What is Google Adwords and How can Small Businesses use it?

What is Google Adwords?

Virtualnet (2014) describes Google Adwords as the system that Google has developed to assist you in marketing your products or services in the Google Search Engine, and its affiliate sites, via the use of a placed text ad that appears when people search for phrases related to your offering, this appears as a 'sponsored link'. The system in which they use is a 'pay per click' system, therefore you can manage where your ad appears through bidding for a series of phrases, but you only pay the amount you have bid for it someone clicks on your ad as a result of a web search.

Wordstream (2007) Google's total earnings for advertising was $32.2 billion. This is 97% of Google's total revenue. From the auction, the top words bid for are:

1.      Insurance

2.      Loans

3.      Mortgage

4.      Attorney

Mashable (2013) shows that Google earns 33% of Online Ad Revenue. This can be seen in the image below against its competitors. 

How does it work?

Wordstream (2007) explains that when someone searches for something on Google, Google looks at the Adwords advertisers pool and determines whether there will be an auction. If one or more advertisers are bidding on keywords that Google deems relevant to the search query, an auction is triggered.

Advertisers identify keywords they want to bid on, how much they want to spend, and create groupings of these keywords that are paired with ads. Google then enters the keywords from your account it deems most relevant into the auction with the maximum bid you've specified as well as the associated ad. These auctions are run billions of times each month. 

Benefits and Drawbacks of using Google Adwords

Google (2014) highlight some of the Benefits of using Google Adwords:

1.      Reach people at the precise moment they're searching for what you offer.

·      Your ad is displayed to people who are already searching for the kinds of products and services you offer. So those people are more likely to take action.

·      You can choose where your ad appears, on which specific websites and in which geographical areas.

·      The Google Display Network (GDN) alone reaches 80% of Internet users in the US.

2.      Control your budget

·      With cost-per-click (CPC) bidding, you're charged only when someone clicks your ad, not when your ad appears. There are a variety of bidding options you can choose from.

·      You decide how much you want to spend each month.

·      There is no minimum spending commitment.

3.      See exactly what's working in your ad, and build on it

·      View a report of how your ad is doing, you can see how many new customers connect to your business from your ad and where they're coming from.

·   Use Adwords tools to edit and improve your ad, and increase the number of potential customers who contact your business.

Jones (2012) indentifies some of the disadvantages of using Google Adwords:

o   Every click through to the company website is a charge to the company, even of the consumer didn't purchase from the site. Dependant on the nature of the business, your visitors can be varied from your competitors to researchers.

o   Failure to make payments to Adwords can immediately remove your presence from Google.

o   No competitor data comparison is shared by Google Adwords. Google does not disclose the performance of other companies as part of its insurance policy.

o   Advertising strategies on Google Adwords still have to be well planned to get an effective response from customers.

o   You shouldn't solely rely on Google Adwords to promote your company, other methods such as email or word of mouth should be used inline.

o   At the minimum, the copy space for Adwords is 70 characters only so choose your words carefully for maximum effect.

How can Small Businesses use Google Adwords?

Wordstream (2013) explain that promoting products and services while trying to complete with large companies like Amazon is a daunting task for small businesses. Big brands may have an advantage when it comes to PPC, but even with a small budget, you can get impressions and clicks on Google with a smart account structure and the right targeting options.

Some top tips when creating your Google Adwords account:

§  Keep it simple - You don't need a huge account to be successful. Start small and progressively grow your account.

§  Tracking your Adwords progress - It is highly recommended that you set up Google Analytics with your website for in-depth analysis.

§  Don't Overreach - Incorrectly targeting your ads, whether its location, device or network targeting or the match types you choose for your keywords. It will waste money.

§  Don't overpay - set a consistent Adwords budget - being the top advertisement on a page isn't likely to happen, especially if you don't have a large budget.

Simply Business (2014) has created a Small Business Guide to using Google Adwords, these are displayed in the images below. 

Guerini et al (2010) did an experiment allowing them to use thousands of subjects for a few dollars in a few hours, by tweaking and using existing commercial tools for advertising on the web. It proved Google Adwords to be very accurate, flexible and fast; exceeding their expectations.

From my research I would recommend Google Adwords to Small Business owner. It will inevitably advertise their products for them as long as they manage it correctly. Ensure you stick to your budget when bidding for words, it is easy to get caught up in an auction and bid against giant companies such as Amazon.

References

Google (2014) 'Advertising on Google Adwords: An Overviw' [Online] <https://support.google.com/adwords/answer/1704410?hl=en> [Accessed 23rd May 2014]

Guerini. M, Strapparava. C. & Stock, O. (2010) 'Evaluation Metrics for Persuasive NLP with Google AdWords' [Online] <http://www.lrec-conf.org/proceedings/lrec2010/pdf/209_Paper.pdf> [Accessed 23rd May 2014]

Jones, G (2012) 'Advantages and Disadvantages of using Google Adword' [Online] <http://www.grahamjones.co.uk/2012/articles/internet-marketing-articles/the-advantages-and-disadvantages-of-google-adwords.html> [Accessed 23rd May 2014]

Mashable (2013) 'Google earns 33% of Online Ad Revenue' [Online] <http://mashable.com/2013/08/28/online-ad-revenues/> [Accessed 23rd May 2014]

Simply Business (2014) 'Google Adwords: The Small Business Guide' [Online] <http://www.simplybusiness.co.uk/microsites/google-adwords/> [Accessed 23rd May 2014]

Virtualnet (2014) 'What is Google Adwords?' [Online] <http://www.virtualnet.co.uk/what-is-google-adwords/> [Accessed 23rd May 2014]

Wordstream (2007) 'What is Google Adwords?' [Online] <http://www.wordstream.com/articles/what-is-google-adwords> [Accessed 23rd May 2014]

Wordstream (2013) 'Small Business Strategy Guide to Google Adwords' [Online] <http://www.wordstream.com/blog/ws/2013/07/15/adwords-small-business-strategy-guide> [Accessed 23rd May 2014]