The reason why Google has a market cap of $100B is because the type of advertising Google sells can be measured directly to sales or sales leads. That ROI measurement comes at a premium!
You can easily create a Paid Search campaign through Google Adwords. Google provides a lot of great tools to get you started and buying ads. You buy ads by bidding on the key word. For example, you can bid $3.00 per click for the key word “Insurance”. Whenever someone searches Google (or other sites — see “Contextual” post) on the term “insurance” your ad will be displayed. If that ad gets clicked on it costs you $3.00.
By bidding a specific dollar amount you are trying to get the best possible position (most optimal position — not necessarily the top spot) in the Google return results. The position your ad gets is determined by the amount you are willing to pay per click AND the historic click through rate for that ad. For example:
Company 1 is willing to pay $3 per click for the keyword “insurance”. Over time Company 1’s ad gets a Click Through Rate (CTR) of 0.75%.
Company 2 is wiling to pay $3.50 per click for the keyword “insurance”. Over time Company 2’s ad gets a Click Through Rate (CTR) of 0.5%.
Google will put Company 1s ad above Company 2s ad even though Company 2 is paying more per click.
There are a couple other odd things about how you buy Google key words — I recommend you check out the many only resources and SEM agencies for more details. The point is, you know exactly what you are paying to get a visitor to your web site. From there you should know your web sites conversion rate. Armed with this data you can manage your key word buys to only be paying for terms that return a positive on your investment. Keep in mind, companies activity pursuing Paid Search manage hundreds to thousands of key words.
Buying keywords can get very expensive. At the time of this post the key word “insurance” is going for between $2.88 and $4.35 per click. The Google estimator predicts I would get around 30,000 clicks and it would cost me over $100,000 per day! But remember — the beauty of Paid Search is that you manage the results. If those clicks don’t turn into buyers you move onto new key words, offers, or landing pages.
I’ve had some success buying key words — a couple insights:
1. It doesn’t scale. You’ll find a mix of key words, offers, and bid amounts that provide a positive return. There is a limited amount of words that will work for you and a limited amount of visitors from those key words. Once you find what works for you simple adding new words doesn’t grow your sales.
2. Branded words perform. If you’re Pepsi Cola and buy key words with “Pepsi” in the phase those buys will provide a positive return. But would you have gotten those sales anyway from the natural search returns? When you use an agency to do your keyword buying make sure they report to you the return on branded keywords vs. non-branded words (in this example the term “Soda” is non-branded since it does not include “Pepsi”). Agencies hide the effectiveness of the overall campaign by buying heavily on branded words and then telling you how successful they have been in converting sales.
3. It’s a lot of hard work. Managing the keywords, bids, offers, landing pages, creative is a lot of work. It needs an educated dedicated resource to do it right. And keep in mind the sales funnel — you have to milk every lead. It’s not just click on buy. It’s about exposures to offer, value of offer, timing, trust, and building a relationship. The goal of a consumers first exposure to your offer is not to get them to buy — walk them through the sales funnel. Search is a tool to help you get that first impression.
