The Google AdWords program is the centerpiece of Google’s internet marketing product line.  Free to use and easy to setup, it affords advertisers anywhere in the world to generate targeted traffic to any web property they designate.

One of the main features that people like about AdWords is that it’s free.  But that’s also one of the pitfalls.  Since anyone can setup an account, and you don’t have to know what you are doing, it is very easy to throw away money with pay per click at an astonishingly fast pace.  So this begs the real question, what is the real value of Google AdWords?

Benefit #1 – Instant Visibility

AdWords offers website owners the chance to establish true validity, along with online awareness and marketability. Let’s say you just launched a new website and wanted to have it show up in front of potential customers immediately, AdWords is the single best tool for accomplishing this.  Advertisers also use pay per click to gain visibility for things like new products, announcements, special sales or offers, and similar items that they may not rank well for in organic listings.

Sample PPC (Pay Per Click) Ad

Benefit #2 – Traffic & Leads

The sexiest benefit of Google AdWords is that is can generate immediate traffic, which can potentially increase the number of leads your business is getting.  It’s not unusual for advertisers to earn good, valid business leads within a few hours of launching a campaign.

Benefit #3 – Benchmarking

Savvy marketers use AdWords to create performance benchmarks for their website.  Because you control your bids, you can monitor the performance of keywords and use that data to create long term SEO strategies that can turn your paid keywords into natural rankings.   As a form of pay-per-click advertising, Google AdWords is a vital component of any search engine-marketing endeavor.

Drawback #1 – Buyer Beware

As stated earlier, Google AdWords can be scary because while it looks simple, being good at it takes time and practice.  After all, why do you think they created a Google AdWords Certified Professional program in the first place?

For instance, the simple act of bidding and placement is more complex that it appears.  If you bid higher than the competition, logic tells you there is a good chance you will earn higher placement for ads and keywords. But this is not always the case, as Google has a “Quality Score” which is generated based on how well your keywords, ad and landing page perform.

Drawback #2 – Long Term Sustainability

The other issue with buying visibility is that once your budget runs out, your ads stop appearing.  So over the long term, it is very important to figure out the key metrics from AdWords to determine your actual ROI so you don’t keep paying for advertising that isn’t producing the results you need.

The secret to determining “real value” – Google Analytics

In order to determine the real cost of Google AdWords, you have to base your decision on the actual results and performance.  And the best way to do this is via Google Analytics.

With any successful online marketing campaign, web analytics plays a pivotal role. These statistics allow you to monitor daily, weekly, monthly, and even yearly web traffic rates. At the same time, it displays the number of hits that were generated via precise keyword and key-phrase searches and links.

If a particular set of keywords is not attracting web visitors that are converting into customers, subscribers or whatever goals you set, it is time to make changes to the campaign settings. You also have to concentrate on the keywords that are working well, while generating several variations and synonyms as well.

You can learn more about Google Analytics in one of our previous posts.

You Determine the Real Value

According to Avinash Kaushik, who wrote the popular book, “Web Analytics”, Google AdWords is a cost-effective solution to online marketing. Along with strategic SEO and advertising techniques, companies can effectively showcase their brands and products to mass audiences.

The real cost of Google AdWords, however, depends on your situation.  If being on the first page of Google for targeted phrases is of value, than you should have no problem coming to your own conclusion!

If you are looking for traffic to your website, there are few tools better than Google AdWords.  But before you get started you really should get a handle on making sure you know how you’re getting the best Google AdWords bid price possible.

You see, one of the beauties of Google AdWords is that it’s free to use, and doesn’t require an agency to manage it for you.  But that’s also one of the drawbacks. After all, if you were to negotiate your own TV ad rates or billboard rates without an intermediary, how do you think that would end up?

This is the basic problem most people encounter when they start on AdWords – figuring out what to set as a fair bid price?

AdWords Basics

The first that you need to know that AdWords is a pay-per-click service so when your ad appears, you are charged every time someone clicks on your ad, not when it appears.

This is a major difference between actually paying for clicks and paying for impressions (display advertising)!

The amount you are charged is your winning Google AdWords bid price. Therefore, you want to keep it as low as possible. But you still need to bid high enough to ensure that you actually get the click – which means your ad position needs to be high enough so the user sees it.

Determining the right bid price

Trial and error is one way to figure it out; many have done this, which is at least partially why Google’s stock price is so high.  But the secret to understanding what you need to do, to get the best Google AdWords bid price, is understand how the bidding process actually works and then putting that knowledge into action the next time you bid.

The bidding system that Google employs is called a Vickrey auction; named for American economist William Vickrey, the auction is a sealed-bid auction, in which bidders submit bids blindly. When the auction ends, the highest bidder wins as in any other auction, but unique to the Vickrey auction, the winner only pays the amount of the second-highest bid made. According to Vickrey the knowledge that you will pay less than you bid, provides the incentive to bid your high-end price or true value of the item.

Taking this method and moving it into the virtual economy, a Vickrey auction benefits the advertiser by increasing the value of their ad dollars (pay less for more) and benefits the seller (in this case Google AdWords) by ensuring that more advertisers will invest their dollars with their service and they will make more in volume rather than price per unit.

Therefore the strategy would be:

• Tommy wants the keyword ‘roofing’ to promote his construction business and so do Kyle and John.
• Kyle bids $1, John bids $1.25 and knowing the he’s bidding in a Vickery auction, Tommy bids $2.25.
• When he wins the auction, he will pay only the $1.25 bid John made plus one cent for a total of $1.26 or the AdWord. This saves Tommy $.99 per click.

There is of course always a risk when utilizing this method of bidding, in that you are not alone in the knowledge of how they process works and so there is a risk of having to pay more than you want to. Let’s look at our construction business owners again.

• This time, Tommy wants the keyword ‘siding’ to promote his construction business and again, so do Kyle and John.
• Kyle again bids $1, but John has learned the system and bids $2.15, knowing he did well the last time, Tommy again bids $2.25 and wins again.
• This time however, he will pay $2.16 John’s bid plus one cent for a total of $2.16 or the AdWord. This time Tommy only saves $.09 per click. Of course the other way to think about it is that it costs Tommy $.90 per click.

Other considerations:  Desired ad position

Sample PPC (Pay Per Click) Ad

Another major component of choosing the right bid price is having a better understanding of ad positions.  Ad position refers to the spot on the page where your ad appears.  So while vanity or ego might compel you to shoot for the highest price for a bid, most Google AdWords professionals would tell you this isn’t always the best practice.

Here are a few considerations:

• The #1 ad spot is the most expensive, meaning you will get the fewest clicks for your budget
• Placing bids that place your ad in spots 2-4 will gain significantly more clicks while still keeping your ad visible above the fold
• Bids that appear low on page 1 will have trouble getting clicks, and are considered lower value as users may not take them seriously due to the low ad position

Our recommendation: shoot for spots 2-4 on ad position.

In Summary

So, it’s plain that while the benefits can be great for your business if you get lots of clicks, it can be a two edged sword. If you end up paying a high price per click, it can eat into your ad budget quickly and significantly. But if you watch for trending keywords and find ways to tie your business to them and make smart bids, you can rest assured that you know that you’re getting the best Google AdWords bid price.

After reading this blog post, if you still have questions about Google AdWords or would like help, please contact us today via email info@mywsiconsultant.com for a free consultation.

The Final Frontier?  Maybe…

While we have covered A/B split testing extensively in previous posts, there is still a great deal to be said about the many ways that this tool can be used and the advantages to be gained from its regular use.

There are three additional points that are highly relevant when  learning about this type of testing for online optimization:

1. When true A/B testing is not possible, there are other ways to create alternative A/B split tests. In a true A/B split test, two versions of a given page are displayed in an alternating pattern to visitors who come to your site. Sometimes, due to technological issues or other limitations, this cannot be done on your site. Consider setting up a sequential test in which you leave one page up for a certain period of time and then switch to the other version.
2. Testing may seem like unnecessary work, but in reality it is the only way you can understand what is working and what is not in your online marketing system. With regular, well-designed, and ongoing testing, you can identify and solve problems, correct false assumptions, and reach the highest possible conversion rates. Testing provides the data necessary to show those in charge which design works best.
3. Additionally, testing regularly will give you a large data set to draw upon when faced with any new challenges or major choices. The aggregated data will allow you to draw larger conclusions about overall trends, resulting in better overall design and a smarter, more effective marketing plan.

Advantages You Can’t Pass Up

The advantages to testing your design, copy, and other components of your online plan regularly are nearly limitless. As a business owner, it is only logical that you incorporate testing into your overall strategy as not only an immediate choice, but also as part of the ongoing maintenance.

A/B Split Testing: Steps 5-8

As discussed in the previous post, A/B split testing is a smart way to determine whether or not changes you have made or plan on making are an efficient way to accomplish your goals for improving your website and online performance, whether that means an increase in conversion rate, a higher number of subscribers, or something else for your specific business.

After you have gone through the first four steps described earlier, you are half way done with your first A/B split testing endeavor!

The following four steps will take you all the way to completion:

1. Use between one and three completely different designs. The goal here is not to test subtle changes but to determine which overall page structure is the best at accomplishing your goal.
2. Take each design through an A/B split test. Compare the redesigned page to the control, which is the original landing page for those who are just beginning to incorporate A/B split testing into their evaluation process. For each of the redesigns, determine how much better they are than the current design, or if the current design prevails, how much better it performs than the redesign. Using heat maps can help you track the impact of specific elements so that you can gauge the potential impact.
3. Use these results to choose the true control page. The best of these dramatically different pages will tell you what the general format of your pages should be. Once you know the best general format, you can work with the details.
4. Optimize the page that has performed the best by continuing to test traditional variables such as color, graphics, page copy, or the call to action.

Reading between the lines

Once you have decided that the information collected is valid, you must interpret the results in way that is meaningful and also correct. Determining what the results actually mean is how you will turn the testing you have completed into action, creating a more functional and efficient website and online marketing operation.

However, do not feel the need to force your test to “mean” something. If there is nothing to be gleaned from the results, then making any significant changes would be an inefficient way to increase the conversion rates and revenue produced from your website.

Learning from the process

However, if at first you cannot determine anything from the data you have collected, do not just throw the information away. There is something to be learned from the process.

First, you may want to run the test a second time, especially if you are concerned that there were issues with timing or the instruments used for measurement that could be corrected in a second run of the test. If you do not think that there is anything you could correct for a second testing run, look more closely at the result and consider filtering them in a different way.

Sometimes there are patterns that you may have overlooked that are related to certain days of the week or times of the day that can explain the results that previously looked meaningless.

Finally, consider what can be learned from your lack of results. Perhaps this tells you that changing this variable is not going to meaningfully affect conversions or result in more unique visitors, so it is not something that you should spend more time examining, or that each of the choices you have are poor ones and that you should not use any of them in the future.

Making sure the results are accurate

After you determine what you are looking to evaluate in your web marketing campaign, how you will find it out, and how you can measure the results that you obtain, it is time to evaluate those results to ensure that they are valid and relevant. Any data that is going to be used for determining the course of your marketing strategy must be meaningful from a statistical perspective, which means that there must be substantial proof from an objective, numerical perspective that one of the options is superior to the others in regard to the measure that is being tested.

Margin for Error

In order to be statistically relevant, the results must have a very small margin of error. The margin of error refers to the likelihood that the information is correct, and generally statisticians will not accept any margin of error that is greater than five percent. If there is only a five percent margin of error then you could say that you are 95% certain that your conclusions are correct.

One way to keep the margin of error low is to make sure that the size of the sample is high. A bigger sample size reduces the margin of error because the more people that are included, the less likely it is that a single variable or person can throw off the whole data set.

What to watch for

There are several things that can negatively affect the validity of online testing. Some those include events that happen at that moment in time, referred to as history events, problems with the tools used in the test which are referred to as instrumentation effects, problems with the selection of the subjects so that they are not evenly distributed, which is called a selection effect, and sampling distortion effects which occur when there is not enough data collected during a given test.

You must keep score

Once you have developed the question and the process for getting the answer to that question, it is time to determine how the answers to that question will be tabulated so that the answers will mean something to you as you structure your marketing efforts. You must decide how you will measure the performance of one treatment as compared to another and of each treatment as compared to the control.

When working with online marketing, there are four basic elements that can be measured that, from a business perspective, are relevant:

1. The amount of activity on your site. How many unique visitors are coming to the site?
2. The source of the activity on your site. Are people visiting the site as a result of an email promotion or a facebook post? Have they found you on Google or as the result of a pay-per-click campaign?
3. The nature of the activity – what are people doing? What pages are they looking at and how long are they spending on specific pages? Are they clicking on certain things?
4. The results of activity on the site. Are people signing up for newsletters? Are they putting items into a cart but not checking out? Are they completing sales? Are they calling your business to speak to a representative?

When you determine which of these factors you want to measure, you can develop the tools to record the relevant information so that you can answer the question that you defined at the beginning of this process. This will put you farther along on your path to optimizing the way your company interacts with potential customer online.