Google AdWords Guide (cont'd)

Googles stipulation that your ads must have a CTR of at least .05% means that a company with deep pockets simply can't outbid the competition. They also have to outwit them by using good ad copy and appropriate keywords. Even if your competition is willing to pay sky high prices for clicks this still won't save them, as if they can't write good pulling ads they will be dropped from the program, leaving you to move up a position.

Other advantages which Googles program has over similar ones include setup time and specific country / language targeting. With Adwords your ads can be live on Google within five minutes of creating them so you can potentially begin to see results immediately, ads on Overture usually go live after a three to five day waiting period. Adwords allows you to choose who should see your ads from among 250+ countries and 14 languages, this means you have more control over your ads so you can be sure they're only shown to a highly targeted audience which means your more likely to be successful.


How to profit with Google Adwords

Now you know why Google Adwords is such a good thing, let's move onto how to actually use it in order for your business to make profit. First things first, you should determine how much you can afford to pay for a click. Doing this is important as it enables you to better understand the amount of money you can bid on keywords in Adwords while still remaining profitable. To do this your conversion ratio is needed, calculate your conversion ratio by dividing your monthly unique visitors by your monthly sales, then convert your answer into a percentage by multiplying by 100.

Imagine in a month you get 20000 visitors and sell 500 products each with a gross profit for you of $50. Your conversion ratio simply put is (500/20000)*100 = 2.5%. This means that for every 100 people who visit your site 2.5 buy your product.

Your gross profit per 100 visitors is calculated by multiply the gross profit on your product by your conversion ratio, to continue with the previous example - $50 x 2.5 = $125. Divide your gross profit per 100 visitors figure by 100 to determine how much you can bid in Adwords.

In this case you could afford to pay up to $1.25 for a visitor and still break even. Rarely will you have to pay this much for a click, remember that the minimum CPC on Google Adwords is only 5 cent so play your cards right and you can have high profits.


Choosing your Google Adwords keywords

Next on to picking your keywords. These are the words which when searched for will trigger the appearance of your ad next to the search results. Choosing the right keywords is imperative to the success of your campaign. A good approach to choosing the right words is to imagine what you'd search for if you were looking to buy a product similar to your own.

Remember as with Overture, the more popular a word or phrase is the higher CPC you'll have to pay and generally clicks from general words convert to sales far less often than clicks from specific terms so it's always better to have a few highly focused keyphrases that get clicks than to be number one for the most general word or phrase in your industry. In Googles own words:

"General or broad keywords will generate many impressions with few results."

Do you want "few results"? You certainly don't so avoid the expensive popular words and stick with the less popular but more profitable keywords. Finding such specific keyphrases can be time consuming, but it's worth it as research has shown that although much cheaper using specific phrases helps get more highly targeted people to your site and hence helps you get more sales.

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