What is the AdWords Daily Budget, how does it work, how much do I pay – and how much will I earn?

Every campaign is governed by it’s own Daily Budget, an amount of money you are willing to spend with Google every day the campaign runs.

There is no minimum amount, although it’s sensible to buy enough clicks per day that will stand a chance of creating a meaningful conversion event (lead, sale, enquiry, phone call, download) on your website within a reasonable timeframe.

Or it could take you ages to find out whether your website converts at an acceptable rate.

The value of the conversion is, of course, totally down to what your website is selling.

And the amount of clicks you can buy is dependent on how much each click costs.

If the average cost per click (CPC) is £1.00 and your daily budget is £10.00, you can buy up to 10 clicks (10 visitors).

When your daily budget is used up, your ads stop showing until the next calendar day, as determined by the schedule settings on your campaign.

How much you pay per day will vary – some days slightly less than your daily budget, some days slightly more.

But Google guarantee that, over a 30-day period, you will never be charged more than 30 times your daily budget.

If they overshoot, you get a credit back on your account.

So this puts you completely in control of how much you want to pay Google per month.

And why it is so important to know your numbers and make sure that what you spend comes back with friends attached.

In this game, he who knows his numbers – wins.

The formula we follow is simple: "Traffic + Conversion = Profits"

Once you get more money back than you put in, how much money are you going to put in? (Answer: "all of it").

Then the concept of "budgets" goes away.

For most advertisers (and marketers) that’s incomprehensible.

But if you want to know more, just get in touch

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Our Chief Economist, Hal Varian, explains the AdWords Ad Auction and how your max CPC bid and quality score determine how much you pay for a click on Google.com.

So you put your AdWords bids up to raise your Ad position, and your AdRank (position) actually falls – what’s going on?

Google’s Chief Economist, Dr. Hal Varian, demonstrates eloquently how AdRank and Click prices (CPC) are computed, and why Quality Score and Click Through Rate are so important whenever your keyword triggers your Ad to enter the Ad Auction.

The video is insightful and revealing, watch it in full at the bottom of this article.

And I now (as of today) also believe the point Dr. Varian makes about increasing bid prices and actually appearing in other auctions with lower positions as a result, although I didn’t when I first saw the video.

This afternoon I’ve just been doing some advertiser research, which involves typing a keyword, seeing what ads appear, and going through all the pages of search results carrying ads for this keyword (tents) – there were about 140 advertisers (UK).

I noticed several things, some of which I’d seen before, but which now “seem” to gel and make a bit more sense against this backdrop.

Firstly, to confirm I had actually reached the end of the advertiser results, I noticed the See your ad here » link which shows when all ads have finished, before starting over with the top AdRank ad again (rather than More Sponsored Links >> which indicates additional ads to come on subsequent pages).

When I was going through each page, sometimes I would see the same advertiser ad that I had seen on an earlier page, but now in a lower position – a different auction, presumably triggered both by me (since I refreshed the search by going to the next page), and by other users who are all searching just like me.

Some advertiser ads also had disappeared from the auction when I had visited their website, and then gone back a page to the results page carrying their ad which I had previously seen and clicked through on.

(Perry Marshall’s observation of the “search and search again” phenomenon where ads quickly disappear and change position if you repeatedly refresh your browser may also be implicated in this auction discussion).

What I think we need to consider are several points:

1. Quality Score which governs the AdRank position is computed REALTIME for every search (i.e every auction) and is therefore potentially variable, because of broad keyword expansion, CTR, different ad text being split tested, restricted campaign delivery, ad optimisation and rotation, exhausted budgets, time of day, scheduling, advertiser competition etc.

2. Since we’re talking realtime, you’ll only ever acquire data that pertains to a tiny snapshot of the whole auction activity over an instant of time – the next search that happens, or if you refresh your browser or go to the next page of results, and the auction has already changed.

3. So the best data you can ever acquire is going to be a series of averages over a specific time period, and the longer the better to avoid glitches. So it’s overall trends you need to follow, rather than snapshots which could go up and down quite a bit.

Maybe the only way to ensure maximum consistency and Impression Share (for an individual advertiser) would be to be in the happy position (with full comprehension of profitability of course) of being able to set a huge daily budget guaranteed to buy every click on the market (and then some), a high bid price to ensure consistently top position in the auction, accelerated delivery, for exact match only with a single ad.

I wonder if anyone’s ever been able to do that? (I bet they have). I’d love to see those reports!

Seems to me that sometimes we actually can expect “too much” transparency from Google, and that they have a highly automated machine which even *they* cannot fully explain all the results from, or offer reporting or tools which can help us dig deeper.

They are still developing and refining it after all. I cite the Ads Diagnostic tool which is a great (fairly) recent functionality, but why should it be a painful, time-consuming and bug-ridden process which you can’t run as a scheduled report? I expect (or hope) that will eventually appear, as many things eventually do (remember when we could not even schedule our campaigns? I go back more than 5 years with all this…)

So AdWords sometimes seems to me to be a bit more like Quantum Mechanics than we would actually prefer (by observing the experiment, you actually participate in it, and alter it without meaning to), and that sometimes we may need to go a little easier on our opinion of Google – after all, there’s no other system like it!

And this video by Dr. Varian *graphically* demonstrates how critically important Quality Score is in governing your Ad position (AdRank), and Cost Per Click.

So, not only is it important to optimise your AdWords performance through

• bid price management to individual keyword level (yes – all of them, and it’s easily done)
• “Peel and Stick” into ever smaller ad groups (I have Campaigns with thousands of Ad Groups, and they get up to 100% CTR)
• Ad Texts targeted to keywords in Ad Headlines, description lines and display urls

but now, Quality Score has to be targeted for optimisation also, and that involves your website and landing pages too.

Remember “Traffic is for Show, Conversions is for Dough”. If you’ve got a “concrete website” – you’re in serious trouble…

The top Quality Score of “10″ is now on your weekly optimisation “to-do list” …

Comments and feedback most welcome…

Start making AdWords – WORK

Contact me today.

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How to tell at a glance how much competition there is for your keyword search terms.

The answer: "It Depends"

Some marketplaces are fiercely competetive, like the "make money online" example above, with over 4,000 people slugging it out to make some kind of a sale – you don’t want to try and play in that game unless all those folks have paid you already…

At 11 ads displayed per page of results, that means you’ll have 380 pages to read through to find the last ad.

Since most of us read only (at most, maybe) the first 3-4 pages, that means ads below position 50 or so will *never* be read.

It’s a fair bet most of these unwitting dupes have already been separated from their money and have bought a dream they’re trying to promote on someone else’s behalf.

They’ll never make it work though, and as fast as they give up, more pour back, keeping the bid prices high and the competition just as stiff.

Then they’ll give up, and claim AdWords is "a scam".

So, if you want to know just how many advertisers are promoting something where you’d like to be, and whether it’s a battle you feel confident fighting (and only if you really know your numbers, should you) then simply scroll down to the last ad on the right hand side of the page, and click More Sponsored Links >>

The truth will be revealed…

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AdWords – otherwise you just wasted money and time trying to get traffic for untested keywords, and on an untested website.

Everybody seems to think that getting "free" traffic from natural or organic rankings in Google, by using Search Engine Optimisation (SEO) techniques is the best thing to do.

Yet nothing could be further from the truth. They are completely complimentary.

Firstly, SEO is not "free traffic" – you still have to invest time and money either figuring it out for yourself, buying software tools to help, or hiring someone (and there are a *lot* of shady organisations out there preaching this, so be warned, and be careful!)

Next, if you have not tested your keywords, your ads and your website’s ability to convert a visitor into a profitable action – what on earth is the point?

You can’t guess this stuff, you have to track, test and improve on it first. Only AdWords can give you instant, targeted traffic on demand to try things out with to see what works, and what doesn’t.

Yes – organic rankings *are* the final destination, but ONLY when you know they have value (or can achieve them in 6 minutes with no effort – see the header graphic for this article).

Finally, no web page (not "website", there are only web pages to the Search Engines) in the world can be optimised for every possible keyword out there, and AdWords serves to plug the gaps that SEO cannot completely address.

And if you can (profitably) occupy TWO positions on Google’s prime Real Estate, rather than just ONE – whyever would you not?

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What is Pay Per Click (PPC) advertising, and why should I use it?

Without traffic (visitors) your website may as well not exist.

Getting traffic to your wesite requires a listing in the Search Engines, and incurs costs in time, money, and effort.

If you’re not appearing somewhere on the first 3 pages of Search Engine Results Pages (SERPs) you’ll never get visitors and your online efforts have been wasted.  

You can either figure out how to do it by yourself or by outsourcing to a Search Engine Optimisation (SEO) agency, or simply pay for it on a per-click (visitor) basis.

This is vastly quicker and more controllable than employing SEO techniques which can take months to come to fruition, and is known as Pay per Click, PPC, or Paid Search.  

The core of the system is "keywords", that is, what words are people typing into Google when searching for something.

By selecting the right keywords, those which describe your offer and are commonly used by people looking, your advertising can reach your ideal audience.  

With AdWords Pay per Click, your advertising appears where you want it to in the Google listings, says exactly what you want it to say, for as long as you choose, in which countries you choose, and only costs what you want to pay on a daily basis.

It is also FREE to display your ad, and you only pay when an interested party actually clicks on your ad.  

Since your ads only display on the Search Engine when a user types in a keyword you have selected to trigger your ad, this is the ultimate in targeted traffic to your website. You are actually using the Search Engine to read the minds of your prospects. 

Is it right for you?

If people are looking for you in the search results, then yes!

If you search for your products or services on Google, and competitor websites appear, then yes!

Particularly if there are lots of Sponsored Link AdWords ads – some people are clearly making money …

How much does it cost?

Bid prices for keywords vary a lot, some can be cheap, some very expensive.

But you are in control by the maximum daily budget.

I can provide a keyword report for your website that shows how many people are looking for you, and how much the estimated click prices are.

Then you can make a decision on whether to enter the market and what it’s likely to cost.

If you’ve got a website that people are looking for, you really have no choice…

Contact me for more information or help.

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