Thomas is a Ph.D. student in economics specialized in platforms and new technology matters. He also works as a consultant in strategy and data analysis for the consulting group Veltys. Thanks Thomas for his contribution, find him on @thomaslarrieu.

Google AdWords tips and tricks 2015

Let’s start with some figures. Google has more than 74% market share in the search engine industry in the US and about 93% market share in France. Google receives 3.3 billion search queries per day, and 15% of them are new search queries. In 2014, Google made 59 billion dollars on advertising (search engine and ad network combined).

Before we start share our insight, know that Google Adwords isn’t just about making the highest bid! If you make good market research so that your ads gives value to your potential customers, then Adwords will become cheaper and more efficient for you!

Google Adwords benefits (from the point of view of Google)

https://www.google.com/intl/en/adwords/benefits/

• Get new clients
• Advertise locally or globally
• Reach the right people at the right time
• Reach your customers, whichever device they are on
• Measurable, accountable, flexible
• Pay only for results
• Test new markets

How does Google Adwords works?

When thinking about your campaign there are two majors ingredients you should know of:

Adwords = Bids * Quality Score

Bids

A bid is the maximum amount you are willing to pay to get your ad displayed or clicked on. The auction system is called a second price auction. Therefore, when you win an auction, you’ll only pay the amount your competitor was willing to pay, that is the second highest bid. Let’s say that A, B and C want to buy a painting. And let’s say that A is willing to bid 100 euros, B 90 euros and C 85 euros. Then A gets the painting while only having to pay 90 euros.

These types of auction are known in economic theory because it gives the buyer an incentive to reveal their true willingness to pay.

Quality score (QS)

QS is the quality of the ad and is determined by Google’special algorithm. The quality of your ad depends on how relevant your ad is compared to what you are proposing. There are two majors factors to look at concerning quality score:

External Factors

Quality and relevance of your landing page.  Your goal is to give as much value as possible to the people you’re targeting with your ads. With highly relevant landing pages, you’ll get cheaper and more efficient ads. A good landing page should make sure to satisfy the technical requirements mentioned in SEO for dummies.

You also want your landing page to be easy to navigate, mobile friendly, have a high loading speed, as well as having a clear purpose that adds value for your audience.

Source tenscore

Internal factors

CTR (click-through-rate) and ad quality. Google monitors if people that click on your ads also click on stuff in your website. When people click and interact with your website, it often means that people were interested in what you had to offer. Click-through rate is a major ranking factor for Google!

To increase your CTR do not hesitate to talk with your friends, family or colleagues. Ask them what they would type to search for a specific product. Take their answers into consideration to build your campaign. Keep in mind that you need efficient wording and be targeting precisely the keyword you are bidding on.

Google also remembers your QS from prior advertising campaigns of yours. If your previous QS score was good, Google would be more confident in giving you a higher QS.

Here’s a nice video about Quality Score.

Source: Tenscore

What is the quality score used for?

Google wants to give value to people using their search engine! Quality score is Google’s method to assure great customer experience by providing users with the best answers for what they are looking for. If your ads are relevant and adds value for users, Google will reward you with lower costs and with placement of your ad.

This table shows 4 advertisers. Each of them want to appear for the same Google search, but there are only 3 slots available. The two first columns (on the left) show bids and QS respectively. With these two parameters, Google computes AdRank and place you accordingly. The formula= AdRank = Bid QS

For instance, the AdRank of the red advertiser will be 4*1=4 and the blue one will be 3*3=9.

Here the Green man will appear first with 12 points, the blue man is second with 9 points and the orange man is third with 8 points. As you see, although the red man has the highest bid but the lowest QS. That’s why he’s last!

To determine the cost that advertisers pay (Cost Per Click), Google uses the following formula: CPC = best AdRank below / QS.

The CPC for the first position ad (the green man’s), it is 9/6= 1.5 €. 9 is the AdRank of the Blue man, and 6 is the QS of the Green man. The cost per click for the second position as (the blue man’s) is 8/3= 2,6€. 8 is the AdRank of the Blue man, and 3 is the QS of the orange man.

The following graphs shows the increase in AdRank and the decrease in CPC with respect to Quality Score for a given bid. For a 1€ bid, the greater your QS, the greater your AdRank will be, and the lower your CPC will be.

Source Tenscore

What is a good quality score?

Always aim for a QS above 7. Under, you’ll end up paying a lot while not proposing relevant ads!

Google tools

Keyword planner

We mentioned this tool in more detail in SEO for dummies articles. Shortly, Keyword planner allows you to look for how many times a keyword (a “word” or “a serie of words) is research per month. It also allows you to check for alternative keywords that might interest you!

Ad planner for display network

Ad Planner lets you choose where you want your ads to displayed. Google has different networks where they display ads. Depending on your audience, you can segment it here!

Competition analysis

Google lets you see check competition for particular keywords as well as how you compete for them. If your Adwords budget is low, you’d better compete where the competition in low.

Bid simulator

Bid simulator is just a tool that allows to test out Adwords by simulating bids. You do not place a real bid, you just test how bids would eventually work. I would use this tool with precaution through. Often, Google incentivises to place higher bid than needed.

Automation

Google lets you automate your advertising. One option is to run ads only when CTR reaches a certain percentage. It is an option if just want to run your high-performing ads.

We did a little experiment on a small website (around 100-200 visits a day). We set our bid at different levels and finally let Google bid for us given our budget constraint of 7 euros per day. The following graph shows the result of this experiment.

The first line of this graph shows my maximum bid for a given campaign. During the first day, it was set to 0.5€. The Second line shows the number of clicks depending on the bids. Until day 15 I choose to decrease bids. The results were surprising considering that my lowest bids had the highest amount of clicks.

The explanation: My daily budget constraint was low and was quickly reached. By decreasing my bid, I increased the number of times my ad was displayed. I therefore got more clicks! So with a daily budget of 10€ and a CPC of 1€, my ad was clicked maximum 10 times. Once my budget limit is reached, Google stops publishing my ads to avoid charging me over my daily budget.

When this happens, there are two ways of getting more clicks. Either you increase your budget or you decrease your bids. Decreasing bids will lower your CPC. Google naturally advises increasing the daily budget as it increases their revenue. Sometimes it is necessary if there is a lot of competition. But often, as illustrated above, decreasing bids gives a greater number of clicks, and that for the same budget!

Remember that your competitors also have a daily budget limit. When their budget limit is reached, Google stops publishing their ads. With lower competition, you’ll be able to publish your ads at a lower cost!

From Day 15, I let Google automatise my ad. Result was that the bid went up to 0.5 € per click. It allowed me to be displayed first, but it also lead to the lowest number of clicks I had during my campaign.

Suggestions

I suggest taking those tools into considerations while monitoring how effective they are. Google’s interest is to make you advertize as much as possible to maximize their profit. They don’t necessarily optimize your traffic.

The best way to find out what works is by testing several bids, with several campaigns and with different keywords while monitoring your results.

Forewords

Should you bid on your own brand name?

It’s a difficult question as it depends on your situation. I believe the answer depends on who you are and what are your objectives are.

Let’s look at Ebay’s example:

Source : T.Blake, C.Nosko, S.Tadelis, Consumer Heterogeneity and Paid Search Effectiveness: A Large Scale Field Experiment. Blake

When Ebay decided to stop paying for brand name ads, they suddenly had more traffic coming from organic searches. This means that the paid advertising was cannibalizing their organic traffic leading to unnecessary advertising costs.

In some cases, your brand name doesn’t appear first when you type it in Google. An example to illustrate is in the hotel industry.

Hotels typically don’t have much online authority. When you search for a hotel, booking platforms are organically better placed. If your running ads for your hotel, it might be an idea to bid on your own hotel name.

Conclusion

Was this article helpful? Then, share it with your friends! Also, if you want to learn more about Adwords, try this course.

Related track: How to get an internship at Google.