In business marketing, keyword advertising is the practice of making advertiser’s content appear on search engine result pages. Google charges advertisers for every click, which is the number of times your ad would be clicked by users when searching keywords.
If we go deeper, you could get click-through-rate (CTR), the ratio which shows how many people click on your ad when they see it. This is an indicator which can be used to test whether your ad is effective for potential consumers. When they see an ad, it’s the first step of success if they are willing to click on it. But why does Google decide to show your ads, not that from your competitors?
When you plan a keyword ad campaign, you must set up a budget and bid. Bid is the specified amount you are willing to pay Google for cost-per-click. Based on the fact that Google must try to maximize its revenue, you can see its suggestions on keyword ad page. But usually, you don’t have to pay that much due to the existence of quality score which refers to the quality of your ad. It is like an auction, the advertiser who has the highest bid wins. But it takes a variety of factors into account when determining the price. Google calculates these metrics with the bid as well as your ad quality to make sure that something offered is what users want.
Google doesn’t need to provide ad impression for the advertiser who has the highest bid because the irrelevant ad will make users unhappy. To be user-friendly, Google will tend to give a higher ad rank to advertisers who have good content and reasonable bid rather than those who have highest amount of bid but bad ad content.
All efforts would be in vain if the ad didn’t enhance conversion rate (CVR). CVR refers to real sales. Generally it also includes the practice conducted by users that advertisers desire to see, such as membership registration and leaving private information like email address, but still, sales promotion is the key.
Many companies spend tons of money on keyword ads because ad campaigns run every day. For example, if you conduct 5 different ad campaigns and have a budget of $400 for each ad per day, it will cost you $60,000 per month, which is not a small amount of money in total! That is why you need faster conversion and higher rate so that ad could bring in more sales after investing income in ad.
Technical terms in digital advertising world
- CPC (Cost Per Click): the amount you pay Google when the ad is clicked
- CPA (Cost Per Action): the amount of money spent to let consumers have impression of the brand, fill out forms and even register as members so as to enter the marketing funnel
- CPM (Cost Per 1000 impressions): the amount an advertiser will pay when your ad is seen by each 1000 people
- CTR (Click-Through Rate): the ratio of users who click on a specific link to the number of total users who view your ad
- Conversion Rate: the amount of conversions achieved per click
- PPC (Pay Per Click): an advertising model that an advertiser pays when the ad is clicked.
- Return on Investment: a performance measure used to evaluate the efficiency of an ad investment
Keyword advertising, although the threshold is not high, it is not easy to do it well because the advertising campaign needs constant monitoring and the effect could only be seen after a period of time. A lot of companies spent a lot of money on ineffective advertising simply because they are not patient enough to wait for the results of the ad campaign.
If you know nothing about keyword advertising before, there are three points you should keep in mind before conducting keyword ads: control the budget, keep it simple, and be patient.
For beginners, the advertising budget should be limited as low as possible in a reasonable range at around $1500 per month. Help your ads appear when consumers search for keywords. Additionally, plan a simple advertising campaign without complex keyword, or you cannot compare and analyze the effectiveness of each advertising. Finally, be patient and don't pay a lot on bidding.
No account to set advertisements? Here’s what to do.
Type in your Email (preferred Gmail) and the website. Google will then ask you to set up your first keyword ad campaign. You have to determine:
- Advertising budget
- Target customer groups
- Maximum bid
- Ad copy
In conclusion, setting up a keyword search campaign is not a difficult task, you just need a very small amount of budget, a sense of who you want to target, a few ad copies and a website! So get your Google account ready, and let’s get started!
