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What Is Adwords?

For businesses everywhere, Adwords is one of the essential marketing platforms for generating a quick ROI. Here's everything you need to know about what it is, how it works, and useful strategies.

Ask digital marketers to tell you the most cost-effective, fastest way to get an astounding ROI, and they’ll say the same thing: Google Adwords.

And they’d be right. 

Adwords is undoubtedly the fastest and most cost-effective way to get the right offer directly in front of your target market– who are ready to click, convert, buy. 

That’s why, even with all the other ad platforms available, marketers and business owners alike are investing the majority of their online advertising dollars in Google. 

In 2021 alone, more than 1.3 million businesses across the United States benefited from using Google’s advertising solutions. 

So, what is Adwords and how does it work?

In this guide, we’ll cover the essentials. This Google Ads guide will go over:

  • What is Google Ads and how its auction system function

  • How the search figures out how to order every Google ad

  • How to run a Google Ads account

  • Must-know terms for Google Ads

It’s time to get started on the Google Ads platform and how it can benefit your website today!

 

What is Google Ads (Formerly Known as Google Adwords)?

Google Ads (or AdWords) is a pay-per-click advertising platform run by the popular search engine Google. 

Pay per click (PPC) advertising means you only pay when people click on your ad. 

The platform is split into two networks: the Google Search Network and the Google Display Network.

When advertising on the Search Network, advertisers place ads on Google’s search engine results page (SERP). 

On the Display Network, advertisers place display ads on Google’s network of sites across the internet.

Note: Google Adwords has recently rebranded as Google Ads – so if you hear marketers talk about Google Ads, it’s the same thing. 

Search ads from Google Adwords normally appear at the top of a SERP and are marked by a small green ‘ad’ label:

cheap home loans search example

 

How Google Ads work 

When someone searches for something on their search engine – whether it’s products or services – Google looks at the advertisers on Adwords.

If one of more advertisers are bidding on the keywords that Google determines as relevant to the search query, it triggers an auction. 

Advertisers identify keywords they want to bid on and create groupings of these keywords that are paired with ads and landing pages. Then, they specify how much they want to spend (usually on a per-click basis).

Now for the really important bit:

Google takes the keyword from your account that it sees as most relevant and enters it into the auction along with your maximum bid and the associated ad you’ve created. 

Pro Tip: You can only have ONE ad entry into any query auction at a time.

Then the winning ads are shown on the search results.

How does the Google auction work?

Millions of auctions happen every day on Google, with thousands of searches happening every second on a variety of search terms. As such, you’ll probably want to know the basics of how a Google auction usually runs.

To enter a Google auction, all you’d need to do is create an eligible Google ad and place a bid on the keyword you wish to be seen on. Once placed, your bid and the ad will then get placed into the auction for the keyword you wish to display for.

In summary, a Google auction typically goes like this:

  1. Whenever someone decides to conduct a search on Google or on a site that shows ads, the Google Ads platform rounds up all the relevant ads that mention or match the keywords in that search. 

  2. Google then sifts through all the ads and removes any that are ineligible. This includes those targeting another country or language as well as ads that violate any ad policies.

  3. From the ads that remain, Google only shows ads that have a high enough Ad Rank.

How does Google work out which ad to show where?

The thing that makes Google Ads different from other PPC platforms is how often an ad shows, its position on the SERP, and how much it costs depend on two key factors: 

Maximum CPC bid x Quality Score 

The maximum CPC bid is the maximum cost-per-click bid you have specified and are willing to pay for your keyword. For example, you might set you maximum bid as $1.20 per keyword. 

What’s the difference between Ad Rank and Quality Score?

Quality Score is a metric that Google uses to determine how relevant and useful your ad is to the user. When Google reviews your ad, it’ll look over a number of factors including your keywords, ad relevance, as well as landing page experience before deciding your Quality Score.

In comparison, Ad Rank decides where your ads will be positioned taking into account your Quality Score as well as your maximum CPC bid. 

The higher your Quality Score, the higher your Ad Rank will be for search terms you’re targeting — and therefore, the stronger your Adwords campaign performance, so it’s critical to focus on improving your Quality Score to get the best from your campaign (more on that later).

Even the slightest changes to your ad optimizations can have a massive effect on your Quality Score and in turn your Ad Rank. As such, if you really want to boost your Ad Rank, be sure to take your time when creating each Google Ads campaign.

The best CPC bid x Quality Score wins the best position. 

Now your ad has been placed, the PPC part comes into play. 

You pay the minimum amount if your ad is clicked on. This means, if you have a high Quality Score, you can end up paying less for a higher position than other advertisers who have a lower quality score. 

Pro Tip: Google offers other bidding strategies other than just CPC. You can use CPM bidding (Cost Per Impression) and CPA bidding (Cost Per Acquisition). 

Why use Adwords for your business

The simple answer is this: Google Ads is a powerful way to get customers in the door, fast. 

In fact, Adwords campaigns can help you drive measurable results throughout the customer lifecycle, from brand awareness to conversion and right through to customer retention.  

How? 

Through audience targeting

Google Adwords helps you get in front of the right people at the moments that matter – in other words, when they are looking to buy.

That’s where the real ROI is.

People searching on Google have buying intent. 

They are typically in the market for the keywords they are searching, e.g. "Cheap sheds".

This is what makes Google Adwords such a powerful online marketing tool – you are targeting people who are looking to buy your goods or services at the exact moment they see your ad. 

In fact, high commercial intent queries on Google AdWords get 65% of the clicks (WordStream). 

Another benefit of Google Adwords is that it is highly scalable. 

If you create a campaign that’s converting like crazy, you can increase your Adwords budget to get even more conversions. 

What’s more, if you optimize your campaigns well and score a high Quality Score and Ad Rank, you’ll find your ads placing at the top of search results.

By placing at the top of search results, you’ll often score more clicks than those who’ve gone through weeks of work to climb the organic search ranks.

With high buyers intent, easy scalability, and a chance for a fantastic conversion rate without burning hours of marketing hours optimizing an entire website, it’s easy to see why advertisers love using Google Ads.

If you want your products or services at the front of mind whenever they’re on the popular search engine, an Adwords campaign is a surefire way to do so.

How does Google Adwords charge?

Google Ads campaigns use a pay-per-click (PPC) format for all its ads on the platform. Meaning, you’ll only be charged when someone clicks on your ads and goes onto your site as a result.

In essence, you can display your ad on Google free of charge, but when someone clicks on your ad, that’s when your site be charged the cost per click (CPC).

Keep in mind that Google Ads works in an auction format for all its advertising on the platform. This means that the cost per click is determined entirely by how much the competition (and yourself!) are willing to spend for a single click.

That amount can vary wildly depending on the keyword and industry, so there isn’t a simple average cost for all businesses. As such, you’ll need to spend time doing proper research to understand how much your final marketing budget will be for every Google Ads campaign.

How to use Google Adwords for maximum ROI 

According to Google, advertisers make $8 for every $1 they spend on Google Ads. 

That’s a massive 8:1 ROI. 

But it’s not as easy as merely submitting ad campaigns, setting your CPC and hoping for the best. You need to spend some time really optimizing your campaigns to see amazing returns for the money you spend.

Here are some key strategies to get started with to reap an exceptional ROI on your pay per click advertising campaigns: 

 

1. Run Google Ads in sync with other channels

Google Adwords is at its most powerful when used as part of a great digital marketing strategy. 

Forget about thinking of just SEO vs SEM. You might think they are completely different strategies. You might even think you have to choose one over the other. 

But actually, the two tactics work together to achieve amazing results. 

SEO is all about the slow burn. 

While free, it can take at least six months for your business to see results on Google Analytics with SEO. 

Paid search, on the other hand, is more immediate. So you can use your Adwords campaigns to offset a slow start to SEO, boost brand awareness and get more qualified traffic through to your site that can be seen through Google Analytics. 

This ensures that your website remains competitive at the top of the search results page on Google at all times.

Interestingly, a study by Google found that searchers who see a paid ad are more likely to click an organic result. 

The reverse is true too – if a searcher sees a high-ranking organic listing, they are more likely to click on the ad for the same brand. 

It’s all about brand awareness. It’s all about making sure your target demographic is always aware of your product or service.

Paid search campaigns can raise brand awareness by up to 80%.

Another massive advantage of using SEO and Adwords together is that you have more data to inform your marketing decisions:

  • Pay attention to your Adwords ad copy that’s performing well, then use this to plan your SEO content for higher engagement.  

  • Analyse keyword data from your Adwords campaigns when developing your SEO plan. 

  • Combine the data sets to delve into your target audience and refine your whole digital marketing strategy.

The same goes with Adwords + email campaigns, Adwords + social media campaigns – you get the gist. 

The key is to get ALL your digital channels working in sync. 

 

2. Focus on improving your Quality Score

Google rewards advertisers with high Quality Scores with lower costs and higher ad rank

According to Wordstream:

Advertisers with Quality Scores around 8, 9, and 10 will gain an average of 37%-50% discount on their CPCs. 

impact on cost per conversion

Image credit: Wordstream

To be clear: your Quality Score has a DIRECT impact on your ROI.

The higher your Quality Score, the lower your cost per conversion. 

How to find out your score:

  1. Sign in to your Google Ads account 

  2. Select the campaign you want to check.

  3. Click on Columns > Modify Columns

  4. Click the Quality Score section

  5. Check the Quality Score, Landing Page Experience, Expected CTR and Ad Relevance. 

Now you know your position, how do you improve your Quality Score?

  • Keep keyword groups small and hyper-relevant. 

  • Optimize landing pages to create an exceptional experience. Make the landing page relevant to the keywords AND ensure the landing page is easy to navigate.

  • Customize your landing pages for specific ad groups. This ensures relevance.

 

3. Use long-tail keywords

If you want high click-thru rates (CTR) for your Google Adwords campaigns, use long-tail keywords. 

Long-tail keywords have three or more words and are very specific to what you’re offering. They could be questions or more descriptive searches. 

For example:

“Cheap flights” is a normal short-tail keyword. 

“What’s the cheapest flight between NYC and LA over Thanksgiving” is a very specific, long-tail keyword. 

Even though they might be less prevalent in terms of search volume, long-tails have some significant benefits for Adwords campaigns:

  • Long-tail keywords are more specific, which means they pre-qualify traffic who are most likely to convert.

  • Long-tail keywords work best at the end of the purchasing funnel. People know what they are searching for, which means they convert at a higher rate.

  • Long-tail keywords are less competitive - fewer people are bidding for them so they cost less per click.

Pair a long-tail keyword with an optimized website page, and you’ll score your business a click-crazy ad campaign that’ll get wonderful results whenever you place a bid.

How do you find these specific keywords? Well, it all comes down to thorough keyword research.

One easy method of keyword research starts by simply going to Google Search and typing in your keyword. Then see what the search engine suggests:

nyc home loan

A better, more comprehensive way is to use tools like SEMrush or Ahrefs’ Keywords Explorer. You can alternatively use the Google Ad platform itself with the Keyword Planner tool to find search volumes. 

Be sure to not target long-tail keywords that are too niche, as low volume search terms could cause your Google Ads to not show up at all!

With meticulous keyword research, your business should be able to identify a marvellous selection of target keywords to start bidding on for your Adwords campaign.

 

4. Keep your Ad Groups tight

Your Ad Groups create the structure of each campaign and control the association between keywords and ads, so make sure to pay attention to them!

Don’t waste your precious Google Adwords daily budget bidding on keywords that don’t make sense together.

Google Adwords generally rewards advertisers with tightly structured ad groups. 

Give each Ad Group a tight theme, and ensure every keyword is relevant to the Ad Group. 

Seen a keyword that deviates from the theme?

Create a specific group for it. 

You aim ONLY to deliver an ad that’s relevant to the keyword used. That then improves your Quality Score. 

A good rule is to aim for:

  • Maximum of 10 Ad Groups per campaign

  • Less than 20 keywords per Ad Group

  • 2-3 ads per Ad Group

 Whether you’re crafting a geo-targeted local PPC campaign, or are focusing on a specific niche, make sure your groups represent that too.

5. Work out your bidding strategy

How much are you willing to pay for a click on your landing page?

Your maximum CPC is a critical part of your strategy. 

Why?

Because it’s your Max CPC bid, along with your Quality Score, which will determine where your ad is positioned on the SERP. 

There are a few different ways to determine your Max CPC bid. 

If you’re just starting out on Google Adwords, use Automatic bidding to allow Google to set your maximum bid for you. 

Then, keep a close eye on how much clicks are costing you. 

Be sure to set a Max CPC bid limit, as this tells Google your overall limit for a single click. Then, you don’t have to worry about Google’s automated bidding increasing bids over that limit. 

In general, though, we recommend Manual bids for the simple reason that you have more control over what you spend. You can increase or decrease your budget depending on how your campaigns are performing. 

Track Google’s estimations for each keyword and look at Page #1 CPC and Top of Page CPC. Then set your maximum bid between these figures and adjust your bids accordingly.

 

6. Run experiments all the time

There’s no such thing as a static Google Ads campaign. In the majority of cases, there’s always something you can improve. While your Google Ad campaign might be working today, who knows how it’ll look like in a month or two when your competitors take inspiration from your techniques for their own Adwords campaign.

A little tweak can make a massive difference in conversions. This could be something as insignificant as changing the colour of a CTA button on your landing page to maximize clicks or changing the wording of your ad headline. 

We recommend split testing ads and landing pages.

Some things you can test include:

  • Offers

  • Colour schemes

  • Page designs

  • CTA language and position

  • Headlines

  • Tone of voice

  • Images

Even something as simple as moving a form could raise conversion rates by as much as 50%.

Pair this with a competitive maximum bid, and you’ll ensure your business will always be above your competitors on the search results page.

 

Adwords Glossary

 

Ad Groups: An Ad Group is a container for your Adwords ads, keywords and landing pages. 

Adwords Auction: When a search query is made, Google processes the request and runs the auction to determine the ad position and each advertiser's CPC.

Ad Relevance: This measures how related the keyword you are bidding on is to your ads, and how much your keywords match the message in your ad copy and landing pages. The higher your relevance, the better your Quality Scores and click-through rates. 

Ad Extensions: Extra elements you can add to your ads, such as Sitelinks, Location and Call. 

CPC: Cost Per Click is the amount the advertiser pays each time someone clicks on their Google Ads ad. The average cost per click on Adwords is around $2.32 on the search network. 

Keyword Matching: Parameters that can be set on your keywords to control what searches trigger your ads to appear. Choose from 4 types of keyword match types in Adwords: 

  • Broad match: Your ad can match to any related search, including synonyms. For example, if you bid on “caravan fridge-freezer,” your ad may show when a user searches for “camping fridge”.

  • Modified broad match: This is more restrictive than a broad match, as your ad will only match when the search includes words you select with a + sign. Words can be in any order. 

  • Phrase match: This is more precise, as the keyword must include the search terms you bid on in order and uninterrupted. They can still include other terms before or after the phrase.

  • Exact match: Not as exact as they used to be - Google made some changes in 2017 so that function words can be added or changed, and it is still an exact match:

Negative Keywords: These prevent irrelevant keywords from triggering your ads, which saves you valuable budget. 

Quality Score: Google’s 1-10 rating of the quality and relevancy of your search ads and keywords. The more relevant your keywords, ad copy and landing pages, the higher your Quality Score will be. 

  

Over to you 

Google Ads can deliver a seriously fast and monumental ROI, but you still need to put in the hard yards. This means regularly monitoring your online advertising strategies at all levels.

This could mean revising your daily budget or bidding strategy, updating your target keywords, or altering the landing page on your business site.

And don’t forget about other tasks you’ll need to do for other digital channels such as monitoring SEO success on your Google Analytics account, optimizing your social advertising, or spending time to create a powerful content plan.

Whether you get an agency, outsource or hire in-house, don’t underestimate how much time you need to invest to get incredible results. With every Google Adwords campaign you create, the more time you’ll need to spend optimizing advertising will only increase.

If you don’t have time, find someone who does. 

Because without it, your Google Adwords budget will simply go to waste. 

We get it - the idea of investing your marketing budget in Google Adwords can be overwhelming. Going it alone might seem like a valuable endeavour money-wise, but without a talented in-house online advertising team in your business, you’re just leaving money on the table.

Start by working out exactly where Google Adwords will fit in your overall digital marketing strategy for the business. 

Luckily, we’ve created this FREE Digital Marketing Game Plan to help you. Download your ebook now!

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