Google AdWords Made Simple: A Step-by-Step Guide

I have a ton of friends who own companies. As soon as they start making some money, they start talking to me about all kinds of investments.

“Real estate’s supposed to be good.”

“I wanna be an angel investor, any tips?”

My usual response?

“AdWords, dude!”

They run these big companies, selling great products and what do they do?

Run off and try to put their money in anything, EXCEPT their own business.

Why not just sell more of their products?

Double down on what’s already working, instead of starting to play in a field you know nothing about.

Google AdWords is usually the easiest way to do it.

If my friend wants to 10x his investment money, say $50,000, he can

• spend 1000 hours trying to become good at angel investing, learn everything about it and hope to land an investment in the next Facebook (which is almost impossible).
• do the same for real estate, trying to snag a cheap apartment or condo and flip it (easier, but still hard).
• spend 100 hours learning Google AdWords (or just hire someone who knows it) and invest $50,000 in Google AdWords campaigns to make $500,000 in sales.

Which one do you think is the most likely to pan out?

Option 3, it’s a no brainer.

Today, I want to open the black box that Google AdWords is to most people and show you what it is, how to get started and how to reverse engineer your way to success.

If you know the costs and margins of your products, AdWords is a really easy way to get your money’s worth, often boasting a ROI in the hundreds of percentage points.

(Image source: Sponsored Linx)

If you don’t know what ROI means, it stands for return on investment. In this example, for every $100 spent on the ads, you would make $330.40 back.

So, you could turn $100 into $430.30 and thus quadruple your money.

A ROI like this is not uncommon with AdWords.  And, if you get it right, a 900% ROI, as with my friend who wants to 10x his money, is definitely within reach.

But, let me start at the beginning.

Google Adwords tutorial overview

Look:

My bread and butter is in SEO. The first place I start when growing a new site is content and links. It’s the #1, go-to strategy I recommend most of the time…

Except when you need results right now.

SEO + content is powerful. Simply put: It’s the most profitable way to scale a website over the long-term. But it takes time. It requires a little patience.

AdWords is the opposite.

You can get up-and-running in less than an hour. And if you do it right (by reading the rest of this guide), you can start generating new sales at the end of the hour.

And the best part? It’s performance-based.

Here’s what I mean.

We’ve talked about pay per click (PPC) advertising before. It’s different from other advertising models (like banner ads with a CPM or cost per thousand impressions) because you’re not paying for eyeballs. Instead, you’re paying for results.

No results? No clicks, leads, or sales? You don’t pay. Simple as that.

But that’s not the only benefit…

When people go to Google, they’re looking for something specific. That means they have intent. They’re actively looking for something to buy. They’re literally telling you what they want to buy by typing out words around your products and services.

That’s why Google AdWords is so powerful (and profitable). There’s no better form of SEM (search engine marketing) out there.

Out of every $3 spent on online advertising, Google gets $1. Advertising is their single greatest source of revenue.

Over 95% of their $60 billion in annual revenue comes from Google AdWords. Combine that with the fact that over 1 million businesses use it and you know that companies are seriously spending money on this.

(Image source: Youtube)

Google AdWords is a marketplace where companies pay to have their website ranked at the top of a search results page, based on keywords.

Let’s be honest with each other for a second:

Google loves big brands in their organic search rankings. So unless (or until) you’re a big brand, it’s going to be tough to outrank Papa John’s or Domino’s in the rankings — no matter how much better your pizza is (and let’s be honest again, it probably is better).

AdWords lets you cheat.

Instead of waiting around, building up an arsenal of content and links over the course of a few months, you can jump straight to the #1 position on the page.

Check it out:

Grubhub is able to takeover #1 from Domino’s for one of the best keywords in their industry. And then Racca’s Pizzeria (some no-named place) is able to breath down Domino’s neck, too.

So even smaller players in the industry can duke it out at the top of a SERP, and all it took was… a few minutes (as opposed to months or years with SEO).

AdWords also gives you a little extra bonus, too. It can help you reveal the ‘money making’ keywords in your industry. So just by spending a few bucks, you will discover which keywords convert the best so you can take them back to your content and SEO strategy.

The Adwords marketplace works as an auction. People bid money for clicks. But, the highest bid doesn’t always win. Google combines the money factor with a quality factor (which we’ll dive into shortly), in order to create the best experience for the user.

Quality ads + solid bid = win!

It is a massive industry and if you haven’t tapped into its potential, I bet you’d love to. Be warned though: Google AdWords is straightforward, but not easy.

It takes time to master and most companies lose money on it, because they’re not patient enough to get results from pay-per-click advertising. In this guide, I want to help you to start simple.

Before we begin, promise me that you’ll commit to 3 things:

1. Don’t spend a lot of money. Set a fixed budget. It can be as little as $50, or even $25. That’s enough to get started.
2. Don’t overcomplicate things. The Google AdWords interface is complex, It’s easy to get lost in it and start creating dozens of variations of ads. Don’t. Keep it simple. Do as little as the platform allows to begin.
3. Be patient. This is by far the most important. 99% of the people who lose money on AdWords simply quit too early (or spent too much, too fast). Have patience. It takes time.

Can you promise me that?

Raise your hand up high!

Okay, good.

Let’s get started with some basics.

How To Use Google AdWords (replacing Overview)

First we gotta start off with some basics. That way everyone’s on the same page.

Here are some basic terms that you need to know:

A keyword is a word or phrase the user searches for and then sees your ad. Your ads will show up for the keywords that you pick.

(the dashboard is fairly complicated, but we’ll get to it)

Google counts the clicks on your ads and charges you for each click. They also count impressions, which is simply the number that tells you how often your ad has already been shown when users searched for that keyword.

If you divide clicks by impressions, you get the click-through-rate, or CTR. This is just the percentage of users who land on your advertised page because they clicked on your ad. This is important, because click-through rate tells you which ads are working well and which aren’t.

Google AdWords is like an auction house. You have to set a budget and a bid. The bid sets how much you are willing to pay for each click. If your maximum bid is $2, Google will only show your ad to people if other aren’t bidding more (on average).

(Auctions have changed)

Google wants to maximize their revenue, so, naturally, they’ll show the ad by the company who bids the highest amount for that keyword, assuming that all bidders have the same quality score.

However, if people are bidding less for the keyword that you want your ad to show up for, Google won’t spend your maximum bid. It optimizes impressions and bids.  Therefore, you might actually end up paying less than $2 per click.

Your cost per click, or CPC, can thus be lower than your maximum bid, especially if your ads produce a good quality score. This is a metric based on the experience that the user has on your landing page, the relevancy of your website and your actual ad.

Google doesn’t just want to show people the ads from the highest bidder – they could be horrible ads. They care about their users so much that they’d rather show them a more relevant and better ad by someone who pays less, because that keeps users coming back to Google.

None of these things matter, though, if you’re not getting conversions. A conversion is a new lead or sale, but, in general, it means the user took the action that you wanted them to take.

In some cases, that action might be something other than a purchase.  Signing up to an email list or entering their personal information would be examples of other actions.

In most cases, though, it’s about the dough (ha, I’m so gangster!). And, rightfully so.

Companies often quickly burn thousands of dollars on AdWords pay-per-click advertising, since their budget is set daily and, unless you pause the process, runs endlessly.

Imagine creating 10 different campaigns for various keywords, with a $10 daily budget attached to each. If you let it run for a month, without paying attention, you’ll have paid a $3,000 bill!

That’s why you need conversions to be sales of a product, in order to quickly regain the money that you spend on ads.

In order to make money with ads, you need to sell something.

Makes sense, doesn’t it?

That’s why conversions is what we’ll start with. I’ll take you through how to setup your account, make sure you track your click-through rate and conversions and then we’ll get the ball rolling.

But first, here’s a deeper dive into how Google AdWords actually works. I’m talking about the math and factors which determine the two things you should care about most:

1. How much you have to pay.
2. And where you’re going to rank.

Here’s how it works.

How Does Google AdWords Work?

Back in the old days, you could bid on almost any keyword you wanted.

So it was a straight auction that didn’t factor in the relevance between what someone was searching for and what you were advertising.

The Quality Score changed all that, though.

This metric combines several factors in order to effectively determine how ‘good’ your offer is for someone’s search.

Buckle up, ‘cause this is about to get kinda nerdy. It’s critical to understand the basic fundamentals if you’re going to start spending into the thousands each month.

Here goes.

Each keyword in your account will get its own Quality Score. So even two keywords within the same Ad Group (we’ll get to that thing in a sec) can have different Quality Scores (that go back to how relevant it is to a search somebody is making).

So that’s the first factor they’re looking for: relevancy.

For example, let’s say someone searches for “snowboard rentals.” Which keyphrase do you think will have a higher ‘relevance’ score?

1. “Snowboard rentals Tahoe”
2. “Skiing rentals”

Should be simple, right? Even though they’re related, one is obviously a much better fit. This same thing happens, though, in a campaign when you’re using keyphrases like:

1. “Snowboard rentals”
2. “Snowboard rentals pricing”
3. “Snowboard rentals in Lake Tahoe”

Click on your keyword and set it to phrase match.

Initially, Google sets this to broad match. Unfortunately, that’s not very targeted. It means that users can type in your keywords anywhere in the query.

But, if someone searches for “how can i make bricks at home cheap”, they’re not looking to buy cheap bricks, so that’s not what you want.

Exact match might be too targeted, though, since it only allows the exact phrase, “cheap bricks.”

Usually, phrase match is a good option, since it must contain your keyword as a fixed phrase, but can have other terms around it.

If users search “where to buy cheap bricks” your ad will still show up.

Now, all that you need to do is one last thing…

Step 8: Setup conversion tracking

Remember how I said that all of this is useless without conversions?

That’s why you need to track each and every single one of them.

How does Google do this?

With a snippet of code.

You put a bit of code on the page users reach, after successfully buying from you, which will let

Google AdWords know that there was a purchase every time that a user reaches the page after clicking on an ad.

To set it up, go to “Tools” and then “Conversions.”

Click “+ Conversion.”

Now, choose “Website.”

Add the info, basically just a name and the value of the conversion.

Hit “save and continue.” Then. you’ll reach the page with the code snippet.

Just copy the code snippet and add it to the HTML code of your thank you page (the one people see right after making a purchase).

That’s it!

It’ll say unverified in your dashboard, at first, but that will change after a few hours or a day.

Once you’ve set this up, go to the Campaigns tab and let the campaign run.

But… what if you’re a lead-based company?

According to Invoca’s Call Intelligence Index, 70% of 30 million phone calls started with a digital channel. Phone calls also convert better, too.

Average conversion rates might hover around 1-2% online. But on phones, that number is as high as 30-50% according to Invoca’s data.

So two things to try.

The first is setting up the AdWords call extension. This will add a phone number or call button to the ad itself

So when someone calls, it will record new rings as conversions inside AdWords (so you can see what campaign or even ad delivered each phone call).

But not everyone will call the number on that ad. They might click through to the website and browse around a bit before calling.

Unfortunately, you’re going to lose the digital trail from what ad delivered that call. Unless you use a tool like CallRail to help you keep track.

All you have to do is copy and paste a script on your website (similar to the AdWords one above).

And then you can set the phone number on your site as the ‘swap target.’

Now, a brand new phone number will be assigned to each visitor, following them from page to page.

That way when someone does call, you instantly know what ad campaign sent them to you in the first place.

Congrats, you just set up your first AdWords campaign!

Now it’s time to maintain it.

What happens now?

Not much.

Google will first review your ad, before it starts showing it to people. That’s why it doesn’t make a lot of sense to create lots of ads right away.

Once you go into your account the next day and see that your ad has been approved (you’ll also receive an email from Google), you can start creating more ads by copying your original ad.

That way, you can avoid going through the approval process all over again. Go to the Ads tab.

Select your ad, in the checkbox and click “Edit,” then “Copy.”

Then, do the same and click “Paste” (or just press Cmd/Ctrl+V).

Paste your ad and check both boxes.

Then, you can click on your copied ad and modify it. Change the headline and/or copy.

In order to get results on AdWords, you always need to test different ads against each other.

If you only run one ad and you get crappy results, you can’t possibly know what would have been better, because you can’t compare it to anything.

That’s why you should create at least a second ad on your second day, once the first has been approved.

Extra credit: Regular account maintenance

Your account is up-and-running. (Finally!)

Over the next few days and weeks, results will begin pouring in.

There’s not a whole lot to do until then.

But… there is one last thing to put on your radar before you get too comfortable counting all those new sales.

Over time, you’ll want to continuously maintain, prune, and improve your account. Smaller accounts can wait every month or so. While other big ones I’ve worked on run through something like this every week.

The goal is to check the health of your campaigns. And quickly fix what’s not working in order to minimize the amount of wasted ad spend.

So first and foremost, pull up that Search Term report.

You’ll want to run through this report regularly and do one of two things:

1. Identify new potential keyphrases to add to your existing campaigns, or
2. Identify off-topic keywords that you’ll want to add to your negative keyword list so that it doesn’t show up again.

The goal here is to move bad spend to good. Restricting any wasted piece of your budget and instead putting it behind the stuff you can already see is performing well.

That will give eventually give you a way to compare profitability per keyword.

The next step is to check ad positions.

For example, if you’re consistently showing up in the first position, you might actually get away with decreasing your budget a little bit at a time in order to bring down your Cost Per Lead (while still showing up at the top).

Whereas if you’re showing up in positions 3-4, you’re probably not getting very many clicks. So this time, raise your keyword bids bit by bit in order to slowly creep up into positions 1-2 (again, without overspending).

Next step is to create more ads. Ideally speaking, you’d like to see ads performing with a click-through rate (CTR) of at least ~8%.

That means you’ll probably have to test at least a few variations per keyword or ad group (depending on how yours is setup) in order to find the one high-performing ad.

In the meantime, feel free to drop or pause the underperformers. Typically you’ll have ads rotating indefinitely to test multiple versions. So be quick to pause the losing ones so it won’t continue to pull budget away from your winners.

You can also experiment with new ad extensions during this time, too. For example, sometimes adding a few extensions (whether that’s a phone number or those little yellow stars from product ratings) can improve an existing ad’s performance.

After improving ads, head over to your locations and time of day (both under dimensions).

This part is simple.

What locations are under-performing? Pull budget away and put it behind those that are producing.

Same goes for days and times.

What days of the week or times of day are under-performing?

No fancy graphs or stats required. Just common sense once you know where to look.