How It Works
By first creating a campaign, you can set the budget, target audience and keywords you’d like to use. One of the most common setups is called CPC advertising, which stands for cost-per-click. When someone clicks on the link in your ad, Google charges you an amount based on your daily budget. The higher your budget, the higher ranking your ad will have compared to competitors ads (like bidding for the top spot). Kissmetrics offers a great example of how this works:
Use the formula below to calculate your Max CPC:
Max CPC = (profit per customer) x (1 – profit margin) x (website conversion rate)
For example, let’s say your average profit per customer is $500, and out of 1,000 website visitors you convert 10 into customers. That means you have a 1% website conversion rate. If you are comfortable with a 30% profit margin, then here’s how you would calculate your Max CPC:
Max CPC = $500 x (1 – 0.30) x 1% = $3.50
You’ll then take that result and compare it to what Google says is the estimated CPC for the keywords you’ve selected. If it is in the ballpark, you’re in great shape! If not, you’ll need to rethink they keywords you’ve selected.
Get Started with Keywords
When you search online for something, the text you enter into the search bar is called keywords. Google even offers a Keyword Tool within AdWords to help you come up with keyword ideas.
Google AdWords even allows you to set up geotargeting, which allows you to only display your ad to folks using Google within a specific area. If you are a smaller local business, it will make more sense to target your town and surrounding area than to run an ad that will display nationwide.
Create a Unique Selling Proposition
Why should customers choose to do business with you versus any other option, including doing nothing? Kissmetrics offers reasons why you need a strong selling proposition: It will generate more traffic from those most likely to spend money with you and it can eliminate comparison shopping.
Instead of claiming to be everything for everyone, focus specifically on what your business does best. This can either be a part of your core business model, or a specific discount or promotion.
Include a Call to Action
Using AdWords you get four lines of text: a headline, two description lines and a display URL. The headline and display URL are links you set up. The headline should be compelling. The description lines should state your Unique Selling Proposition clearly and succinctly (you only have 35 characters for each line). The display URL should be easy to read and short.
Measure and Adjust
Google AdWords provides a wealth of information regarding conversions and clicks. Connect your Google Analytics account for a treasure trove of information on traffic and ad success. You can use this information to tweak your AdWords campaigns or add other campaigns to target other specific audiences.