I don’t get it.
I have a ton of friends who own companies. As soon as they start making some money, they start talking to me about all kinds of investments.
“Real estate’s supposed to be good.”
“I wanna be an angel investor, any tips?”
My usual response?
They run these big companies, selling great products and what do they do?
Run off and try to put their money in anything BUT their own business.
Why not just sell more of their product?
Double down on what’s already working, instead of starting to play in a field you know nothing about.
Google AdWords is usually the easiest way to do it.
If my friend wants to 10x his investment money, say $50,000, he can
- spend 1000 hours trying to become good at angel investing, learn everything about it and hope to land an investment in the next Facebook (which is almost impossible)
- do the same for real estate, trying to snag a cheap apartment or condo and flip it (easier, but still hard)
- spend 100 hours learning Google AdWords (or just hire someone who knows it) and invest $50,000 in Google ads, to make $500,000 in sales
Which one do you think is the most likely to pan out?
Option 3, a no brainer.
Today, I want to open the black box, that Google AdWords is to most people, and show you what it is, how to get started, and how to reverse engineer your way to success.
If you know your costs and margins of your products, AdWords is a really easy way to get your money’s worth, often boasting an ROI in the hundreds of percentage points.
(Image source: Sponsored Linx)
If you don’t know what ROI means, it stands for return on investment. In this example, for every $100 spent on the ads, you would make $330.40 back.
So you could turn $100 into $430.30 and thus quadruple your money.
An ROI like this is not uncommon with AdWords, and if you get it right, a 900% ROI, as my friend wants to 10x his money, is definitely within reach.
But let me start at the beginning.
I mentioned pay per click (PPC) advertising before, and Google AdWords is one way of doing so.
Remember that search engine marketing (SEM) was a subset of PPC? This is it.
While you can also run ads in other search engines, Google knocks out the competition single-handedly. So when most people say SEM, they really mean Google AdWords.
These are the ads that show up at the top when you search.
Out of every $3, which are spent on online advertising, Google gets $1. Advertising is their single greatest source of revenue.
Over 95% of their $60 billion revenue per year comes from Google AdWords. Combine that with the fact that over 1 million businesses use it and you know that companies are seriously spending money on this.
(Image source: Youtube)
Put in one sentence, Google AdWords is a marketplace where companies pay to have their website ranked right with the top organic search results, based on keywords.
The way this marketplace works, is like an auction. People bid money for clicks. But not always the highest bid wins. Google combines the money factor with a quality factor, in order to create the best experience for the user.
Quality ads + solid bid = win!
It is a massive industry and if you haven’t tapped into its potential, I bet you can’t wait to. Be warned though: Google AdWords is simple, but not easy.
It takes time to master and most companies lose money on it, because they’re not patient enough to get results. In this guide, I want to help you start simple.
But promise me you’ll do 3 things:
- Don’t spend a lot of money. Set a fixed budget. Can be as little as $50. Or even $25. That’s enough to get started.
- Don’t overcomplicate things. The Google AdWords interface is complex, it’s easy to get lost in it and start creating dozens of variations of ads. Don’t. Keep it simple. Do as little as the platform allows to begin.
- Be patient. This is by far the most important. 99% of the people who lose money on AdWords simply quit too early (or spent too much too fast). Have patience. It takes time.
Can you promise me that?
Raise your hand up high!
Let’s get started with some basics.
Here are some basic terms you need to know:
A keyword is a word or phrase the user searches for, who then sees your ad. Your ads will only show up for the keywords you pick.
(the dashboard is fairly complicated, but we’ll get to it)
Google counts the clicks on your ads, and charges you for each click. They also count impressions, which is simply the number that tells you how often your ad has already been shown when users searched for that keyword.
If you divide clicks by impressions, you get the click-through-rate or CTR. This is just the percentage of users who land on your advertised page, because they clicked on your ad. This is important to know which ads are working well, and which aren’t.
Google AdWords is like an auction house. You have to set a budget and a bid. The bid sets how much you are willing to pay per click. If your maximum bid is $2, Google will only show your ad to people, if other aren’t bidding more on average.
(Auctions have changed)
Google wants to maximize their revenue, so naturally, they’ll show the ad by the company who bids the highest amount for that keyword.
However, if people are bidding less for the keyword you want your ad to show up for, Google won’t spend your maximum bid. It optimizes impressions and bids, and therefore you might actually end up paying less than $2 per click.
Your cost per click or CPC can thus be lower than your maximum bid. Especially, if your ads produce a good quality score. This is a metric based on the experience the user has on your landing page, the relevancy of your website and ad.
Google doesn’t just want to show people the ads by the highest bidder – they could still be horrible ads. They care about their users so much that they’d rather show them a more relevant and better ad by someone who pays less.
None of these things matter though, if you’re not getting conversions. A conversion is usually a sale, but in general means the user took the action you wanted them to take.
That can in some cases be something else than a purchase, for example signing up to an email list or entering their personal information.
In most cases it’s about the dough though (ha, I’m so gangster!). And rightfully so.
Companies often quickly burn thousands of dollars on AdWords, since your budget is set daily and, unless you pause the process, runs endlessly.
Imagine creating 10 different campaigns for various keywords, with a $10 daily budget each. If you let it run for a month, without paying attention, you’ll have to pay a $3,000 bill!
That’s why you need conversions to be sales of a product, in order to quickly regain the money you spend on ads.
In order to make money with ads, you need to sell something.
Makes sense, doesn’t it?
That’s why conversions is what we’ll start with. I’ll take you through how to set up your account, make sure you track conversions and then we’ll get the ball rolling.
Time to reverse engineer a successful Google ad!
Step 0: Getting set up
This is pretty straightforward.
Go to Google AdWords and hit start now.
Enter your email (best to use a Gmail account) and homepage. Then Google wants you to set up your first campaign.
What the heck Google? How am I supposed to know any of these things, if I’m just starting out?
That’s what this guide is for. You can leave the browser tab open in the background. Now you need a calculator.
Step 1: Calculate a budget
You can do this with fourth grade math, really.
In order to know how much you can comfortably spend, you just have to work backwards.
Let’s say you’re selling bricks. You need two components to work this out: your profit per sale and your conversion rate.
If a package with 500 bricks costs $200, and out of those $200, you make a $100 profit on each, the $100 will be your gain per sale.
Your conversion rate is the percentage of people who actually order when they arrive on your bricks sales page.
If for every 1000 views of the page 10 people buy, that’s a 1% conversion rate.
Since the advertising on Google costs money, they get a cut as well.
How much would you be willing to give to them, out of each sale?
If you think making $70 per sale is still okay, then that’s as if you pay Google a 30% commission for each successful conversion through AdWords.
Putting all of it together will give you your maximum CPC.
Max. CPC = your profit x commission for Google x your conversion rate
In this case, that would be $100 x 0.3 x 1% = $.30
That means you can spend $.3 per click on Google AdWords and still make $70 per sale (given your conversion rate stays the same).
Wasn’t so hard, was it?
Now we can just scale our max. CPC up to determine our daily budget. One common misconception is that you need lots of clicks to be able to tell anything.
This is not true.
You just need any clicks to get started.
Of course, the more data you have, the more statistically significant it will be. But this is something you will get over time.
If you just get 20 clicks per day in the beginning, that’s okay.
At our maximum CPC, that would cost us $6 per day tops. You can run a campaign for 10 days and just spend $60.
Step 2: Pick a keyword
Now that you know you want your maximum keyword price to be in the $3 range, it’s time to determine some keywords.
Head over to the Google keyword planner, and start searching.
Put yourself in your customer’s shoes.
If you were looking to buy bricks online, what would you enter into the Google search bar?
Type in exactly that.
You can even set your product category, if you can find it. Also set the right country and language under targeting.
For Google just choose Google, exclude the network (these are sites that show banners etc.). Hit get ideas.
Once you go to the keyword ideas tab, you’ll see the monthly search volume for your keywords in that region, plus the average CPC for them.
From this you can see that only 10 people per month in the US search for “buy bricks cheap”, but it costs almost $3.00 per click to advertise for that keyword.
Not such a great deal.
“cheap bricks” on the other hand has 260 searches per month, but only costs $0.78 on average.
That’s a solid start!
Before we decide on this keyword though, let’s take a look at what the competition is doing.
Step 3: Check out the competition
Peeking over into your neighbor’s garden will help you determine if it’s easy or not to outrank them.
Remember Google AdWords also considers quality? You want to know how good your ads have to be to win.
This is also known as competitor intelligence.
Go to Spyfu.com and enter your keyword, in this case “cheap bricks”.
It’ll show you the the average CTR (so you know what to expect) and the number of companies who have advertised for this keyword in the past 3 months.
In this case, that’s just 41, which is nothing, considering there are over 1 million companies advertising on AdWords.
It’ll also show you other keywords that have done well on AdWords in this niche.
If you click on “Advertiser history”, you’ll even see the actual ads your competitors use.
Pro tip: One determinant of relevancy for Google’s quality score is whether the keyword shows up in your actual ad.
In this case, Brickit doesn’t even mention bricks in their ad. So that means they shouldn’t be too hard to beat.
Alright, we have our budget, a good keyword and easy to beat competition, time to advertise, right?
One more thing first.
Step 4: Make sure your landing page rocks
You’re about to spend money to get traffic.
I need to make sure you understand that.
You will pay people money to go to your website, in essence.
It’s still your job to convert them and make them pay you money.
Which means, if your landing page sucks, you’ll lose all that money. I was shocked to find out that businesses will only spend $1 converting their traffic for every $92 they spend acquiring it.
After people have come to your landing page, would you spend another $92 on them if that meant they’d end up buying your $300 product? Of course you would!
Make sure you’ve done everything to convert as much as possible, before starting to advertise. If you send 1000 people to your landing page through AdWords and convert at 1%, you’ll make $1000 with a $100 product. Imagine increasing that to 2%.
You’d instantly double your money and thus be able to spend more on ads.
If done right, Google AdWords has a positive reinforcement effect, but your landing page needs to convert.
After spending quarter of a million dollars on conversion rate optimization (CRO) it breaks my heart to see generic, boring offers, like this one from citibank:
They offer some kind of bank account, that has no obvious benefits over well, any other bank account.
Even worse, then they want me to enter a ton of information.
Wordstream has come up with a good article on improving your landing page.
Here are 4 main points to consider:
- Keep the design simple. Don’t cram your page with tons of videos, animations and fancy design that takes to load forever.
- Make the headline powerful and stand out. It’s the first thing people read. It better be good.
- Write clear copy. Don’t try to sound smart by using complex terms no one understands. Write as if you talk. Be as clear as possible about what you have to offer.
- Use bullet points, pictures and other visual elements. Again, don’t overdo it. These things are supposed to help the reader get a better grasp of your message, not become the sole reason for catching their eye.
Want an example of a job well done? Check out Lyft.
Simple design, clear headline, straightforward instructions.
Another good example is Codecademy. Their homepage tells you immediately what you’ll get. And you’ll get it fast.
Once your landing page is decent, it’s time to return to the setup.
Step 5: Set up your first campaign
After setting your daily budget ($6.00 in our case) it’s time to target the right location.
If your business is operating only in the US, but US-wide, enter United States.
Under networks, uncheck the display network. You only want your ad to show up in the Google desktop search results, not on other websites in your industry.
Then enter your keyword (don’t worry about Google’s recommendations, you can add more later) and set your bid to $3.00.
Awesome, now all that’s missing is the ad.
Step 6: Write your first ad
So what does it take to write a great Google ad? A few things.
Be precise. You don’t have a lot of room to express yourself. So be short and sweet.
Having a unique value proposition (UVP) helps. It’s a one-sentence description of the benefits for your customers.
Know the Domino’s slogan?
“You get fresh, hot pizza, delivered to you in under 30 minutes – or it’s free!”
(Image source: ConversionXL)
What more could you want out of ordering pizza? Fast delivery and it’s still warm when you get it.
Spend some time thinking about how you’re different from anyone else. What can you bring to the table, that your competitors don’t?
Capitalize on that.
Including a call to action is also tremendously important. The easiest way to get people to click your ad is to ask them to do so.
Look at this ad that comes up for our keyword “cheap bricks”.
Not only do they not include the keyword properly (having it in its true form is very helpful), but also there’s no action they prompt me to take.
Different types of stones, 12 years of experience.
What does that mean for me? Nothing.
They’re not telling me to do anything, so I don’t.
Another key factor is your display URL. This is the green link displayed beneath the title. It can be anything you want it to be, but the domain has to match the domain of your landing page.
You should always include the keyword here, for additional highlighting.
Keeping those factors in mind, create your ad.
How about this:
If our page is wesellcheapbricks.com, we need to make that the display URL as well.
Pro tip: Remove the “http://” in your display URL to get more space for your keyword.
Let’s dissect the ad real quick:
“Get cheap bricks fast” is a headline that doesn’t solely rely on the keyword and thus stands out, but is also an action people can take, which makes it clickable.
Again, http removed and added “cheap-bricks” at the end, so it’ll be highlighted in the search results and make our ad more relevant to searchers of the keyword.
You only have 2 lines, which isn’t much to get the message across. “Our bricks are cheap and delivered within 2 days.” That’s as clear as it gets. Of course cheap is always relative, but it sounds good enough to the searcher.
Delivering within 2 days is definitely a bonus most other brick stores won’t offer (let alone mention in their ads).
Call to action (CTA):
“Order today.” What more needs to be said? There is no exclamation mark, because Google isn’t big on those, but it’s definitely a good prompt to take action.
Have everything? Hit save and continue.
Step 7: Fix details
You’ll then land on your dashboard for the first time. First of all, pause the campaign so it doesn’t start running just yet.
If you click on the campaign you’ll see inside of the campaign, Google automatically created an ad group.
If you click on that, you’ll land on the ad level, where you can see your keyword.
Click on your keyword and set it to phrase match.
Initially, google sets this to broad match. Unfortunately, that’s not very targeted. It means users can type in your keywords anywhere in the query.
But if someone searches for “how can i make bricks at home cheap”, they’re not looking to buy cheap bricks, so that’s not what you want.
Exact match might be too targeted though, since it only allows the exact phrase “cheap bricks”.
Usually, phrase match is a good option, since it must contain your keyword as a fixed phrase, but can have other terms around it.
If users search “where to buy cheap bricks” your ad will still show up this way.
Now all you need to do is one last thing…
Step 8: Set up conversion tracking
Remember how I said all of this is useless without conversions?
That’s why you need to track each and every single one of them.
How does Google do this?
With a snippet of code.
You put a bit of code on the page users reach after successfully buying from you, which will let Google AdWords know there was a purchase every time a user reaches the page after clicking on an ad.
To set it up go to tools and then conversions.
Click add conversion.
Now choose website.
Add the info, basically just a name and the value of the conversion.
Hit save and continue. Then you’ll reach the page with the code snippet.
Just copy the code snippet and add it to the HTML code of your thank you page (the one people land on right after making a purchase).
It’ll say unverified in your dashboard at first, but that will change after a few hours or a day.
Once you’ve set this up, go to the campaigns tab and let the campaign run.
Congrats, you just set up your first AdWords campaign!
What happens now?
Google will first review your ad, before it starts showing it to people. That’s why it doesn’t make a lot of sense to create lots of ads right away.
Once you go into your account the next day, and see your ad has been approved (you’ll also receive an email from Google), you can start creating more ads, by copying your original ad.
That way you can avoid going through the approval process all over again. Go to the ads tab.
Select your ad in the checkbox and click edit, then copy.
Then do the same and click paste (or just press Cmd/Ctrl+V).
Paste your ad and check both boxes.
Then you can click on your copied ad and modify it. Change the headline and copy.
In order to get results on AdWords, you always need to test different ads against each other.
If you only run one ad, and get crappy results, you can’t possibly know what would have been better, because you can’t compare.
That’s why you should create at least a second ad on your second day, once the first has been approved.
Congrats! And now?
Sit back and wait. I’m serious.
Turn on your second ad and once everything is running, do something else.
Don’t sit at the computer, waiting for things to happen.
Remember the third promise I made you make? AdWords takes patience.
Check back in a day. Then create more ads. Start tweaking. Read the data.
And remember: Nothing matters without conversions.
It’s great if you can tell which ads get a better CTR, but if they don’t get conversions, that also doesn’t help you make money.
It might take you a month to get results (here’s a good infographic on what to do in that month).
Just follow your ads and analyze the data as it comes in over the next 10 days.
Then review, turn off ads that don’t work, add more keywords, and double down on what performs well.
Once you start going deeper, be sure to check out the great videos we have on Google AdWords in Quicksprout University.
What do you want to use Google AdWords for? Let me know the headline of your first ad in the comments.