AdWords - the Google PPC Program

Google has two PPC Programs

The first Google PPC service is called AdWords and is designed specifically for advertisers. This is not to be confused with the other Google PPC program called AdSense which is a PPC service for website owners. Lets look at each of these programs in more detail and highlight the differences.

1. How the Google PPC AdWords Program works

AdWords is designed for advertisers who want to place advertisements on websites and mobile phones. A group of keywords are associated with each ad and this helps determine when they are shown.

AdWords ads are displayed next to Google's search engine results (normally on the right-hand side, but sometimes above the search results) when someone enters one of the keywords you identify as relevant to your advertisement. The top 3 Ads are also shown on selected partner sites.

At the beginning of your campaign, you set a maximum cost-per-click for each of your Ad Groups. An Ad Group contains one or more ads targeted to the same set of keywords with the same CPC. If the cost-per-click you've specified is higher than what's necessary for your ad to maintain its position, the actual cost-per-click you are charged is discounted automatically. You pay only the minimum necessary to stay ranked above the next lower ad - plus one cent.

A $5 initial activation fee applies when you first open your account. The fee is not credited towards the cost of any clicks you receive. The minimum cost-per-click for keywords begins at $0.05 and varies according to that keyword's popularity. You can determine the minimum cost-per-click for a keyword easily by using the Traffic Estimator (accessible from the sign-up or campaign management pages.)

The position of your ad on the Search Results page is based on a variety of factors including a combination of the maximum cost-per-click and the clickthrough rate for your ad. The higher the maximum cost-per-click you set and the higher your ad's clickthrough rate, the higher your ad's position. For example, if your ad is twice as effective as another ad, Google will rank your ad as if your maximum cost-per-click were double what you actually set. However you still only pay the amount you originally chose.

The clickthrough rate component rewards advertisers who have well-targeted ads that are relevant to searchers. You get more bang for your buck if your ad pulls the clicks better than the opposition.

Once you know what you are doing with Google AdWords you can automate a lot of the mundane work with automation software like Dynamic's BidMaximizer and save yourself both time and money.

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There is no doubt that Google have developed an impressive pay per click program with AdWords. It incorporates many unique features and avoids most of the shortcomings experienced with other PPC search engines. Also the reports are very detailed and flexible.

Now that Adwords has been running for a while, many of the early Advertisers with good CTR's have been able to reduce their bids. Going on my experience (bids are not displayed on ads) bids are much higher than the results achieved with the original AdWords. One problem is the level that many minimum bids are set at. They vary according to keyword and are generally set quite high by Google. Update - If my experience is anything to go by, bids went up to unrealistic highs but have now fallen to sensible levels. Well written targeted ads are now giving small budget advertisers a chance to take on the big guys, unlike Overture where deep pockets rule.

TIP: The best way to get an estimate of potential traffic is to actually set up a campaign and place an ad. Write your title and description in such a way that no-one will click on your ad. Every day Google will report on the number of times your ad was shown.

Unless you have deep pockets or can come up with a super successful ad, it may be a case of bidding on the less popular keywords if you choose to use this service. Ads below position 13 attract very few clicks. My suggestion for Advertisers with small budgets is to put a lot of effort into writing an effective ad and start your campaign as high as possible, but not lower than position 12.

NOTE: The only third party bid management software I am aware of that supports Google AdWords at present is Dynamic's Bid Maximizer.

2. Google AdSense Program

Would you like to earn income as an affiliate of Google?

Google have an advertising program called AdSense that is perfect for you. When you are accepted into the AdSense program you can place Google AdWords advertisements on your website(s) using a snippet of code supplied by Google. For every ad on your website that is clicked on, you receive money (a share of what Google receives from the advertiser). Follow this link to discover how to make money with Adsense.