Effective advertising on Google

Last week (May 14 and 16) we asked teams how they were buying ads on Google. The answers were not very coherent. “We just say how much we want to spend, and what words.” But why those words? How much did you end up paying for every potential customer you brought in? How do you decide if these words are working? If they are cost-effective?

Learning how to bring people to your web site is, obviously, crucial. Right now you have a relatively short term goal: Maximum learning about what works, subject to a limited budget.

There are several ways to bring in people, including:

  • Referrals from sites that mention you (discussed in class on Wednesday)
  • Paid search – showing ads to people who are searching for specific terms that suggest they might be interested in you. This is our topic. You will see it referred to as S.E.M., Search Engine Marketing.
  • Organic search – Getting ranked near the top on a general search by potential customers.

Your task this week is to learn about, devise, and implement a good strategy for paid search. This is a big and important field in e-commerce, for obvious reasons.  Document what you did, and measure how well it worked. Iterate fast to get better results. Show that you know how to run fast experiments.  (see below)

Some Resources

Initial explanation: https://searchengineland.com/guide/what-is-paid-search

A short “cartoon” explanation of many factors affecting  success. For example, how to target different customer characteristics. https://www.wordstream.com/blog/ws/2015/05/21/how-much-does-adwords-cost

Google’s own pages for AdWord beginners are good. Start with them, and the associated videos. https://adwords.google.com/intl/en/home/how-it-works/search-ads/
Google’s adwords help center, still quite elementary: https://support.google.com/adwords/answer/6146252

I expect that there are also many good videos on these topics. If you find some, please post comments, or send emails.

A page listing multiple AdWords tutorials. https://www.disruptiveadvertising.com/adwords/adwords-guide/
One specific tutorial:     https://neilpatel.com/what-is-google-adwords/

Two books, downloadable on Springerlink.com:

  • The Definitive Guide to Google AdWords: Create Versatile and Powerful Marketing and Advertising **Campaigns**


Use a planning tool such as this one to analyze your choices and make a  plan. You don’t have to implement it (e.g. you can be unrealistic about your budget). But we want to see if you understand this technology.  Here is an example of a planner: https://support.google.com/partners/answer/7337243.
There are many others around.

Why is this complicated?

There are multiple levels for designing your advertising. Google started with a sophisticated “double auction” system, invented by a well-known economist, and it set them on the path to riches. But it is based on some sophisticated choices that small companies are not set up for. Recently, Google seems to have shifted to a system that hides what is  going on, and in particular does not show you the cost for different words. Despite this simple interface, behind the scenes Google still uses bidding to set a constantly changing price of ads on different search terms. You need to figure out the basics of pricing, although you certainly do not need to understand the underlying algorithms. Fundamentally, you want search terms that people who are interested in your site/product/service will use often, but that are special to a narrow group so that the ad price will be low. You can add negative words and use other methods to reduce who sees your ad.

Fortunately, Google makes it easy to find relevant, high-demand keywords. Simply enter your keyword ideas into the AdWords Keyword Suggestion Tool, and Google returns lists of similar keyword terms along with their estimated monthly search volumes and various other metrics. Estimated costs per click are shown, but these figures are often incorrect. Definitely pay attention to the level of competition for each keyword term; keywords with higher levels of competition are being bid on by more AdWords users,

A refinement is that you only pay for people who click on your ad. Therefore as much as possible:

  • Write your ad to attract people who might want your product, but nobody else.
  • Use different ads to appeal to different groups, associated with different search terms.
  • Experiment with different ads just as you experiment with search terms. Be systematic (keep good records of what ads you tried and what they produced)
  • The key ratio is not the click-through ratio, but the ratios of conversions per click. A conversion is a positive event by a potential customer. You can define it how you want, such as filling out a request for information, making a purchase, etc.


Author: Roger Bohn

Professor of Technology Management, UC San Diego. Visiting Stanford Medical School Rbohn@ucsd.edu. Twitter =Roger.Bohn

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