New to AdWords? Here are the first 4 things you need to know

Many people in our Facebook Group have indicated they’re brand new to AdWords, so I thought I’d put together a quick article on the first few things you should know as you’re getting started.

*Note: this article primarily covers the AdWords search network, as opposed to the AdWords display network.  The AdWords search network pertains to the ads you see when you search for something on Google, while the display network refers to text or image ads you see on sites across the web that are part of Google’s  network.

So, without further ado, let’s talk about the first four things you need to understand if you’re new to AdWords:

1. What is AdWords?/What are AdWords ads?

In the simplest terms, AdWords is a form of advertising called “pay per click” (ppc). With ppc advertising, the advertiser only pays when someone clicks on their ad. Advertisers decide how much they want to “bid” on keywords that are relevant to their business. When someone searches those keywords (or phrases closely related to them), they may see an ad. The ad is displayed above the normal, “organic” search results. The advertiser only pays when someone clicks on their ad – there is no charge when someone simply views the ad. Here’s an example of what the ads look like:

You can tell these are ads because of the little box next to the url that says, “Ad”.  Ads show above and below the organic search results on desktops, mobile devices, and tablets.

2. How and why do the ads show?

AdWords works on an “auction” system. Advertisers decide how much they’re willing to pay for a click when someone searches a particular keyword. How valuable that click is to your business will determine what you’re willing to bid for that keyword. For example, if you’re a med spa and you need to acquire customers at $100 or less in order to be profitable, and you know that 5% of your clicks convert into customers, then you know you don’t want to bid higher than $5/click. (Max cost-per-click = target cpa * conversion rate).

So, when someone searches for “botox in charlotte,” you tell AdWords you’re willing to pay no more than $5/click.  Often times, you’ll actually pay less than that (you only ever pay 1 penny more than the advertiser who shows beneath you) – but you’ll never pay more than $5/click if that’s what you set your max cpc at.

Now, you might be wondering – is AdWords just a race to the top? Is the top position reserved for the highest bidder?

No – there is a little more to it than that. Google always wants to show quality ads – so they’ve also added a quality component to determine who shows where.  Your ultimate position is determined by your Ad Rank – which is a measure of your bid, quality score, and the ad formats you use. Google wants to encourage you to have high quality ads and to use ad extensions (extensions are just extra “add-ons” you can include in your ad – i.e. promotions, phone numbers, addresses, etc). As you can see below, even if you have a lower bid than someone else, you can still outrank them if your ad quality is high and your ad uses appropriate extensions. This is why savvy Sue’s ad will show higher than high bidding Bob’s.

3. Who is AdWords right for?

For the most part, AdWords is good for any business for which there is search volume. If you have a really niche product or service, AdWords (especially the search network) won’t work for you. If people aren’t searching for what you have to offer, the AdWords search network doesn’t make sense.  In that case, you’d have better luck with advertising channels that can help build awareness (i.e. Facebook or possibly the AdWords display network). The AdWords keyword planner tool (which is within AdWords – you must have an account to view) can help you determine whether there’s any search volume for your service.

In general, AdWords works well for the following:

• Retailers
• Professional services (lawyers, dentists, doctors, insurance, auto mechanics, etc)
• E-commerce
• Businesses that rely on lead generation
• Local businesses
• Some online products/courses (if there’s search volume)

4. Keyword Match Types

As you now know, AdWords functions by advertisers “bidding” on keywords. However, you can set how closely the keywords you bid on should match the searcher’s query. For example, if you own a med spa and you offer breast implants, you decide if you only want to show when someone types exactly: “breast implants” or if you want to permit Google to show your ads for related searches too – i.e. “breast enlargement,” “breast augmentation” and “breast implants in charlotte, nc.” The way you do this is through keyword match types.

It can be a little tricky to understand these at first, but it is one of the most fundamental things to grasp about AdWords.

In general, the broader your match types, the more traffic you’ll get (but it might be less relevant). The tighter your match types, the more relevant the searches will be, but the less traffic you will receive.

You can use a variety of match types, and set your bids accordingly once you see how your keywords are performing.

Here’s a cheat sheet to help you understand how match types function:


Hopefully that helps you understand the basics of AdWords a little better.  If you have any questions, feel free to ask them in our Facebook Group.  We also offer a free e-book on how to launch your first campaigns, once you’re ready to do that.

  • Updated January 23, 2018