Plan Your Internet Success – Part 14: CPC Web Advertising and Adwords

CPC Web Advertising and AdWords

I was planning to make a short stop here and combine advertising and banner exchange, but these are two very different topics that need to be treated in very different ways. Furthermore, I believe that the topic of Web advertising on the Net is very often brushed aside as too expensive or at the other end of the spectrum, “over-sold” by gurus as an easy way to make money doing what is called “arbitrage.”

As a result, instead of doing a short overview, I’ve decided to spend some time reviewing advertising on the Net. The focus is on Search Engine Marketing (SEM) and Cost Per Click (CPC) advertising typical of search engines as is AdWords.  As a matter of fact, I will use AdWords in particular, as well as keyword advertisement (I will address keyword advertisement on Facebook and the other social network in another issue) to review this topic, since it is a popular way to advertise today. This fact is a result of various changes on the Internet including:

– Searches are a fact of life and most (if not all) people search for something using one or several search engines

– Sponsored listings that are presented to users at the result of a search are common practice and quite successful.

– Advertising on the Net, and on search engines in particular, has become a necessity for Web site entrepreneurs, if they want to offer their products or services to potential buyers at the most opportune moment.

– Keyword-based advertising can be a blessing in disguise if you know how to use it and how to manage your spending and advertising methods.

– Google AdWords and the tools that are offered via this application are great for collecting tons of intelligence and using it to better understand your potential customer and what it will take to get their attention.

– Google AdWords and most SEM solutions suck for affiliates who work with networks such as Clickbank, CJ, Linkshare, etc., and make a commission based on sales — unless you know how to cherry pick offers and manage traffic generated by clicks.

– PPC advertising can work if you have the right formula of service or product and play the game smartly.

First, let’s set the scene for search today: You may not like it but Google, Yahoo! and MSN provide most of the searches on the Internet, with Google being the dominant figure (nothing new here).

Here are the official numbers per Nielsen for searches in 2009.

Google: 64.0%
Yahoo!: 16.3%
MSN: 9.9%

If my math is correct, this represents more than over 90 percent of all searches on the Net.

If you are an information junkie and want to know how the other 10 percent is split, here it is.

AOL: 3.7%
Ask: 2.1%
My Web Search: 0.7%
Comcast Search: 0.5%
Yellow Pages: 0.4%
Next Tag: 0.3%
Dogpile: 0.2%

This demonstrates one thing to me (and, I hope, to you as well), Google is the dominant search engine.

This also implies that Google is most representative of most every users and searches, and, as a result, is very accurate as far as what users search for and how they search. As a result, Google can provide you with the best intelligence on your potential customers’ search habits.

Of course, you can now open an AdWords account and start spending your hard earned money on very expensive keywords and key terms and probably not generate enough revenues to pay for it, let alone make a profit.

So, how does one use Google to gather information without spending a fortune?

Based on most online marketing doctrines, a pay per click (PPC – also called Cost per Click – CPC) advertising campaign has two very distinctive goals that include:

1) To ensure that an ad (text typically, but also banner ads in the network) is positioned on the search engines to attract potential customers and trigger an action and/or increase sales

2) Expose a company brand on the Internet and/or use name recognition to appeal to shoppers who have the tendency to trust and shop at name-brand online stores (a network like Google Content Partners or Networks like Commission Junction, Linkshare, etc. are a good examples of those).

For the sake of keeping this plan simple at this level, we will look at what is probably the most impressive ad network of them all: Google AdWords.

The first rule of understanding AdWords is that no matter what you think, you must realize that Google Ad Network (the bid system where people bid for keywords on a CPC or CPA basis or partner contents) is designed to make as much money as possible for one entity: Google.  By playing you against your competitors, AdWords’ bottom line is its own profit margin based on clients’ size, reputation, history, spending, etc. Hence, the basic principal of AdWords, where people believe that the more you pay, the better your position, is not always correct.

And while the AdWords worked relatively well for most everyone at some point in time, it no longer works when keyword bids are as much as $9, $15 or even a whopping $30 per click. FYI, just a few years ago, the average keyword on Google was $0.54.

This reality should tell any marketer to re-evaluate the way he/she uses Google AdWords (and the other SEM solutions for that matter). My advice is, first and foremost, advertising on the Net using SEM should be used to:

1) Initially gather information on what/how information is being searched and the cost of keywords, hence a campaign.

2) To give you the opportunity to analyze this information to find the best way to “monetize” your services or products based on what others in your vertical are spending.

As far as branding, I am of the opinion that when it comes to PPC, branding is nothing more than a “residual” effect, and brand recognition will be minimally enhance if at all. However, you may have an advantage if you already have an established name. If your plan is to brand, then look into networks like CJ or other CPA networks or something like AdWords content sites and make sure that you have banners and creatives that give your product and company justice.

So the question is “How to Use AdWords?” to get maximum bang for your buck?”

At this juncture, your goal should be to use AdWords to gather information with minimal expenditures.

The first thing you need to do is to create a campaign for each product and/or service (and business if you are launching multiple) that you have and then create buckets of key terms using keyword software.

I personally recommend using a combination of two or three solutions to search for the best keywords and they include:

First: Wordtracker (http://freekeywords.wordtracker.com/) to find the keywords that works for you

Second: AdWords keyword tool

(https://adwords.google.com/select/KeywordToolExternal)

Third: Use a software or solution that provides you with a KEI ranking for keywords. KEI stands for “Keyword Efficiency Index” and uses a simple formula that attributes a value to a keyword, based on its popularity and competing Web sites that feature this keyword.

As a result, very popular keywords often will have a low KEI rating since the competition for these keywords is fierce, hence not so good, since bidding on these keywords is probably very high. The goal in looking at KEI is to identify keywords and key terms that are searched, but for which the competition is not so fierce and, as a result bid price is low.

I personally use IBP, an all-in-one software that allows me to test HTML, find keywords, calculate KEI, submit sites, evaluate a Web site’s ranking, and much more. If you are interested, check it out at http://www.ibusinesspromoter.com/

To illustrate the three steps that I explain above, I created screen shots that show the steps that I would follow using first Wordtracker, then AdWords keyword tool and finally IBP.

Looking for keywords related to a theme such as “marketing” and marketing as it relates to the Internet in particular, I first use Wordtracker to find keyword in these themes as shown on screen shot 1:

Key Terms and keyword search

The result that I get already is giving me a lot of potentially good keywords and key terms. However, since “marketing” is a high level keyword (after all what kind of marketing are we talking about), the keywords that are listed in the result become what I call a “bucket.”  The idea of a bucket is to group together keywords that address specific area of the business you are targeting.

In my example, these buckets would be “Internet Marketing,” “Search Engine Marketing,” “Network Marketing,” “Web site marketing,” etc.

Now, by clicking on these keywords, I am able to drill down and find keywords that are specifically related to each bucket.

For example, clicking on “Internet Marketing” would result in the following:

keywords and key terms search to optimize Google Adwords

This result is my first bucket of keywords that I titled “Internet Marketing” based on the keyword that I selected to explore one level up (as shown on screen shot 1).

The same approach is taken with the other high level keywords that were obtained at the first level of search (screen shot 1: “Search Engine Marketing,” “Network Marketing,” “Web site marketing,” etc.)

However, what I suggest is to organize keywords in some kind of buckets system.  Buckets are, for all intents and purposes, a way to better define your vertical by specialized keywords and key terms.

The top level one is “Marketing,” but it is a very big topic so I need to better define what I call specialized-verticals like “Internet Marketing,” “Search Engine Marketing,” etc. All of them derive from my main vertical, but allow me to be more specific in the type of marketing I am going to target.

The importance of these buckets is that eventually they will become your ad group on AdWords, and that alone will allow you to be much more efficient in the way you use AdWords.

Using my example, when I’m finished with this exercise I will have a top level vertical called “Advertising” that will translate into my campaign on AdWords and buckets like “Internet Marketing” that will become my ad group on AdWords.   As a result, my AdWords account will look something like this:

Campaign: My Advertising Campaign

Ad Group 1: Internet Marketing

Keyword 1: internet marketing

Keyword 2: internet marketing marketing
Keyword 3: internet marketing services
Etc.

Group 2: Search Engine Marketing

Keyword 1:
Keyword 2:

Keyword 3:
Etc.

Now, you may think that you are ready to roll, but before you spend a dime, there are two things that you must do (as explained in the preceding pages). You must check the AdWords Keywords tool and evaluate the KEI of each keyword.

The AdWords keyword tool is quite simple and allows you to find keywords in the same vertical that you entered as shown in the screen shot below.

Google Adwords Keywords Suggestion Tool

As you can see AdWords gives you a number of options for keywords that you may or may not have already found on WordTracker, and there is nothing wrong in adding new ones to your list of keywords.

However, stay in the spirit of your bucket, and don’t add keywords that are not directly related to that bucket. Since, in this example, I am set to find “Internet marketing” related keywords only, I would stay away from keywords that are not directly related such as “market research” (listed in that same result under “Additional Keywords to Consider”). In this case, assuming that “market research” is a keyword that I could use, I would put it in a different bucket or create a new bucket.

A good example of that are the key terms “search engine optimization” and “SEO.”  These two terms stand for the exact same thing, but if you pay attention, you will note that people search using the term SEO (or SEO associated with another word) as well as search engine optimization. And even though SEO stands for search engine optimization, there are enough searches under these two terms to make space for a bucket dedicated to each one.  As a result, in this instance, I would create an ad group called “SEO”, along with one called “search engine optimization”.

Finally, while you must pay attention to the bar that indicates the competitiveness of these keywords; do not be alarmed since our next and last step will be to review the popularity and KEI of these keywords, something that will define how we bid.

Tip: The blue bar that you see on AdWords can be a very useful item that can help you find out how much the price of the top bid is for any given keyword at a given moment.  This is something that is explained later on in this document, so keep on reading.

As mentioned previously, the KEI is something that can be obtained using various online solutions or software.  For the sake of this example, I will show you how it works using the IBP software (next page).

Google Adwords and Keyword Optimization

IBP, or similar software, can provide you with the ability to confirm from an independent source (other than Google) the number of searches for a keyword as well as the number of competing offers relatives to this keyword and, finally, a KEI value. The KEI is nothing more than a simple formula that reads as follows:

Adwords and Keywords Optimization Using KEI

With SV = Search Volume and C = Competition

Using this formula, you can calculate the KEI of each keyword yourself as per the example below (using Wordtracker and Google Search – simply enter the keyword on the search box and look at the number of result you get):

keywords Optimization and KEI

Keywords Optimization and KEI

A more advanced formula is also used for calculating the KEI, and that formula uses the relevance of a keyword.  The formula reads as follows

Advance KEI Formula

With SV and C based on the same values and with R = relevance

Relevance is something that is defined by the user and typically has three to four variants, as follows:

1 = Excellent Relevancy

2 = Good Relevancy

3 = Limited Relevancy

4 = Poor Relevancy*

* Note that in this case the KEI = 0 – some formula have only three relevancy values, but I find “poor” to be almost irrelevant keywords

As a result, your own calculation using the same example of keyword (Internet marketing) will look like the following:

KI and keyword optimization

Note that the KEI and KEIr are identical in this case, because the keyword selected (“Internet marketing”) is very relevant.  However, the KEIr will start moving down as relevancy changes as shown in the example below since in this example “Dallas Internet marketing” has limited relevancy and, as a result its value is only 3:

KEI

KEI Results for Keywords

Note, however, that I decided in this example to give a relevancy value of three to “Dallas Internet marketing.” Of course this would not be true if I were targeting the Dallas market.  Should this be the case, my relevancy value for Dallas would be 1 or 2 depending on the importance of this key term in my campaign.

This leads me to point out to the importance of keyword relevancy and the fact that keywords’ relevance is a judgment call based on your campaign’s goals.

Go get it

You are now ready to start with AdWords, and the first thing you will need to do is to create a campaign budget and set the type of campaign you want to run (search or content) and other targeting factors. Here are some recommendations:

– Set a low daily budget with limited time for the campaign to run (you can always extend it) and time during the day when you want it to run.  Again, remember that the goal of this initial campaign is to gather intelligence on keyword popularity and pricing, competition, etc.  This should be viewed as an R&D project.

– Create your first ad group and set a cost per click at $0.35 for search content. Again, nothing to worry about you can always change it.

– Create one or more ads for each group (I suggest two to three per group) using your main keyword in the header (for example “Internet marketing expert” for the ads corresponding to the Internet marketing group). Look at other Web advertisers who offer the same service as you by searching Google. No matter what, do not copy what is done. Create your own ad, something that reflects who you are.

– Some people may recommend that you create ad groups that target search, network content and managed content. I personally like to segregate between search and managed content and create two sets of campaigns. However, this is applicable when I am actively generating clicks and leads.  For the sake of this “exercise,” I suggest that you focus on search and opt for “network content” with a very low PPC for the latter: set it at $0.15, or less, just to get is going and see what you get. As far as managed content, feel free to start if you think you can manage it all.

An example: for an online campaign that I run on AdWords I have for one campaign, 22 ad groups, 63 ads and 480 keywords. It’s a lot of work, but it is worth it if you want to make money on search engine marketing and Google AdWords in particular.

Once you have launched your campaign, you will very quickly see something happening, and that is the infamous “below first page bid” on some of your keywords. Nothing to worry about since the goal here is to find out how much it costs to be on the first page (but not in order to be there).

Tip: Don’t be intimidated by high keyword prices to be on page one. For example, some keywords in the Internet marketing space go for as much as $20 per click for something like “email marketing software” (I guess email marketing software companies have a very high margin or a high lifetime value for their customers).  Regardless, the top position on AdWords is not something you want to target, so no worries.

Tip: To better manage your campaign(s), I suggest that you download a Google campaign management tool called “AdWords Editor.” It comes with great features and allows you to manipulate things much faster than if you were online. (http://www.google.com/intl/en/adwordseditor/index.html)

Now, the game begins. Using your KEI software or own calculation look at your keywords with the highest KEI. Those are the keywords that may not generate great traffic, but that are the most cost effective in getting visitors. I usually increase my bids for those to be in a decent position. Not necessarily page one, but close enough, and as long as it is within my daily budget.

During an actual campaign, one of the most critical aspects of AdWords is its “network placement” and “managed placement.” I continually adjust my “managed placement” and often pay as much as my PPC average for search, but set my network placement maximum to a very low number. I also slash out Web sites from my managed placement that are generating clicks, but not producing conversion.

As you do the above, you will notice within a relatively short period of time that some buckets/groups show significant impressions and some don’t. This may be the result of a bid that is too low or the keywords simply do not create much traffic and this is part of the game.

If would increase your PPC for search, remember to change in small increments.

In the same manner, if you change your PPC for a specific keyword, do not be tempted to double or triple how much you are willing to pay. Do it in increments and do it often.

Within a couple of weeks of this (I usually do this for three weeks and spend one to two hours per day reviewing and adjusting), you will see an emerging “picture” of what is going on in your space including “hot” keywords based on searches, ads that perform well, keywords and messages that combine to convert well, etc. Your spending for these two or three weeks may be $200-$300, but the intelligence that you will gather is worth 10 to 20 times that amount.

Why? Because you now have a great “picture” of what works for your campaign as far as keywords and ads. Equipped with this information you will be able to create campaigns on Yahoo!, MSN, Miva, AOL, Ask and all the other search engines, while minimizing your time tweaking your campaigns. Sure, there may be some different results for the same keyword on Google and AOL, but is it worth spending an entire day figuring this out? I’ve always believed and continue to believe that when it’s all said and done, Internet marketing is a numbers game and that once you find what works on Google, it probably will work 90 percent of the time on Yahoo! or MSN. This approach will allow you to minimize the time spent managing campaigns, while expanding very rapidly.

With this information, you also will be able to better target directories if you want to advertise on them. You will be able to better target your email campaign thanks to a better understanding of what works in your message and the key terms to which people are more receptive. And this applies to both the subject line and your email message.

While all this is time consuming, it is by far one of the most critical parts of your plan to succeed, so stay focused and do it right.

Coming up on Friday is the complement to this post with more details on Adwords

You can review the complete manuscript, “Plan Your Internet Success” on my web site at www.jtouboul.com

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3 comments so far

  1. Jimmy on

    What do you think is the quickest way to make good money?

    • Jean Touboul on

      This is as broad a question as I can imagine. It’s like looking at a canvas and asking how fast can you create a painting? If you are someone like Salvador Dali you could probably create something in a few minutes (if not seconds). For most however it takes time and many will never finish.

      But to be more constructive I would have to answer with a question… Do you have a product or service to sale? Are the profit margins on this product high or low? Are you planning to sale product that others will deliver (in other word are you planning to be come an affiliate)? If you can give me a better “picture” of what you have or want to do then I could answer more “intelligently”.

      Regards,

      Jean Touboul
      http://www.jtouboul.com

    • Jean Touboul on

      This is as broad a question as I can imagine. It’s like looking at a canvas and asking how fast can you create a painting? If you are someone like Salvador Dali you could probably create something in a few minutes (if not seconds). For most however it takes time and many will never finish.

      But to be more constructive I would have to answer with a question… Do you have a product or service to sale? Are the profit margins on this product high or low? Are you planning to sale product that others will deliver (in other word are you planning to be come an affiliate)? If you can give me a better “picture” of what you have or want to do then I could answer more “intelligently”.

      Regards,

      Jean Touboul
      http://www.jtouboul.com


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