Over the years I’ve evolved from a grumpy system administrator who hates advertisements of any kind (thanks to years of trying to outwit spammers sending us ads for “V!86ra”) to a technology professional who understands that advertisements can also be used for good and meaningful purposes. It’s been a mutual evolution, you might say.

There was a period several years ago where pop-up and web banner ads were so obnoxious they could drive you away from a site (I remember some notorious ads while reading news on Boston.com which blocked the entire screen and were difficult to close). Online advertisers seemed desperate to bring in revenue by any means necessary and relied on the “fire hose” approach of trying to spray large volumes of ads at audiences while hoping a few droplets might hit the mark, and never mind who got angrily wet.

Things have come a long way since then and marketing has evolved from hounding strategies to using more sensible (and eye-pleasing) techniques. It’s no longer about bugging people, but rather reaching the right kind of clientele. Targeted ads, for instance, are now deployed so that appropriate audiences are presented with material that they are more likely to find compelling.

Data is being scrutinized to understand what customers want and how they respond to certain types of ads, so as to eliminate the unpopular and uncomfortable techniques (this notion can be a bit creepy, but as a skier I’d rather see an ad for discounted nearby lift tickets than a Snuggie, which I wouldn’t wear on a bet). Marketing is now more psychologically oriented and uses methods to attract prospective customers without repelling those outside a certain sales niche. This has benefited both businesses and consumers alike. When I go online now I no longer feel like Alex in “A Clockwork Orange,” being forced to sit through unwanted solicitations.

While I still hope for a day when spam becomes as extinct as New Coke and the Edsel, I’ve recently found ads both online and in-person which can be useful or even interesting. This poster recently seen at Urban Outfitters in Faneuil Hall, Boston is a perfect example.

Figure A

I think it’s safe to say most of us would appreciate “mo money” for any one of those categories listed. The ad is fun, exuberant and appealing; about as far from dry 1950’s commercials as you can get.

How does Google Conduct advertising?

Google is also committed to the concept of useful and relevant advertising. Their advertising system is called AdWords. Participating organizations pay Google to display their ads either when Google’s Search is utilized or on websites related to the Google network. In the case of search, if someone enters “blender” then an ad for “Max’s Appliance Store” might appear alongside the results. That is, if Max is an AdWords customer who has configured “blender” as a keyword to bring traffic to his site. Certain other conditions apply in this context to get the link to Max’s site in front of users. This is done tastefully, I might add, and not in a charging gorilla fashion like ads from days gone by.

Sounds simple, right? Well, it is and it isn’t. Just like saying an aircraft carrier deploys fighter planes for the Navy, that’s a summary, but the intricate details involved can be incredibly complex. It might sound like Google just accepts money from any and all merchants eager to receive high rankings in search results and the one who pays the most wins. It doesn’t work that way.

How does AdWords operate?

Any keyword which users enter into Google Search can trigger a behind-the-scenes auction if multiple advertisers have opted to bid on this word. Now, this is not the kind of auction with the guy speaking at 78 rpm and chanting “going once, going twice” to a crowd of breathless participants. It’s an automatic auction behind the scenes whereby participating businesses have a bid set up on certain keywords they want to use. This auction happens in between the time the user clicks the search icon and the results appear.

Businesses set limits on what they want to spend on keywords in these auctions. The “winner” (the one whose ad is displayed first; in other words, the highest ad rank) is the business that has the highest bid multiplied what is called a quality score.

What is a quality score? Google states it is “a measurement of the quality of your ads, keywords, and website.” The protagonist in “Zen and the Art of Motorcycle Maintenance” had some difficulties defining quality, but Google has gotten the concept down, at least as far as ads go. Quality of ads refers to click-through-rate (aka CTR) which is the first factor – how many people respond to these ads and want to see more. Ads which are clicked on the most are considered high quality (and you’ll actually pay less if your ads are higher quality).

Relevancy is the second factor – advertisers can’t just hog a slew of unrelated terms for mining equipment and expect to drive traffic to their online surf shop. The landing page (e.g. target website of the business involved) is the third and smallest factor in establishing the quality score. These factors ensure competition among advertisers and make it fair for those who want to participate.

For more information about the auction process, click here. This infographic also lays the process out quite well and includes some more valuable tips for those in the marketing industry.

Note: keywords can also get your ads to appear elsewhere on the internet via placements on other websites part of the Google Display Network.

An example

Let’s say you’re Max of the aforementioned Max’s Appliance Store and you’ve just signed up for AdWords. You have a business in Keokuk, Iowa and would like to bring in business from customers in Illinois and Missouri who aren’t aware of your shop. However, you certainly aren’t concerned about presenting ads to people in San Francisco or Seattle as they live thousands of miles away and may never come to Iowa.

So, you set up AdWords and configure your Campaign (your advertising strategy) to use what’s called “Radius targeting” to get your ads out to people in, say, a 150 mile radius around Keokuk (as determined by client IP address). Your ads won’t reach people in Chicago or St. Louis, but they will reach cities such as Hannibal, MO and Springfield, IL – where likely customers might be interested in your wares, or perhaps keep your store in mind as they traverse the region.

Then you create a great ad for blenders including lively and dynamic characters – Sammy the Shake blender, Miguel the Margarita blender, and Frankie the Fruit Smoothie blender. Your site has been set up to educate users and provide photos, reviews and specifications for blenders as well as other appliances – it picks up where the actual ad left off.

Now it’s time to set up bidding on keywords such as “blender.” You decide you want to set a certain daily budget and maximum bid on specific keywords. So you set a maximum bid of $.50 if someone in your region searches Google for “blender” and then clicks on your ad (also called cost-per-click).

This doesn’t necessarily mean you’ll pay $.50 per click nor pay it every time. The way Google has set it up is that the MOST you will pay in this scenario is $.50. If Ruby’s Kitchen Supply store across the street is also an AdWords customer and Ruby is the second-place contender in the auction (thanks to the maximum bid x quality score formula) but has only bid $.40 for a keyword search on “blender,” you’ll just pay her bid plus a penny more if someone clicks on your ad, totaling $.41.

It can even work another way! Let’s say Ruby bid $.60 per click on “blender” but your ads and your site are better than hers. You’ll win that auction and your ad will appear over hers in the example search described (at a cost of $.50 per click however).

The above is one small example in a field with many possibilities and conditions. Google offers a help page with further detail about this process.

How much does AdWords cost?

We didn’t have a definition problem with the word “quality,” but we do with “cost.” You can spend a little, or a lot – there are many factors to note. If I go to Las Vegas and someone asks me how much they should bring to the blackjack table I can’t answer that. It depends on their risk tolerance, available budget, and overall goals. I’m stingy, so I’d bring fifty dollars, but my wife’s twenty-something cousin Patrick would probably show up with nothing less than a thousand. We each have a different approach to risk.

That being said, here are some factors worth noting about AdWords costs:

  • You pay Google only when a customer clicks the ad.
  • You can set a maximum amount you’re willing to spend each day or month.
  • Automatic bidding can adjust your bids depending on your daily budget.
  • If you are spending too much you can adjust your settings as needed.

It should be expected that some tweaking and adjustments will be required to get your bids appropriate for the business you’re receiving. You shouldn’t spend more on ads than you make in profits, obviously.

If you have better ads and a great website, your rates may go down, thanks to the concurrent increase in your quality score.

The overall process is manageable but requires diligence and savvy. There is no “set it and forget it” here.

Analytics Results has an excellent page laying out some suggestions on how much you should spend on AdWords. In one of the comments it is stated that a business might expect to start out paying $2000 per month for instance, but of course this can vary. Here is Google’s explanation on how costs are figured out.

Is AdWords effective?

Well, it’s very effective for Google; it is their top source of revenue. According to a great article on ansonalex.com, Google brought in almost $38 billion dollars through advertising in 2011. AdWords brings in over $100 million per day, states a recent story by Pamela Parker on Searchengineland.com, which also indicates Finance, Travel and Shopping are the biggest spenders on AdWords.

But is it effective for businesses? Google claims they have well over one million advertisers participating in AdWords, but these advertisers are going to have good, average, and bad results. The key to using AdWords effectively is to educate yourself on the schematics, understand your bids, sharpen your keywords to a knife-like edge, and then formulate great ads and a stellar website.

As I said, you can’t just implement your settings then cross your fingers and hope for the best. If that’s your strategy, you might as well take your money to Vegas and bet it all on black. The good news is that there is no shortage of resources available on the web from experts with years of experience dealing with AdWords. There is very likely also no shortage of people who brought their money to the table then mismanaged it and found this didn’t work for them because their strategies, products or innovation didn’t fit the bill, so there are lessons to be learned from them as well.

If you have a business page on Google+ you can take advantage of this by using social extensions to link your Google+ page to your ads. According to Google, “Search ads using Google+ average 5 to 10 percent more clicks.”

Precautions regarding AdWords

It should be noted that browser add-ons such as Adblock can prevent your ads from appearing, or users might block specific advertisers they don’t like. Just because you bid on a keyword isn’t a guarantee your target audience may see it. On the other hand, as I’ve indicated previously, ads are getting less cumbersome and obnoxious, and I find some people are taking fewer steps to avoid them.

Advertising to mobile devices is an up and coming strategy, and some information seems to indicate that the customer targeting via mobile strategies is cheaper and more advanced than AdWords. If you feel your target audience may be heavy mobile device users (perhaps more so in San Francisco and less so in Nome, Alaska?) then a separate advertising policy for mobile devices should be researched and considered.

Another consideration: if you violate – or are suspected of violating – the AdWords policies your account will get suspended and you’ll essentially be blacklisted by Google. You can find the terms and conditions for AdWords here. David Rodnitzky at Searchengineland.com tells a story worth reading about some problems regarding an AdWords account that was wrongfully blacklisted, and he includes some suggestions for Google on how to address the problem. Now, this can happen with any advertising carrier you select, of course, but it shows that it’s very important to ensure all policies are followed and to be prepared to address any snags that might come up.

How do I get set up?

Obviously you need a Google account, but you don’t have to have a special business or merchant designation. I set up AdWorks with my personal Google account after specifying time zone and currency. I went right to the “Campaigns” page where Google presents some steps and Q/A to walk you through the process. I didn’t have to enter a credit card, keywords, or bidding details to initialize my account; it took less than a minute.

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How can I report on the results?

AdWords can show you how your ads are bringing in traffic (and from where). It can tell you what keywords invoked your ad. Searchengineland.com has a page describing several important AdWords reports and how they can help your business.

What if I don’t run a website?

You can use AdWords Express. This is perfect for any brick and mortar stores which may not have a website or has one which is presently subpar. For more information here is an overview on AdWords Express.

Where can I find out more?

Google offers an AdWords Help Page here. This video presents a decent summary as well. The entire Searchengineland.com site is a wealth of resources involving Google AdWords and I highly recommend you peruse as much as you can on the subject. Google also provides a blog called “Inside AdWords.” There is even a Dummies book on the topic!  Don’t let the title fool you; I personally find the Dummies series invaluable in all aspects of life (and am steadfastly ignoring the implications of that admission).


We all know that ads are necessary for online services to be available without a paid subscription. In Google’s case, ads permit the use of Search, Gmail, Drive, Maps, YouTube Videos, Wallet and many of their other products (though it is worth noting that the Google Apps free version was recently retired for new subscribers; existing free accounts remain intact).

Google employs a business model whereby they provide free services to many users who are then presented meaningful ads from paying Google customers. These users provide business to the paying customers, and thereby help fuel the system. It’s like night and day from the nightmarish onslaught of annoying and offensive ads from before, which just made you want to shut off the computer and go outside. Advertising should be “more magnet, less handcuffs.” Google AdWords has helped pave the way towards this strategy.

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