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What is Google AdWords? What Business Owners Should Know

Every modern business owner needs to know how to attract customers through Google’s search engine results and online ads. These days, one of the most effective ways to get people to click on your site is Google AdWords: a pay-per-click advertising platform that’s linked with Google and the Google Display Network in the Internet giant’s network.

Despite its popularity, Google AdWords can seem impossible to understand, especially if you are new to online advertising. Let’s break down everything business owners should know about Google AdWords and how it works.

Google AdWords Explained

In a nutshell, Google AdWords is an online advertising platform. You can use Google AdWords to reach customers across the web (and even internationally!) to significantly bolster your marketing efforts, boost your business’s customer attraction and conversion rate.

Google AdWords is a type of PPC or pay-per-click ad platform, which means that advertisers pay Google based on the number of clicks their ads get. More importantly, advertisers and business owners are able to prioritize showing their ads to certain users based on demographics, keyword searches, and other factors.

The result? An online ad platform that gives you a lot more bang per marketing buck you spend compared to other options.

How Does Google AdWords Work?

To understand how Google AdWords works, you need to understand Google Ad Networks. There are two different networks to consider:

  • The search network has advertisers bid on target keywords (which are relevant to their industries). Users who search for those keywords may see the ads as organic parts of their search queries, typically at the top or bottom of the page
  • The display network, which has advertisers display banner ads on any websites that are part of the broader Google Display Network. These aren’t as targeted as ads for keywords but can still be effective

Think of Google AdWords as a live auction advertising marketplace. You, the advertiser, place a “bid” on Google for a specific ad position based on keywords, competitiveness, and so on. Depending on the price you bid, you’ll either receive the position you desire (usually toward the top of the list) or have to stick with a lower position. This all happens automatically based on a number of factors in Google’s algorithm and the settings for your ad campaign.

Ad Rank vs. Quality Score

You also need to understand the Ad Ranking system and the ad “quality score”. Google AdWords uses an Ad Ranking system to determine how likely your ads are to be placed above those of other advertisers/companies.

The Ad Ranking system, in turn, is affected by quality score. The quality score describes:

  • How well an ad is optimized for specific keywords or users
  • A website’s landing page quality
  • The expected click-through rate for an ad
  • How relevant the ad is to searchers

The higher your quality score, the better your ad will perform. This means ensuring that the wording of your ad and the landing page it points to when the user clicks are relevant to the keywords you’ve set it to appear for. The higher the quality score, the more frequently it will be displayed for relevant Google search. Even better, Google AdWords rewards you in discounted costs and higher ranking ad positions as your ads perform better and achieve higher levels of quality.

How Effective is Google AdWords?

Google AdWords can be very effective. But like all advertising platforms, its effectiveness is contingent on how you use it!

When leveraged correctly, Google AdWords can let you:

  • Target your optimal users or customers with unerring precision
  • Help you reach new customers
  • Be affordable depending on the competitiveness and price of your relevant keywords

It’s a good idea to start off small with Google AdWords because it’s easy to spend too much money on competitive ads (see below). That way, you can see how the platform works and gradually ramp up how much money you spend as you learn all of its intricacies and tricks.

Google AdWords Charges Explained

As noted earlier, Google AdWords charges with a pay-per-click advertising system. All of your ads are technically displayed for free. But then you have to pay Google when someone clicks on an ad they see on Google’s search results or networked pages.

The auction system described earlier refers to the price you pay per click. More competitive ad slots (for common or highly popular keywords, for example) cost more per click than less competitive or niche keywords.

That’s why it’s important to consider the following factors when you run a Google AdWords campaign to avoid burning through your marketing budget too fast:

  • Click-through rates for ads
  • How competitive (expensive) keywords are
  • Maximum bids and positions for your ads
  • The average monthly budget you allot for marketing

For the best results and for small businesses, it’s usually best to set a daily budget so you only pay for what you can afford until your ads take off and you receive more revenue as a result.

How to Use Google AdWords

The key to using Google AdWords effectively is to do a lot of research and come up with a set marketing campaign with a daily budget. Once you do that, you can use Google AdWords by:

  • Establishing a Google AdWords account and account goals. Google has you set new campaign goals when you make a fresh marketing campaign
  • Give Google information about your target audience (i.e. their demographics, age range, location, etc.)
  • Provide Google with specific keywords. Use tools like SEMrush and others to figure out the best keywords to compete with other companies in your industry
  • Create new ad campaigns and groups with different keywords and ads
  • Place the ads into Google AdWords’ search results and bid on your target keywords. Pro tip – if your keywords are competitive and you don’t have a lot of extra cash, try to bid for long-tail keywords that are relevant for your business. These may also help to capture your target audience’s traffic more effectively in the long run, anyway
  • Make the ad copy, and be sure to include any important keywords plus an excellent call to action so people actually click!
  • Design your ads and website so they are high-quality and they will rank more highly on Google’s search engine results
  • Keep optimizing and iterating as time goes on

Wrap Up

This is just a brief look at Google AdWords and all that it can do. It may take you many months to learn the ins and outs of this advertising platform. But it’s well worth it in the end thanks to its precision, potential affordability, and effectiveness.


Isn’t Google AdWords Expensive?

It can be, but it depends on the bid price for your chosen keywords. Highly competitive keywords can be costly, but PPC ads for less competitive keywords can be very cheap.

What is the difference between Google Ad and AdWords?

Google Ads is just the new name for Google AdWords. They’re the same advertising platform with new branding.

Why do I need Google AdWords?

Google AdWords is useful for your small business since it allows you to:

  • Target certain users or potential customers
  • Advertise more specifically
  • Only spend as much money as you can afford on your marketing campaign