Online Money Dot.com

Today I am going to get back to Google Adwords. Independently of being Google´s cash cow, it´s one of the best way to very quickly let the world know about your online projects. If it wasn´t for Adwords, my classified ads site wouldn´t have received over 700 ads in about 20 days.

It is also through Adwords that you can make money promoting affiliate programs, although it isn´t as easy a task as some might lead you to believe, especially in the USA, where the market is very competitive. There are people that take in five figures every month, without ever really buying or selling anything.

Getting back to Adwords, whenever we set up a campaign, we have the option of showing ads only on the search (Google search), or on websites, in the form of Adsense ads (Content Network). In a very simplified explanation, if we opt to only show ads on search, our ads will only show when someone actually searches for our keywords. Of course we can change these options at any time, with instant results.

Here is a screen shot of where you make the option of having ads shown on the search and content networks. If you choose to have ads shown on both networks you should also check the “content bids” option that lets us set different bid prices for both search and Adsense type ads. It is very important that you use this feature.

Having ads shown on the main search has a higher cost per click, and you can set a different value for each of your keywords. For example, I might be willing to pay 20 cents a click for the keyword “free classifieds”, and not more than 5 cents a click on the content network.

Our natural instinct would be to opt for the cheaper Adsense type ads, since it seems tempting to pay only 5 cents a click, instead of the 20 cents or more for the search ads. This is where the Google Adwords conversion ration becomes useful.

Check out this screen shot for the advertising campaign I am running for my classifieds website. The top line refers to ads running as Adsense on websites, and the second line is for the search ads. Notice that the average cost per click for the search ads is 1o cents, while the content ads only average 3 cents a click. This however is not the number you want to be paying most attention to.

Check out the conversion rates: 2.75% on the Adsense style ads, and 24.9% for visitors coming from Google search ads. The cost per conversion also reflects this. Adsense visitors came in at $1.09 per conversion, and search traffic only cost me 41 cents per conversion. Even though search clicks cost me over 4 times more!

For my classified ads campaign I considered a conversion to be the placement of an ad, but it could be anything else. It could even be a sign-up for an affiliate program. The short of the story is that the cost per conversion is lower for the search traffic then for the Adsense ads, even though the Adsense traffic is lower on a cost per click basis.

Imagine that my classified ads website had an affiliate program that payed $1 for each conversion (free ad placed). If you ran an Adwords campaign targeted at content traffic, you would loose money, even though you were only paying 3 cents a click. But if you run a campaign targeting search traffic you would be making about 59 cents per conversion ($1 minus the 41 cents acquisition costs). Now imagine 50 or 100 conversions a day!

As a rule of thumb, I only run search targeted campaigns, simply because they convert much better. I apply this rule to any affiliate campaign, as well as to promote my e-commerce website. The only time I run content ads is when I want to get the word out about a site, and there isn´t a specific objective to the campaign, such as a sign-up, sale, or something else.