google adwords

Google AdWords: A Brave New World

(A Pocket Guide to the Road Ahead)December, 2008

By Andrew GoodmanPresident & Founder, Page Zero Mediawww.pagezero.com

© 2008, Andrew Goodman and Page Zero MediaGoogle AdWords: A Brave New World (December 2008) 1 of 44

http://www.pagezero.com/

Welcome: Author’s Note

Thanks for stopping by. I drastically shrunk down the size of the plan for a complete rewrite of my original Google AdWords Handbook, for three very simple reasons. First, that effort largely went into my print book, Winning Results with Google

AdWords (2nd ed.), and that book is now in stores (as of December 10, 2008)! Woohoo! It took me about 18 months to put it all together.Second, I’m hard at work on a more focused, nimble ebook that aims to solve tough problems for intermediate-level advertisers. It’s called “21 Mistakes that Kill Paid Search Profits.” This will be out in January, 2009. Stay tuned.The third reason for this little document is that I wanted a quicker and dirtier introduction for people looking to catch up with the latest thinking on AdWords – one that could be distributed widely for free. So here it is. Kind of a “welcome to the big leagues, kid” piece. Welcome. Enjoy. Got a comment? By all means ping me at my personal email address, [email protected]

Consider my introductory note little more than a “sticky note,” because I know time’s important to you.Here’s the deal: Taking the plunge to buy ads through Google AdWords no longer needs much justification, now that Google is one of the largest companies in the world. To this day, more than 98% of Google’s enormous annual revenues are derived from advertising. Most of that is those tiny little text boxes you see near Google AdWords: A Brave New World (December 2008) 2 of 44

http://www.pagezero.com/publications/google-adwords-profits.php

http://www.pagezero.com/publications/google-adwords-profits.php

mailto:[email protected]

http://www.amazon.com/Winning-Results-Google-AdWords-Second/dp/0071496564/ref=pd_bbs_sr_1?ie=UTF8&s=books&qid=1228347991&sr=8-1


search results on Google Search, or around the web. They’re diversifying, of course, and the picture is getting more complicated, but here, I’ll stick mostly to core concepts.How big again? Google’s revenues in the United States alone are around $10 billion. Making the wild assumption that an average cost per click across the whole AdWords system is 50 cents, that’s 20 billion targeted clicks per year. How many ad “impressions” or views does that add up to? Well, trillions. Sounds huge, doesn’t it? But your campaign will be the size it needs to be, and that could be small, medium, or large. Google wants your business, especially if your ads are very targeted. “Averages” are largely irrelevant. In your AdWords account and across the whole system, the range is vast between keywords that are valuable to your business, and those that are nearly worthless. In the old school “cost per thousand impressions” (CPM) math, it’s not uncommon to see some highly commercial keywords selling for effective CPM rates of $500 or more (or $15-20 per click, or more) on AdWords. Just as it is common knowledge that the “junkiest” ad inventory on the web (personal profile pages on MySpace) is changing hands for next to nothing – pennies per thousand impressions. Google’s bias is towards the mid- to higher- priced ads. Their logic is: if ads are particularly annoying and untargeted, then why show them at all?Here’s a factoid to get us in the right frame of mind. Google actually prides itself on leaving white space where ads might appear, if the particular search query isn’t very commercial in nature, or if no advertisers are relevant or high quality enough to qualify to show up. That means that they maintain a “monetization rate” at least 10% lower than their main competitors, Yahoo and Microsoft, on search results. That means that if you look at every search done every day, Google will show no ads (all white space) on about 35% of the search results pages. That number for Google AdWords: A Brave New World (December 2008) 3 of 44

Microsoft and Yahoo is lower, about 20-25%. (The numbers keep shifting, but that’s the Ads Quality principle in action.)

Fig. 1 – On search queries that are less commercial in nature, Google often shows no ads, even if some advertisers would like to appear here. The Google Paradox is that they serve users (search engine users) first, not advertisers. And the result is they make more money on the advertising program, not less, because their relentless focus on speed, quality and relevancy have made them the world’s favorite search engine… by far. (In most markets around the world, Google has 65-90% market share of searches.)

Google AdWords: A Brave New World (December 2008) 4 of 44

Section I. Don’t Fail From the Get-Go, Please!

Getting the right kind of start with AdWords is essential to success. You’ll lose time and money if you get it wrong. In no particular order, but as comprehensively as possible, here are some key tips.Generations of AdWords

AdWords has been revamped and redesigned several times. On one hand, we’ve seen ongoing improvements in much of the functionality of how you slice and dice your ads, bids, and campaigns. But the really fundamental changes have occurred in how the system treats you. Many folks are working on outdated assumptions. I call this version of AdWords “2.5” to distinguish it from prior versions. Page 7 of an article I co-authored with Mona Elesseily, “Search Engine Smackdown,” covers the generations of AdWords in a nutshell. Pages 1 through 6 are useful too. We provide a lightning-quick scorecard summary of how Google AdWords and Yahoo Search Marketing stack up in key areas.http://www.imediaconnection.com/content/14775.asp[Guess what? Google has changed the rules again. We’re now up to approximately AdWords 2.7, so get your copy of Winning Results with Google AdWords and read Chapter 5 to get the latest take on what it’s all about.]New advertisers in the “AdWords 1.0-2.0” era always had a feeling of shock and awe when they set up campaigns and found things going immediately wrong with them. This current generation of AdWords is no different. Some, but not all, new advertisers, will face high minimum bids on their keywords (whoops, they tweaked Google AdWords: A Brave New World (December 2008) 5 of 44


http://www.imediaconnection.com/content/14775.asp

that minimum bid part, but the concept is roughly unchanged) which is very similar to the old days when keywords that didn’t meet certain qualifications after running for a couple of days (basically, the ads didn’t get clicked often enough by search engine users) were “disabled.” So, the song today is somewhat the same, though the band is wearing newer t-shirts: AdWords is hard at first.Help from Google: Two Sides of the Coin

Many of you are aware that you can get technical support from Google, either by emailing them from within the AdWords interface or by ringing the company up at 1-866-2GOOGLE and entering your customer ID# into the phone system. (Your mileage may vary internationally, but Google staff are helpful in most parts of the world.) In fact, you’re very likely to be able to work consistently with the same rep because things are very well coordinated now.


Support staff don’t generally work at the main Google campus (the Googleplex in Mountain View, CA) anymore. If you’re a national US advertiser, you may well be talking to someone in San Francisco or Irvine. Depending on your vertical and Google’s way of assigning help to different kinds of accounts, you may deal with someone in New York, Denver, Dallas, or someplace else. Of course, Google has many international offices, as well, and they’re always expanding. Finding a helpful ear at Google is always a plus, so insofar as it is possible, try to get to know a rep.

Fig. 2 – Google headquarters in Mountain View, CA. Brilliant engineers; great cafeteria; beach volleyball court. Just be aware that there are clear boundaries around the degree to which a support rep can improve your marketing. Don’t just expect to hand off your whole campaign strategy to someone at Google, obviously. Ain’t gonna happen. You need to dig deep and improve everything at your end, and/or with the help of an expert third party.Google AdWords: A Brave New World (December 2008) 7 of 44

But help *is* there if you need it. The problem here is that on the most vexing issues you’ll face, like high minimum bids due to low “Quality Scores,” you might not get very clear answers.Also, be appreciative on the surface, but somewhat dismissive in your heart, of “boilerplate” advice. Over the years, Google reps have been coached in the “nice sounding” “best practices” suggestions that are best conveyed to advertisers. Pablum-like recommendations are generally easy enough to distinguish from hard core advice. Once in awhile you get the good stuff from a Googler. Other times, you should feel free to smile, nod, and ignore.What’s With All the “Non-Search” Inventory?

Don’t mind me, but I’m going to talk about issues in the order they seem appropriate.The core of AdWords is of course “search” ads (the ads that show up next to or above Google Search results, or on partner search sites). This is wonderful, beautiful stuff as advertising goes. I won’t waste time defending its wondrous targeting qualities.From there, you’ll notice “search partner” traffic is available. That’s other search engines that show Google AdWords ads that have been syndicated to the other search engine. Sometimes it’s an Ask.com search results page. Or it might be an Internet Service Provider like Roadrunner that has a search box on their home page in partnership with Google.


Fig. 3 – At search.rr.com, the text ads at the top of the page are served by Google.It’s not worth giving a whole lot of thought to the distinction. The amount of search partner traffic you’ll see is relatively low these days, and the performance is consistently good enough that there is generally no reason to disable this channel specifically.If you go into campaign settings, you can set the checkboxes for “on” or off to various ad distribution options: search, search partners, and content network.


Fig. 4 – The graphic display ads at the top and right are served by DoubleClick. The "sponsored links" on the left are served by Google AdWords. The need-to-know essentials on content targeting traffic are as follows:

• This isn’t search traffic, and people are viewing your ads on pages all over the web;• That isn’t inherently bad, it just tends to convert to clicks and sales at a lower rate than search traffic, and is less predictable;• Thus, you must bid lower on it – often 40-70% lower than search• The default is that this traffic is turned “on” in your account – you must enable content bidding (separate bids that you can manually enter) in the campaign settings area, or disable content targeting entirely if you don’t want to have a lot of “high bid” traffic from questionable sources draining your account


• Here’s a wrinkle: Google doesn’t make it intuitive for you to enter separate content bids when setting up a new campaign. Go back, and re-check things in the Campaign Settings area. Trust me, it’s worth double-checking everything at the Campaign Settings level, especially the status of content targeting (now often called “placements”). For making adjustments to content bids you can also do this at the ad group level or in bulk at the “Campaign Summary” level (shown below).

Fig. 5 – Bidding can be separated for "search" and "content." • Google uses an automated system to sync up so-called “AdSense publishers” with AdWords advertisers. The keywords and ads in your account, along with your bids, are used to determine whether your ad is a good candidate to show on a certain page online. This is sometimes known as “contextual” advertising because of the attempt to show users ads in the context of some related interest.• There’s a whole different flavor of content targeting that works on a different model. It’s called Placements or now Managed Placements (yikes, Google keeps changing their names for things). What that does is to combine Google’s old “match on the fly” classic content targeting, with your ability to


restrict that process so this is occurring and showing your ads only on sites you choose. It’s cool, but it’s definitely extra work. Don’t forget your main goal: to do well on the “search” advertising auction!• You can exclude sites in the content targeting program. Hunt and peck until you find how to do “site exclusion” at the campaign level. Examples of sites you might want to exclude are social networks like Bebo or MySpace, or sites that are giving you poor performance.• In the Reports tab of Google AdWords lies a complicated reporting tool that can give you pretty much any type of info you might want. A Placement Performance report will show you where your ads showed up, and much more. The reports can also show you whether a content site or page falls into a special category, like Parked Domains (a glimpse is in the screen shot below). Google has added a great deal of transparency to their system, taking much of the mystery out of marketing, at least for power users who know how to run reports. Don’t buy into scare tactics that vaguely refer to “shady” AdWords clicks. That’s so five years ago! Familiarize yourself with the reporting area in general.

Fig. 6 – A glimpse at the Placement Performance report.


Beyond text ads in the contextual programs, as you’ll see from poking around with the ad creation views of the AdWords interface, there are options to place banner ads and video ads on partner sites. Radio and print programs are also being piloted. Don’t worry about all this for now. Start with the core AdWords stuff that is proven to work.How Not to Panic on Day One

This is even harder than ever. Assuming you get through the onerous setup phase (I’ll get to this in the very next section), you’re going to want to have a strategy in mind or you’ll screw things up, big time.Work backwards: Establishing design, navigation, analytics, goals and

business process

One thing I always advise advertisers to do is to work backwards. If your site isn’t well thought out, if you don’t know whether your landing pages will convert, etc. – then I suggest you work that out first. Sending traffic to see if a really crummy-looking, weak site will still convert for you always produces the same result: you pay for the traffic, and lose money.Similarly, if you haven’t set goals and haven’t figured out how to measure success, you won’t know how the traffic is performing. An example: an auto dealership group that wants leads to funnel to the correct salespeople. For this to happen, the site needs to be designed to create a lead generation opportunity, persuade people to fill out a form, and funnel that form correctly. If a one-dimensional Flash designer sits in the room with ten company staff and execs who have no knowledge of direct marketing principles and how to incorporate them into a web development process, Google AdWords: A Brave New World (December 2008) 13 of 44

you’re likely to design a website that reflects a hodgepodge of priorities but leaves marketing goals and measurement issues on the back burner. Get the right people on the bus (a savvy web design firm), and the wrong people off (all the various execs and salespeople who want to micromanage bells, whistles, and font colors, even though they’ve never taken a single course on programming or design; you need one or two qualified ecommerce project managers at most).In another nightmare example of wasted, unaccountable traffic that we were asked to buy for a client: the underqualified web designer and webmaster for a major beauty treatment chain hosted the website at his home, and funneled all the leads to his own inbox, when they should have been going to both store managers across North America as well as to the executive team and the marketing agency. When this webmaster caught wind of a redesign being performed by a third party developer, he refused all access to the domain and hosting accounts, making transition to a new site at the main company domain nearly impossible.Get the right people on the bus. If you don’t, failure shouldn’t come as a surprise.Working backwards also entails installing an analytics or ROI tracking program. You can get away with doing this second, but it’s better to know what you plan to do first.Categorization is king: go granular at the planning phase

Another element of strategy is to remember that keywords need to be sync’d up with ads that are related to those words. So you’re going to find that you need to logically structure your account into campaigns and ad groups that break things down thematically. Doing this in a very specific, highly detailed fashion, is often referred to as going “granular” (that is, fine-grained) with your “organization tree” Google AdWords: A Brave New World (December 2008) 14 of 44

or logical plan. A lot of little groups of keywords, each with their own ads, would be called a “highly granular” campaign.How many keywords per group? Anywhere from two or three up to a couple hundred. Any more than that gets unwieldy. Actually, anything over fifty is unwieldy. Googlers will often recommend 10-20, but we don’t always need to listen to what they say, right?Google is awe-inspiring, if you’re easily awed by massively brainy folks. Some of their innovation is scary stuff! “Damn, they’re good,” etc. They’re so smart, I think they have to hold back a whole lot of the features they build in the lab – they’re way ahead of us as ordinary advertisers. (That’s the opposite of TV show pilots that never go to air because they are so stupid that not even average viewers will be able to stomach them.)I’m not really supposed to share their beta tests with you, but imagine this: what if Google allowed you to instruct AdWords to take your “lumpy” (less fine-grained) account build and automatically make it more fine-grained for you, leaving you with only a little ad copy cleanup to finish up? Don’t quote me on this, but they’re working on this as we speak.So, until the granularator is released to the public (granularator being my imaginary name for that tool), the biggest mistake you can make is to write a very small number of ads and to begin dumping huge numbers of keywords into the account in only one or two ad groups. It’s not effective. Don’t do it this way.


You can’t test haphazardly from Day 1

In fact, in the new world of AdWords the bar is higher than ever because you’re being evaluated for something mysterious Google calls “Quality.” In AdWords 1.0 back in the day, quality was measured on only one variable (other than the amount you bid on a keyword): clickthrough rate or how often your ads were clicked. Now, quality is a whole formula.One of the elements of so-called Quality-Based Bidding is that new accounts don’t have any data yet, so Google’s system guesses as to whether you’re putting relevant keywords into the system. They don’t share the exact formula, but they might be looking at whether your keywords seem to match up well with your ads and landing page. There are a number of other things that are assessed through a combination of automated and editorial review. The end result is that even on Day 1 you can begin to establish a history that may set the tone for the next 6-8 weeks of your campaigns. Beyond setting things up carefully, you should also be worried that initial data – clickthrough rate and potentially user behavior on your website – is being watched closely and might quickly tip your Quality Scores into Poor territory.So as sad as it sounds, you can’t go throwing keywords into the system “to see what sticks” anymore. Instead, you need to focus on carefully thought out keywords – the crème de la crème of your potential keyword list, so to speak. Start with these, and meticulously written ads and well-chosen, user-friendly landing pages. Then let that good history establish itself (including a sound regime for ad testing, discussed extensively in Chapter 8 of Winning Results.). Only from that point should you focus on “keyword expansion” to increase your overall volume.Google AdWords: A Brave New World (December 2008) 16 of 44

You’re Under Evaluation: CTR and Other “Quality” Elements in Quality-Based Bidding (2008 Edition)

CTR = Clickthrough Rate, or the number of times your ad is clicked divided by the total number of times it appears on a user’s screen. Let’s get this out of the way up front: getting high clickthrough rates on your keywords (and the contribution to that from the ads you write, and the way that you match ads to keywords in your account) has been a key feature of AdWords all along. It’s nearly as strong now as it ever was.The old AdWords (from February 2002 through August 2005) ranked ads on the page based on a simple calculation:[Your Bid on a KeyWord] * [Your Historical Clickthrough Rate] = AdRank(That is, Max Bid multiplied by CTR = Ad Rank which determines your ad’s rank or position on the page.)The higher the ad rank among advertisers vying for top ad placement on the page, the higher that advertiser’s ad will appear in rank order of ad positions 1 through 10. (10 or more.) If you’re ranking well down the list among competing advertisers, your ad won’t even appear on the first page of search results.So, while how much you’re willing to pay for a keyword partially determines your ad’s visibility, that other element – CTR, which is sort of a proxy for ad “relevance,” – is important, too. In fact, being diligent and careful in campaign organization, and testing ads, was always the secret to “economizing” on AdWords, because this would maximize your CTR’s.Google AdWords: A Brave New World (December 2008) 17 of 44

A few quirks of that (former) method of calculating ad positions were as follows. First, CTR’s tend to be much higher in the top two or three ad positions, and generally speaking gradually decline as the ad falls down the page. To avoid undue ad position effects to prevent anomalous behavior (like the “lock-in” strategies of bidding to #1 position to rack up high CTR’s to “seal off” your advantage over competitors some of us promoted back in 2002), Google accounts for ad position in their calculations.Second, how do we define “historical” CTR? Google always grappled with how much history to look at, and how much to disclose. A particular problem was: the majority of keywords in the universe of keywords searched by users were low-volume, providing limited historical data. It might take half a year for your account to show much of anything. Not a very intelligent system.Google adopted a number of awkward workarounds to stop people from taking advantage of holes in the system. One of these was putting keywords “in trial” or “on hold” as the system evaluated them. This was always a murky way of doing things.Furthermore, Google had a 0.5% CTR for keywords (normalized for ad position) “cutoff” point, below which your ads would simply be disabled. While this indicated their strong preference for relevant ads and keywords, volatility in CTR’s could knock out perfectly good keywords, causing advertisers major headaches in getting them reactivated.Through it all, the importance strong CTR’s remained a consistent principle in the ad auction. Along with that emerged a nascent idea which would evolve further in 2005 and beyond: the importance of establishing a strong account history.Google AdWords: A Brave New World (December 2008) 18 of 44

The “Big Think” – Quality-Based Bidding Versions 1 and 2 (AdWords 2.5 and 2.6, I Call Them)

Google had to solve a whole bunch of quirky issues that arose in earlier versions of the auction. They also seem to have decided that they had a number of larger problems to solve: unscrupulous advertisers taking advantage of the system to run massive campaigns at the expense of Google’s resources; inconsistent editorial policy decisions that could be an embarrassment for the company if customer support reps gave conflicting advice; and the increasing complexities of a few “don’t be evil” policies that stretched beyond keywords and ads to the advertiser’s website. [An example of a rule enacted to signal Google’s commitment to the user experience was: no pop-up ads on landing pages. Predictably, this spawned the invention of “not quite pop-ups” (pop-ins, coded differently) that got around the literal rules but probably just stiffened Google’s resolve to devise solutions that wouldn’t require them to get into little sparring matches over every element of their policies.]It must have become evident to Google engineers that a shifting list of rules sounding not dissimilar to a grade-school teacher’s “don’t chew gum” stipulation was not suited to the shifting terrain of evaluating user responses on more general principles. Saying “don’t chew gum” only means that some wiseacre will hold a stick of gum in the air with their right hand, while moving his jaws vigorously, until some new rule is made. Google wanted to come up with a system of laws, so to speak, that was not based on childish gum-chewing edicts but rather, a complex multidimensional “scales of justice” that would give “good” advertisers the green light, while slowing or stopping the progress of “evil” ones.Google managers also wanted to use advanced economic techniques to squeeze even more profit out of the existing advertiser base.Google AdWords: A Brave New World (December 2008) 19 of 44

There is a certain perverse elegance to the way that a bond rating agency or an actuary in an insurance company can roll a complex reality into a simple, defining number. This simplicity – in part because it can make the appearance of subjectivity, and the apparently “negotiable” elements of the process, vanish into a black box – must have been attractive to many Googlers, faced as they were with growing complexity and a growing need to justify often unpopular decisions to a messy constellation of actors (Google stockholders, search engine users, nice advertisers, naughty advertisers, government regulators, and so forth).So the team working on AdWords ranking methods thought and thought, and devised a system that would solve a laundry list of problems in one go.To quote WKRP in Cincinnati anchorman Les Nessman, in his parody of a typical glad-handing politician, Google’s so-called quality-based bidding system would have to be “at once simple, yet complex; firm, yet flexible; and above all, fair to every American.” Aha. So this is why I must sometimes feel that “Poor” Quality Scores are unfair… I’m Canadian. We can be such pests. Don’t even ask the French what they think.Beyond that, quality-based bidding had to be something you could express in computer code so that it could take an accurate reading of a complex reality, and do so in an efficient and consistent manner. There are too many data points for individuals to assess.Before we go on to explain the nuts and bolts of how that system works, though, we need to stop there. Because much of the process is automated and cleverly automated at that, many advertisers fall into the trap of believing that it is entirely automated. Basically, many of the principles for how Quality Score is devised come from human design, and data to feed various predictive algorithms comes from Google AdWords: A Brave New World (December 2008) 20 of 44

humans interacting with websites and coding their assessments in. Moreover, overrides are available to editorial staff both to correct overly harsh Quality Scores and to punish obvious violators of policies who have somehow managed to score too high by tricking the system. How, exactly, these manual human interventions are integrated into the process is 99% opaque, so therefore in a form of translucence you’ll only consider beautiful if you’re on some weird drugs we can’t seem to buy up here in Toronto.From the boilerplate responses to your questions to AdWords support reps on these issues, you’ll see what I mean. They won’t give you the formula, or info as to whether a policy specialist looked at your account and turned some knobs, or anything like that.The good thing is, Google makes extensive information available on how Quality Score works.http://adwords.google.com/support/bin/answer.py?hl=en&answer=49174This document changes frequently. At present, they bullet-point eight factors without discriminating among them, describing the mathematical relationships among them, or giving you much inkling about the weightings. In reality, landing page quality – one of the factors – is treated differently from relevancy factors like CTR, and in itself is a complex, ever-shifting, and opaque algorithm. By “differently,” I mean that only a minority of advertisers will have problems, and landing page issues generally don’t factor into Quality Score enough to derail a strongly relevant campaign.


http://adwords.google.com/support/bin/answer.py?hl=en&answer=49174

Note in particular that the Quality Scores used to determine ad rank on the content network don’t spill over to affect your campaigns on the search network and Google Search.Following the first release (I dub it AdWords 2.5) in August 2005, there were actually two Quality Scores responsible for two different processes in an AdWords account: (1) keyword Quality Score for ad ranking purposes; (2) Quality Score for keyword status (minimum bid). That was rather confusing to advertisers. The latest version is even less clear, and will no doubt continue to change. My concern is that advertisers will run around trying madly to optimize a lot of detail in their accounts. I want to assure you that strongly-built, conventional, well-categorized and well-tested accounts today run very smoothly in AdWords as they always did, and the advice provided in 2002 and 2005 in my publications (for example), and that provided in the 2008 edition of Winning Results With Google AdWords, is really all you need to do well. You should not attempt to predict every hiccup in the algorithm.Just take Google being transparent today about the fact that the historical CTR on the display URL’s in an ad group is included in the calculation of Quality Score. For years we’ve been testing display URLs for our clients, as part of A/B and multivariate ad tests. In a seven-variable multivariate (partial factorial or Taguchi) ad test, display URL is one of the variables Page Zero recommends testing. Best practices pursued by the best basic-level advertisers still work. And advanced tactics like testing your ads very thoroughly, including variations on display URL’s, still work.If you thought hard about the implications of Google including some of these factors in their algorithm, it might be pretty eye-opening. What if eBay.com as a display URL was starting to lose favor with search engine users? What if that fact alone caused Google AdWords: A Brave New World (December 2008) 22 of 44


eBay’s average CPC’s on Google to rise to the point where they felt they had to scale back massively on their targeted AdWords advertising? Google is that strong. They can turn the screws (algorithmically) on a major advertiser like eBay, and make up that revenue elsewhere. Meanwhile, this change in advertising costs, and the resulting decision to scale back, might be to blame for the current alarming decline in eBay’s traffic numbers, and its business overall. It raises the question of whether eBay went from “trusted” and “known,” to “overexposed” and “annoying” in the search results. All else being equal, does competitor Kijiji typically get higher CTR’s based just on their brand being less annoying to search engine users than eBay?But I digress.Let’s get back to the issue of landing page quality. You might be saying: “I didn’t even know landing pages had quality as far as AdWords was concerned, let alone that their lack of quality could be a factor in anything!” If “landing page quality” were a factor in ad rankings, wouldn’t that make the ad program just like the organic search side, where you’re facing off against an algorithm that is trying to show the “most relevant” result to a searcher? And yet you’re paying for that privilege?Interestingly, Google is not shy about implying they’re halfway down that path.But, for now (“now” in this case was June 2008 – it’s changing as we speak), landing page quality only governs keyword status (minimum bids). It is not part of the Quality Score calculation for ranking purposes. When it joins the list of factors that govern ranking, we won’t know what the weighting is, and whether there are complexities like “only below a certain threshold of crappiness will a landing page harm your rank,” or whether the impact is logarithmic, or whatever. Using common sense we can go back to Google’s shifting objectives over the years and conclude Google AdWords: A Brave New World (December 2008) 23 of 44

that they’re using a combination of human and automated methods to try to ferret out certain classes of violations.Don’t worry – Google doesn’t make this entirely opaque. In fact, they give you a detailed page full of Landing Page and Site Quality Guidelines here:https://adwords.google.com/support/bin/answer.py?answer=46675&hl=enYou might be surprised to hear that Google can deem you low quality if they just don’t like the cut of your jib. In their words, Google has put together a handy reference guide to types of website that are “much more likely” to send up red flags to their Quality Score algorithm. I review this issue in my article at Search Engine Land, “AdWords Quality Score: Can Your Business Model Be Banned?”:http://searchengineland.com/adwords-quality-score-can-your-business-model-be-banned-12271.phpYou might be wondering why Google would include “travel aggregators” and “comparison shopping sites” on the list (they continued to do so as of this writing in December 2008), or e-books for that matter. I sell (and give away) e-books. And don’t like it any more than you do.The answer seems to be: some of these kinds of companies are sincere, but others are nefarious. Google thinks many websites in these categories are claiming to be a certain type of information or business when they are not, in reality. Deceptive business models are permanently on Google’s radar. And they mean to place sanctions on them in the name of consumer empowerment, whether it be on the organic or paid search side.


http://searchengineland.com/adwords-quality-score-can-your-business-model-be-banned-12271.php

http://searchengineland.com/adwords-quality-score-can-your-business-model-be-banned-12271.php

https://adwords.google.com/support/bin/answer.py?answer=46675&hl=en

This is good news for most of us. If you’re a legitimate business, Google’s policies help you by clamping down on unscrupulous players who want to gain all the benefits of the advertising system, while gaining rank with inaccurate and deceptive ads that ultimately divert attention from legitimate offers.In any case, landing page and website quality, as Google calls it, is a factor in determining the Quality Scores that affect minimum bids (or to use the most current lingo, eligibility to show up on queries, and/or rank on the page) on your keywords. So this (along with low CTR’s, irrelevant keywords, etc.) is a type of poor or very poor quality that can essentially cripple your whole account, because it is weighted heavily in setting your minimum bids (and/or eligibility to show up on a given query, and/or rank on the page). Keywords aren’t eligible for you to show your ads on if your bid doesn’t exceed the minimum imposed by Google. Poor and very poor quality keywords (remember, sometimes caused by the landing page and website, too) can have minimum bids anywhere from 35 cents to $20.00. Above $1.00, you know that Google is saying “Houston, we have a problem, you are Very Poor,” and most of the time in those cases (the $5.00 and $10.00 minimum bids we’ve come to fear) it’s your website or landing page that is the culprit. (This is mostly outdated already. The dollar figures are now gone. Google will now show you a keyword Quality Score on a scale of 1 to 10, if you know how to drill down to look that up.)


Fig. 7 – Google provides some detail on aspects of any keyword's Quality Score. Many of you will rarely if ever run into severe Quality Score problems, so you’re likely at this point to wonder what I’m talking about. Standard retail accounts that send users searching for “hockey pucks” to pages selling “hockey pucks” tend to carry on without a care in the world, with “Great” Quality Scores.In the screen shot above, our client’s keyword, [fudge], is coming up at the high end of “OK,” with a Quality Score of 7. Some other words in that group are rated “Great,” but I guess [fudge] is a pretty broad and potentially ambiguous keyword in relation to any given user’s search intent. So “very much OK” will have to do.Google AdWords: A Brave New World (December 2008) 26 of 44

For the most part, “best practices” and a focus on the user experience are going to put you in good stead, and your Quality Scores should be OK to Great if you do everything well and diligently.Notice that Google counsels tight relationships in the keywords you use, as they relate to your ads and landing pages. Great advice anyway, but now more important than ever.For practical advice for ways to dig out of Quality Score nightmares, or advice on how best to consult with Google on the problem, see Winning Results With Google

AdWords, or attend one of my seminars or conference presentations, as this can be a fast-shifting and case-by-case topic that runs pretty deep.In any case, it’s worth reinforcing the need to establish a history, both on individual keywords and account-wide.Get off on the right foot if you’re going in with a completely clean slate. Use at least a two-stage process for building and expanding your account. Start with very targeted words that are in narrower niches and likely to return a high ROI. Rather than ambiguous broad matches for popular, competitive terms, like hosting, try groups devoted to specialized areas, like “collocation hosting” or a regionally-targeted campaign devoted to “phoenix web hosting.” Throwing everything in at once is a great way to get into a low-quality-score “trap”. Establish a history of highly relevant keywords by delaying your introduction of broader or more speculative keywords for several days or even weeks.Another point to reinforce once more: “work backwards” and ensure that you’ve prepared a high quality site that is ready to go before you enable the AdWords campaign. AdsBot – the little guy that reads your ads and compares them against the Google AdWords: A Brave New World (December 2008) 27 of 44



website and so forth, to check for relevancy, rules violations, and to assist with the keyword research tool – is going to check you out right away. Sending AdsBot to a dummy or nonexistent landing page because your site will launch “in a week or so” is a bad idea nowadays. If you want to pre-build campaigns while waiting for a site to launch, you’ll have to do so in a spreadsheet or AdWords editor, rather than the AdWords interface itself. If you let AdsBot see blank, generic, or dead pages, it’ll set your initial Quality Scores lower than they should be, and it will cost you money.Optimize Absolutely Everything

Building your account is one phase. Most accounts in operation today, though, are sitting at a more advanced phase of development. In total dollar terms, that’s where most of the area for significant improvement lies.While the list of potential improvements to an account isn’t infinite, it is fairly long. To boil down our philosophy at Page Zero: you can really break down a complex task into some simple math related to the gaps between current reality and potential on all the key performance variables in an account. Add up all the gaps, and you have an overall performance gap. Closing that gap is the goal. It takes time and effort.Again, to be clear: on every significant component of an account, there is an imaginary or ideal “perfect” situation or status for that component. The distance between your current reality and the ideal state constitutes the performance gap in your account.It takes judgment, experience, savvy, and persistence to identify and close these gaps. Judgment and experience come into plan when identifying the changes that Google AdWords: A Brave New World (December 2008) 28 of 44

are likely to have the most impact. So among a wide of a big range of “performance drivers,” you want to make the most important changes the most urgently.Persistence is a must. Nothing is every perfect at the start. It takes time, testing, and market feedback to improve an account’s performance. I’m thinking right now of how to work the phrase “you have to iterate” into a Bobby McFerrin song. Anyway, it’s true. You have to iterate.

Fig. 8 – If Bobby McFerrin worked at Google, he'd recommend that you "iterate." Here’s a brief summary of the elements of an account that need to be assessed, reassessed, optimized, and re-optimized, with varying degrees of frequency:

• Settings at the Campaign Settings level. Every single important setting needs to be set correctly and appropriately for your campaign goals. Don’t misuse the daily budget or other budgeting tools. Opt into the correct ad distribution options and geography for you. Choose the right bidding methods and ad rotation methods.• Keyword coverage, not only for popular (head) and unpopular (long tail) searches, but fuller coverage of semi-popular “torso” terms. Two-word


phrases need to be covered thoroughly as they relate to your target audience; pay less attention to ridiculous, infrequently-searched, four-word phrases, etc.;• Understanding and correctly using matching options. Broad, phrase, exact: what do they do? How can broad match trip you up? What is automatic matching? Should you opt out? Which negative keywords should you use to filter bad queries?• Bid strategy, position strategy, dayparting, etc. As with some other elements, this may run into hundreds or thousands of individual judgment calls; the key is to make key judgment calls manually while letting automation take care of the heavy lifting where there is too much data;• Ad testing; various elements of that process, etc.;• Correct landing page selection; addressing conversion rates and testing; addressing site-wide issues, etc.

A laundry list of bullet points like this looks short, but the reality is, a cursory glance at many currently running accounts will show a serious performance gap on many fronts. After filling the majority of those gaps, many advertisers are pleasantly surprised to see improvements they might not have thought possible!Smart But Busy Professional Screws Up His Campaign, Big Time

My friend Chris, the commercial real estate broker, is fantastic. He’s helped me find two, going on three, office spaces. Professional, meticulous, and like many professionals, it took him ages to get his web presence up to speed.I’ve been grateful for Chris’ help, so naturally, I agreed to have a look at his Google AdWords campaign. It was underperforming, so he had it turned down to $10 a day. Google AdWords: A Brave New World (December 2008) 30 of 44

With my experience in AdWords-driven, focused lead generation, I knew he must be leaving major money on the table. I had a look, but I must admit that as prepared as I was to see some mistakes, I was stunned by how poorly this otherwise savvy marketer had done with his AdWords campaign management. It seems that the interface has just become so complicated, that many people don’t take to it very well. And with all the hype you hear about different exotic techniques, people get distracted from the basics.Here’s what I found:

• Not only did he fail to geotarget to the Greater Toronto Area, his main market, but his campaign was actually showing around the world! Not even country or continent wide, but globally. So the budget would be exhausted very quickly, or he’d need to turn bids way down. The amazing benefit of targeting to a specific city in a high-ticket field like commercial real estate is that you can afford to bid high due to the extreme targeting, and still make out like a bandit. Rookie mistake, Chris! But he is a rookie to AdWords, so why did this surprise me?• He had his ad rotation set to “optimize”. He liked the idea of ad testing when we talked earlier, but the problem was, until he set the setting to “rotate,” he wasn’t actually testing.• As with many novices, his budget was being eaten up by content targeting clicks bid the same as his search clicks. He needed to bid content much lower, turn it off, and/or run it in a separate campaign. Basically he was getting little or no real feedback from Toronto-based search clicks because the clicks he was getting were mostly other kinds of clicks!• Out of fear, he was turning bids way down, as low as 15 cents. This corresponded poorly to the typical economics of the types of prospects he should have been targeting. With the right campaign targeting, an average


click even in a low-competition market should be 50 cent up to five bucks. Bidding 15 cents in a B2B campaign is a symptom of something amiss these days; either your business model is messed up, or your campaign is. Marketers don’t win real high-ticket customers through such defensive strategies.• Overcaution was again indicated by the exclusive use of “exact” match types. This is a common obsession among those who feel that AdWords is there to “burn” them. Successful campaigns can also work with less precise match types. Insufficient available search inventory should ultimately be your main complaint. When you use exact matches only, you’re exhibiting fear of clicks. You’re opting out of potential customers.• The landing pages were completely unoptimized and less likely to convert because they didn’t include a contact form. The contact form required some hunting. Yet another area that would translate into disappointment and overcaution. With higher response rates, suddenly the confidence level would grow, and all the defensive measures in campaign settings and strategy could be dropped.• Measurement and conversion tracking was weakly implemented, if at all. Not uncommon, certainly, but surprising to be sure.

There’s no shame in seeking help. I’m glad Chris did. He allowed me to go in and make many of the needed changes very quickly. From there, I turned it over to him. Lesson learned: AdWords isn’t there to burn you. It is a legitimate customer-generation tool that needs powerful strategy and tactics to shape the “lead generation machine” so that it works exactly as you would want it to.Bigger budget advertisers won’t have a campaign quite this far from optimal. But the point is: there is usually a lot of room for improvement, and I don’t mean minor tweaking. Look again. You could be missing something major.Google AdWords: A Brave New World (December 2008) 32 of 44

Get Attitude: Some Random Tips from Battle-Hardened Veterans

Before I forget, friendly warnings from grizzled veterans.On Overkill

I titled an above section “Optimize Absolutely Everything.” And that is so very wrong. You must optimize everything feasible. Many people overshoot that goal, because they’re getting tunnel vision. Imagine becoming so obsessed with regular toenail clipping that you spend an hour a day, just on your toenails. That’s what some advertisers do, and it wastes time and resources.It’s no secret that computers help us reach scale. It’s also no secret that the Internet is “always on.” Result: you could add a potentially unlimited number of keywords. You could work on your account 24 hours a day. You could also drive yourself insane and jump out of your office window. Recently, considering a move (with the help of my good friend Chris), I toured an office numbered 1307. I’m not superstitious, but seeing bad luck and good luck all wrapped up in one package, and seeing all those little people walking around down there, is a reminder that life is fragile; random stuff happens; work is work, and while fulfilling, not the sole end in itself; getting it done efficiently is important, so I can work on related areas of my business; in turn, so I can make it home safe, sound, and sane to see my family and friends (and occasionally, Craig Ferguson).If you’re comparing how many keywords you have in your account with other advertisers (as long as you seem to be doing well, and didn’t stop at 100 keywords), ask yourself why. If you think of account expansion in terms of expanding from “500 ads to 5,000 ads,” ask yourself why.Google AdWords: A Brave New World (December 2008) 33 of 44

You know what they whisper behind that guy’s back – the guy who feels the need to tell you about his “huge keyword list”? Ahem. Anyway, I don’t measure a campaign’s adequacy by the number of pages of zeroes I have to wade through in that week’s report. Big keyword lists are mostly for bragging rights. They don’t necessarily drive any more traffic, or significantly better performance, past a certain point.Related to overkill is the “optics over fundamentals” habit that many advertisers and agencies get into. It looks good to frequently change your ad copy, right? Helps you look busy. George Michie of Rimm-Kaufman Group recently blogged something to the effect that it often hurts you to over-test ads, especially in terms of opportunity costs:“Many firms get so wrapped up in frenetic copy changes that they stop paying attention to those other factors that have far more impact on the campaign’s performance. Careful analysis of the data may not be as easy to demonstrate to the corner office, but the benefits that flow into smart, subtle adjustments to bid strategy, scrutiny of search strings and match types, and extra attention to the performance changes going into and coming out of a holiday generate much greater return on the investment of time.”George is a data analysis genius (an even cleverer Wile E. Coyote, Super Genius, than yours truly) but we’re on the same page with this point: always be attuned to the opportunity costs of whatever it is you’re frantically spending your time on, and ask if there isn’t something in your account (or outside it) that will be a more efficient use of your time; something that will move the needle more in terms of bottom-line results.So, when I said “optimize absolutely everything,” I said it in spirit. In the real world, it’s ridiculous to attempt to tackle “everything”.Google AdWords: A Brave New World (December 2008) 34 of 44

It’s The Marathon of Hedgehogs, Not The Sprint of the Hyenas

It’s hard to get around the fact that other stupid advertisers can come along and bid a lot before eventually giving up and dropping out. No matter how smart you are, short-term, that’s going to drive up your costs.Just avoid an excessive focus on upstarts, newcomers, and competitors in general. In this game, I’ve noticed that “hedgehogs” tend to do very well. Get in your niche, stay there, and do better and better in it. Expand accordingly. This as opposed to jumping all around with inconsistent strategies, and freaking out every time some competitor does something.The Hedgehog Concept taken literally is something rather specific out of Jim Collins’ book Good to Great. Companies that consistently mine their core strength beat companies that fly about searching for another gimmick. The general attitude seems to apply to AdWords. Stick to your knitting, and you’ll have a, er, um, really nice pair of mittens at the end of the day. (My mother-in-law should like this analogy.)I can think of no better example of an AdWords hedgehog than Ray Allen of AmericanMeadows.com. I worked with him in his earliest days of AdWords experimentation and watched as he became a featured Google case study, and even got into the act in the Biography Channel’s documentary about Google!Recently, I learned that investors are buying Ray’s business – he is headed for much-deserved retirement after two fulfilling careers, one in traditional advertising (he built a Miami-based agency), and one in farming-meets-ecommerce. Checking in with Ray occasionally I was always impressed because his story was always “we grew this year.” Some years that growth was 20%, some years 50%. One year, after several years of strong growth in the 20-50% a year range, Ray’s business grew Google AdWords: A Brave New World (December 2008) 35 of 44

more than 80% - the culmination of various aspects of learning and optimizing different parts of the business, repeat business, and introducing some new product lines.80% on top of the other %’s… really adds up over the years.AdWords success, one keyword, one ad, and one customer at a time – was a huge part of American Meadows’ success. Hearing the story stretching back to the founding of the company as a mail order catalog company 20 years ago makes it even more impressive, because you can describe the past seven years of rapid improvement and major victories in one handy paragraph. The company eliminated all forms of traditional advertising other than its spend on paid search marketing, and time spent in (mostly online) self-promotion and public relations. The operation became leaner, while sales skyrocketed. It didn’t happen overnight, and it didn’t happen because Ray had millions of investor dollars handed to him. Instead of trying everything, or freaking out every time a competitor did something, Ray and his colleagues patiently executed, and gradually grew a strong, loyal, and profitable customer base on a low cost platform.


Section II: Setup Tips – The Executive Summary

Some closing reminders about one page of the AdWords interface that will make or break your campaign effectiveness. I’ve mentioned it in the past, but it’s time to reinforce the point.You can really hurt yourself if you neglect key settings in “Campaign Settings.” This section will be referring to the main Campaign Settings screen. These settings will need to be checked for every campaign if you have multiple campaigns in your account. Here, I’ll offer a short list of do’s and don’ts rather than attempting exhaustive treatment.DO: Go over your geographic settings for every campaign. If you’re advertising only to the United States, don’t leave ads on for the whole world! If you want to try segregating campaigns by state or region, keep in mind this is going to take a lot of extra effort, and separate campaigns for each. Another common mistake is to isolate too small a geographic region, then forget you did so, such that later on you feel the need to try a dozen (unhelpful) desperation tactics to increase click volume. In general, setup parameters that decrease potential click volume may force you into overcompensating moves in other areas of the account. So be aware of any unnecessary limitations you’re placing on volume.DO: Make sure ads are set to “rotate” for the purposes of testing. When you’re running tests with Google Conversion Tracker, Google Analytics, or other analytics installed and customized, you’re typically trying to find the ad with the best ROI or return on ad spend, as opposed to the ad with the highest CTR (though CTR is also important). The default setting for ads is “optimize” – Google’s system takes over Google AdWords: A Brave New World (December 2008) 37 of 44

from there to deliver the ad with the highest CTR (or Quality Score). Don’t use that if you don’t mean to. Switch it to rotate.DO: Be cognizant of whether or not you want the content network turned on or off, and if on, set it to “content bidding” rather than auto-bidding. Try bidding lower on content, and double check your bids frequently. The interface can be tricky.DON’T: Rely on the daily budget setting to keep your budget in check. Mostly, you should manage your spend with accurate bidding, appropriate keyword selection and matching options, de-emphasizing whole sections of accounts that are not panning out, and other kinds of strategy. A low daily budget setting is a blunt instrument that, in essence, prevents quality clicks in the better parts of your campaigns, as well as reducing spend in the bad parts.DON’T: Turn bids down to 0% (i.e. off) when using Ad Scheduling (dayparting). Use the Advanced setting of the Ad Scheduler if you must daypart. Try bidding 60% of your full bid at night, or whatever you want to do. Also, be aware that latency is a common effect from weekend clicks, particularly Sunday night clicks. You often get a spike of purchasing on Monday, but that is from the office, and the initial research may have been done at home on the weekend. In that case, maybe you should be a lot more careful about shutting your ads off than you might initially believe. Maybe dayparting is overrated as a cost-saving tool.DON’T: Use confusing tools like Budget Optimizer, Conversion Optimizer, or Campaign Optimizer unless you understand what they do. (I don’t understand them myself, half the time!)


Bonus Do and Don’t

DO: Check out Google Website Optimizer (GWO). Since they have so many products and features with Optimizer in the name, it’s worth mentioning the one that really rocks. GWO synchronizes with your landing page(s), testing methodology, creative inputs, and Google Analytics to facilitate scientific tests aimed at increasing sales conversion rates. The reporting dashboard is brilliant, and the methodology for hot-swapping content is sophisticated (though not quite as sophisticated as what Amazon.com uses, perhaps). I definitely recommend GWO, but effective operation requires a strong process. It’s tougher than it looks! Remember: garbage in, garbage out. DO call us at Page Zero (1-888-404-2220) if you need help running a GWO test of a landing page or pages.DON’T: Hire Mordac, The Preventer of Information Services, to run your website. Let alone to handle your web analytics, or any aspect of your marketing.


Conclusion: To a New Beginning

Well that’s it! I’ve just basically been standing around here shooting the breeze, and we’ve reached about the 40 page mark, so it’s most definitely time to stop theorizing, and start digging into testing, tweaking and profit-seeking.You’ve been well and properly introduced to the never-dull adventure that is AdWords 2.5, er., 2.7… and more to come. Welcome to the big leagues. Never stop learning.


History of the Original AdWords Handbook

For the record, I produced the world’s first third-party guide to Google AdWords, titling it something like “18 Ways to Maximize ROI on Google AdWords Select,” in March, 2002, shortly after Google rolled out the pay-per-click version of AdWords. Deciding to sell it as an e-book, the title changed to “21 Ways…” (I believe the first copy was sold in early April, 2002) and then eventually “Google AdWords Handbook” and went through several editions. I told someone I’d be happy if 100 people bought it – it’s the old story that you get one customer first, then talk about your strategy if it still matters. A smart friend told me he figured 1,000 copies would be no problem. The reality blew our expectations out of the water. And that little experiment turned out to be, as scripted, something of a lead generation tool that helped put Page Zero in touch with consulting clients. As it turned out, what seemed like a quirky, narrow niche (I never thought it was, but most still do) turned out to be plenty wide enough.(My relatives, and even some of my Canadian clients, still don’t get it. “You mean folks just started calling you?” Yep, from Nashville, Albuquerque, Grand Rapids, Boulder, and pretty much anywhere and everywhere, but especially in “every state in the union” in the U.S. Apparently, that kind of thing just doesn’t happen. At least to folks who play it safe and conservative, sit back and wait for life to come to them, and don’t try to start up their own agency on a shoestring!)And yes, eventually it did get us local Canadian customers, too. I spoke to a guy from a local technology company several years ago. He called me to exchange views on digital marketing trends, AdWords, etc. Really friendly. At the end of the call, I said Google AdWords: A Brave New World (December 2008) 41 of 44

“so what do you do over there at FourOxen, Dave?” And he replied, “Oh, I’m the CEO.” I love humble people. They’ve been a client ever since.Sure, there have been other guides to this subject! But amazingly, the original Handbook had the marketplace to itself for a full 18 months before the first competitor (Perry Marshall) rolled something out. I consider Perry to be a force of nature and a major contributor to the success and mindset of marketers. Not so for the oh-so-many lame copycats, as I’m sure Perry, too, would attest.Many of the insights in the original ebooks formed the basis for a more methodical approach to the topic in my traditional print book, Winning Results with Google

AdWords (McGraw-Hill). The first edition was published in September, 2005, after about 18 months of writing and research. The second edition is now out as of December, 2008. It was no less time consuming.“Author” is my nights and weekends job. Full time, I do all the things necessary to keep the employees and clients of my marketing agency, Page Zero Media, in sync. I love how much variety there is in this job, and while I strive for focus and yearn for simplicity, the reality is there are many aspects of this life I would never want to give up.




Acknowledgements

1. To the fantastic Page Zero team, who create winning results for our clients, and who make this hard work feel like a joy. Special thanks to the Page Zero veterans who started with us way back when, pioneering new techniques and blazing trails in evangelizing the value of accountable digital marketing: Mona Elesseily, Cory Kleinschmidt, Scott Perry, and Dean Towers. Thanks also to Dave Weber, less grizzled than the above, but always meticulous and engaged – and brave enough to read the first draft of this paper.2. To Page Zero clients, without whom there would be no screen shots.3. Thanks to the sneezers.


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