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Search engine ads: cut costs maximize profits

Price by Position

The top ad position always loses money. If you want to find out the cost of the top position in Google AdWords, enter $50 as your bid price at the account setup process. The estimated cost per click would be how much that position costs if you assume the standardized clickthrough rate which is probably close to 1%.

Next, lower the bid price until you are in the second or third position and so on. If you get to a different number, look at the estimated click price to see what the click would cost assuming the standard clickthrough rate. If you have a higher clickthrough rate, the bid price will be lower. If you have a low clickthrough rate, you price is higher.

How Competitive is Your Market?

Markets shift quickly, and you will notice certain ads will appear multiple times that are generating revenue. The downloadable software, AdWord Analyzer, can easily show you how competitive a market is.

You will want to mark the top 10 results every few days for several weeks. If an ad maintains the same position, and is not from a large corporation, for more than a month, they are making money.

Getting Your Ads on the Top of Google Search Results

The lower your ad position the better ROI you will have in some markets. However, they will not produce the distribution to create decent profits. Google AdWords will occasionally list the top ad or two above the natural search results instead of off to the side.  The top ads normally have a great clickthrough rate and this helps to lower costs. If you have an ad which is placed in a premium position, it could take up to a few days for you to get back into a top position.

The ad position on Google's right column is determined by the equation of max bids times ad clickthrough rates. If an ad appears on the top, it has been reviewed by humans and the ad has to be very relevant.  Relevancy is closely approximated by the clickthrough rate, therefore ads that display above search results factor in clickthrough rate more than max bid.

Finding the Best Products

If there are a lot of affiliate ads, then there is a dominant player in that keyword term space. You will want to try to purchase your competitor's product to see the whole sales path all though the site to the backend.

If there are less affiliate ads than non affiliate ads, then there probably is no dominant player/system in the marketplace.

Check for Broad, Phrase, and Exact Match

Using exact match can dramatically increase your clickthrough rates. If you want to see if a competitor is using exact match, to a search for keyword A adfkafdjsadf keyword B.

If the ad still shows up, then they are relying on broad match. If it shows up for nonsensical broad match searches, then they probably have a good clickthrough rate and are making money.

If you then search for keyword A keyword B dfadfkadfa and the ad does not show up, they are relying on phrase match.

If the ad doesn't appear for the phrase match, then they are relying on exact match for their ads. Anytime you check a competitor's ads, refresh the screen multiple times as some certain ads may not show.

Local Targeting- Extreme

Google lets you target your ads for:

  • A zip code or regional area.
  • A mileage radium near your business.
  • The defined coordinates of any polygon you enter in.


You can see if your competition is using AdSense syndication on content networks if you perform a search on and then click through to a item on from those results.

If you set up a syndicated ad, you should make separate ad campaigns for each level of syndication. Bid a fair market value for Google AdWords, but that ad campaign should have syndication disabled.

Establish a second campaign and bid a slightly lower price and enable search syndication, but do not enable content syndication.

Content ads do not have as much implied intent to buy so they usually have a value of only 20 – 30% of what ads are displayed on Google. Set up another campaign with a much lower bid and enable content syndication.  You can also use image ads to lock out competition from advertising against you.

Google will only display one of your ads at any given time.  Using three separate tiers lets your bid price more represent fair market value while you still maximize the reach of your ads in each ad network.

Syndicated ads are not on partner sites until approved by an editor.

Determining AdSense Relevancy

Google examines the content of AdSense publisher web pages to determine what the pages are about.  If you are attempting to match ads with those pages, Google looks at:

  • Not one keyword, but the entire list of keywords you are associating with the ad group.
  • Adgroup creatives also help to understand which ads will be displayed.
  • Clickthrough rate and max PPC also factor into the order of the ads shown.
  • You will want to use well themed keyword adgroups to make sure your ads are delivered properly. Having generic words will make it harder for Google to understand what your adgroup is trying to sell.
  • Always use the appropriate campaign negative keywords to help further target your ads.
  • Google also offers a great video of effective contextual advertising tips for free.

Why does a Lower Ad have a Greater ROI?

A lower ad has a lower bid price and that can save a lot of money if the top placed ads are overpriced.  Also, as a user clicks lower and lower they are more pre-qualified to make a purchase. Scrolling down to your ad means they have a greater intent to buy

The two mathematical factors mean that listing at 5 or 6 gives you a better ROI than listing at the top.  Also, you will need to determine the profit elasticity for your market to see what ad locations will give you highest gross.

Lower the Click Price after You Bid

Once you have 10 to 20 clicks and have a good clickthrough rate, you will want to cut your bid in half or even two thirds. It is good to start off with your ad in the #1 or #2 positions and get feedback, then let it fall some as you drop the ad price.


If your ads are correctly run, the availability of a well targeted ad should be what limits your spending

If your ad expenses are limited by a budget and you are ranking high for many of your search terms, you may want to lower your max bid to a position between 3 and 7. This will help you show up on more search results and pre-qualify your site visitors.

Dynamic Keywords

If you have similar keywords using the same copy text, you can turn this feature on by writing out your normal body text and putting {KeyWord: default keyword} in the title of the ad.

Once again, the default will show if the search criteria is greater than 25 characters. Also, the K and W are capitalized to remind you that they will appear capitalized in your ad title.

Keywords in your title can help your title stand out from the others and improve your clickthrough rates.

Google lets you to pass the referring keyword trigger as a variable within the actual destination URL. To pass the trigger keyword as a variable you should use &kw={keyword}.

A Keyword Rich URL is a Good Thing

People often think of the URL as one of the most important parts of an ad. The title sticks out the most, but most factor in the URL more than the ad copy. If you change your URL to a keyword rich URL you may raise your clickthrough rate by 50 – 200%. A new throw away domain name only costs $8 at GoDaddy.

If you have some high selling affiliates you may also want to reward them by giving them their own keyword rich URL. This can also help some of your affiliates get their message through to customers as some bad affiliates can get messages with your URL in it blocked from being by people using AOL or similar email clients.

Bid on the Competition

Trademark laws are not concrete in this field. Google allows advertisers from the US and Canada to bid on trademark names of their competitors. Their name(s) of competitor's trademark may not appear in the ad, but they can in fact be used as a trigger. If you are using competitor names as the triggering word you will need to group them together in an ad that does not use dynamic keyword insertionm or the title of your ad will put you in trademark violation.

Keep in mind that since the laws are hazy in this area you may run into some issues if you push the envelope and do not respond to complaints. US trademark owners are required to inform you of the problem and give you the opportunity to fix it before they have a chance to sue you for damages.

You should ask people before using their names, especially if you think they may take it the wrong way. Another good way to appear on many of the content sites is to run your ads on phrase match for some of the more popular article titles and ideas in your industry.

Targeting Locations

Many times people target ads to a specific country. If you are not that country you can view the country specific ads by adding &gl=countrycode to the search string (ca for Canada, US for United States, UK for United Kingdom, etc).

If Google is mixing in state and regional ads, the state name will be at the bottom of the ad. Geotargeting can allow you to afford words which may be broader than your more globally effective keywords since they are geotargeting only delivers ads to specific regions you are interested in advertising at.

You may want to break your ads down by different price levels according to the country codes.

Sending Viewers to Your Landing Page

The best conversion process has the unnecessary steps removed. By sending a user one of your focused landing page versus your home page you can improve your conversion rates.

Capital Letters

Google will let you use capital letters at the beginning of words in the title and also in the description. Using capital letters at the beginning of each word in your ad title and ad description can also improve your clickthrough rate.

Split Testing

In Google, you can test multiple ads at any given time. Every week you should try to make a new ad and test it against the best ads from the previous week.  If you have an ad that is getting an exceptionally low clickthrough rate and you have another that is getting decent clickthrough, you can usually get rid of the bad ad after a few clicks on it.

There is a free online Split Testing tool, created by Perry Marshall, which will assist you with mathematics to determine if you have collected enough data to stop testing.  He recommends waiting until the software is at least 90% to 95% sure of your results.  Also, you can make two copies of the same ad and send it to different URLs to test various landing pages.

When you are split testing you will want to turn off the auto optimization tool and limit the test only to Google so you can get the most accurate analysis.

If a Word is Giving Your Trouble

You will want to develop custom ads specific to your most expensive and high traffic keywords. If you are having issues with a word, then remove it from your adgroup and create its own.

From the beginning, you can try the exact match.  If you try multiple exact match specific targeted ads for that keyword and still do not get it to run, then that is probably not the word you should be running an ad for.

Cheaper Traffic

There are AOL users that have “type search term here” in their search queries. Some of them accidentally run their search with the word here attached to a term, like hereBusiness or hereYourTerm.  People will search for stuff like NBA, and there is a ton of cheap targeted traffic if you are creative.

Affiliated Ads

Google will only let one affiliate ad per keyword per URL. That affiliate does not need to identify their relationship and the one who has the ad with the highest effective click price between the merchant and its affiliates gets their ad shown.

Affiliates can still have their ads show up if they establish white label affiliate sites with more information about the items.

PPC Creativity

A few helpful Pay Per Click techniques are:

  • Always think creatively.
  • Do no point pay per click ads at landing pages.
  • You can cloak pages that the ad editors will see.
  • Do not use the budget functionality.

It's been noted that more creative AdWords ad ideas might be best tested by Google on a Friday evening so that they can be able to run the full weekend before an editor reviews them.

If you have the premium AdSense position and you rank well naturally, you can bump the 2nd ranked ad position down to the right rail if you edit your copy. It can take almost 3 days for an editor to review your new ad and raise both ads to the top of the results once more.

Quicker Business Feedback

If you are beginning a B2B account, it is probably a bad idea to start that account during a weekend. Monday is the biggest spending day for almost all B2B purchases and would be the best day to begin your ads.

Lead generation is the best way to start Google AdWords versus selling affiliate products. It is common to have a lead generation rate of 10-20% therefore the feedback loop is almost 10 times faster than selling a product that may convert at 1-2%.

Competitive Analysis Software

Google does not offer tons of information about competing sites. Some recent software products have come about which ping Google and determine the display rate of the ad, and the average position for your ads and competing ads. This information helps you see which of your competitors are the most sophisticated, and what positions are the most profitable and competitive. AdArchiver is a cheaper product and AdGooroo is a pricier but more sophisticated system. Google also released an API which allows lets you build interfacing software.