act is called Conversion.

The conversion is your actual goal (which is why conversion in Google Analytics is also called goal or target conversion). Because a lot of traffic on your website can be quite gratifying. With that, you have not yet sold an additional pizza, to stay with the example on the previous pages. Because 1,000 new visitors doesn't mean that your stove is smoking.

It is therefore very important for you to know how many conversions or orders you achieve with the new visitors and thus with your AdWords spending.

You can view the conversions resulting from your AdWords campaigns directly in your AdWords account. This requires the installation of a tracking code on the conversion page, which Google makes available to you. It is highly advisable not to create a campaign without concrete, measurable conversion figures.

Conversion rate

The Conversion rate is the percentage of your visitors via AdWords who actually took the action you specified. The basis of the calculation is therefore the number of clicks:

Conv rate = (number of conversions / number of clicks) * 100

In particular, the conversion rate gives you information about the »quality« of your visitors and about your landing page:

  • In one month, your AdWords ads brought 10,000 new visitors to your website. This resulted in 1,000 pizza orders on your website. Your conversion rate was 10%.
  • In the next month you were able to win another 10,000 new visitors, but the orders were only 500 pieces. Your conversion rate was halved, no longer every 10th, but only every 20th visitor ordered a pizza - the "quality" of your customers fell.

The reasons for this can be varied and result from the changes that you have made in the period under review. Perhaps you put a new landing page online that instead of an improvement, it was deteriorating. Perhaps you added new keywords that brought in visitors but not customers.

You can see how important it is to track conversions. You would not have noticed any change in the number of clicks alone, as this has remained the same. In fact, however, your result got halved.

But you also realize that you are pursuing a different goal than Google: While the highest possible conversion rate is important to you, Google evaluates the click rate as a quality criterion. Since both sizes can contradict each other, you have to consider these different objectives and bring them into line accordingly.

Cost per conversion

The "Cost per conversion«Result from the number of conversions in relation to the costs or your campaign budget:

Cost = clicks * average CPC cost per conversion = cost / number of conversions

In the example above, a click should have cost you an average of EUR 0.25. For the 10,000 new visitors that AdWords brought you, you paid 2,500 euros.

  • In the first month you were able to sell 1,000 pizzas over it. So you paid Google 2.50 euros for each pizza order.
  • With only 500 pizzas in the next month, the cost per order doubled, so it was already 5 euros.

Depending on the average Order value This development can decide whether the AdWords placement is worthwhile for you or not. If you only order one pizza worth 7 euros per order, you might still have a profit in the first month with ingredients, travel expenses, etc. In the second month it was at least very close.

The order value you achieve per conversion can be displayed dynamically after the conversion tracking has been installed. You can also save a certain average order value as a fixed amount.

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