Do you advertise on Google AdWords? If so, did you know that there’s a top secret way to save 50% or more on your monthly Adwords cost if you create awesome ad campaigns? Alternatively, did you know that you might be paying up to a 400% surcharge on your AdWords cost if your ads stink?

How does this work? It has to do with an ingenious yet also somewhat confusing billing system that Google AdWords employs when calculating the Cost Per Click (CPC) when a user clicks on one of your search ads.

In AdWords, advertisers specify a maximum CPC, which is the most you’re willing to pay if a user clicks on your ad. But your maximum CPC is not the same thing as your actual CPC, which is always less. Exactly how much less depends on your secret AdWords discount (or surcharge).

Top Secret Way to Save 50% or More on AdWords Cost

Understanding Your Quality Score in AdWords

Quality Score is Google’s method of rewarding advertisers that have high quality ads and well structured campaigns, and also penalizing advertisers with lousy ad campaigns.

Google assigns a “Quality Score” between 1 and 10 to each of your keywords. It’s a grade for your keywords and ads that is calculated based mostly on the Click Through Rate (CTR) of your keywords and ads.

Relevance

The reason for this is relevance. Google wants to serve up relevant ads that help its users, because then they’ll be more likely to keep using Google, as well as to click those ads (which puts more money in Google’s pockets). If users are clicking on your ad more often, then there’s a good chance that your ad is relevant to those searches. If users aren’t clicking on your ad that often, then your ad probably just isn’t that relevant to the user’s search.

To Summarize

Google wants to incentivize and reward advertisers to write high quality, relevant ads and pick specific, relevant keywords that earn high Click Through Rates and thus High Quality Scores. The higher your Quality Score, the higher your secret AdWords discount.

But how much you ask?

The Typical Quality Score Distribution

Recently, I did a survey of the average impression-weighted Quality Scores across the accounts of several hundred WordStream clients acquired in 2013. Here’s a summary of what I found:

As you can see, Google grades all keywords on a curve.  Some keywords get a score of 10/10, but others get just 3/10 or 4/10. But on average, the typical keyword Quality Score is 5/10.

This means that having an above average Quality Score of greater than 5/10 results in a “discount,” and having a below average Quality Score of below 5/10 results in a surcharge.

Below are the benefits of having high Quality Score. As you can see in the following table, having a Quality Score of 10 affords you an estimated 50% discount:

Alternatively, a Quality Score of 6/10 means you save approximately 16.7% on your Cost Per Click (CPC). Furthermore, having a below average Quality Score of 2/10 means your CPC’s are actually increased by approximately 150% relative to the average CPC.

The key to getting your big discount is by having a higher Quality Score, which means doing stuff to ensure higher Click Through Rates (CTR) on your ads, such as writing great ads, using negative keywords, being picky in choosing your keywords, leveraging ad extensions and so on.

It’s also worth noting that in the last 4 years, Google has become a “tougher grader.” Meaning the average Quality Score grade used to be 7/10 and now it’s just 5/10. This means that a high Quality Score is worth much more than it was four years ago, in that it will result in a substantially higher discount.

Are Your Quality Scores Helping or Hurting Your AdWords Cost?

This new data illustrates just how crucial good Quality Scores are to your AdWords ROI (Return on Investment), since they can save you up to 50% on each click. So where do your Quality Scores fall in the grand scheme?

I suggest using the AdWords Grader to check your impression weighted Quality Score distribution. This free tool shows you what your Quality Scores look like across your account and where the curve should be for better cost efficiency, as shown here:

In this case, the advertiser has an average Quality Score of just 3.8/10, which is below the average score of 5/10. According to the preceding Discount / Surcharge Table,  they’re stuck paying the AdWords surcharge of between 25% and 67%.

Are you receiving the top secret AdWords Quality Score discount – or are you paying a surcharge on your Adwords cost?

Top Secret Photo via Shutterstock

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5 Lessons: eBay Adwords Case Study

1) Use Negative Keywords

AdWords enables advertisers to set negative keywords, which tell Google what keywords you want to avoid your ad showing up for.

For example, if you are a small shop selling organic coffee beans, you probably aren’t interested in showing up for queries like “Irish coffee recipes” or any coffee-related queries that don’t relate to what you sell.

eBay’s technique has evidentially been to think of as many keywords as possible, with no regards to relevancy or buyer intent, and to set few, if any, negative keywords. While a hardy list of keywords is no problem, eBay manages over 170 million keywords, which seems to indicate an emphasis on quantity over quality.

This looks like a prime example of something that eBay should have set as a negative keyword:

Irrelevant keywords can be a real danger, because those queries can result in clicks that don’t convert. They’ll cost your business money with no ROI (return on investment). While setting them is an extra step, don’t overlook the value of negative keywords.

If you aren’t setting negative keywords – you’re likely leaking money somewhere.

2) Use Dynamic Keyword Insertion with Caution

Another lesson that can be gleaned from eBay’s poor AdWords performance is to use discretion when it comes to DKI, or Dynamic Keyword Insertion. DKI enables advertisers to have a searcher’s exact query automatically inserted into your ad text. DKI can be beneficial when used intelligently, but it can be a real disaster when used indiscriminately, as eBay did.

[Exactly what I was looking for - NOT]

Take note AdWords advertisers: DKI is definitely not a fix-all. Use this powerful tool with discretion if you want to make it work for your business.

3) Write Original and Compelling Ad Text

For years, eBay has held steadfast to their unoriginal ad text, composed exclusively of “Shop on eBay and Save,” “Buy it Cheap on eBay,” and a few other similarly dull lines. This is a major no-no when it comes to writing ad text.

So it comes as no huge surprise that this technique hasn’t been yielding much in the form of results.

For clickable ad text that drives conversions, keywords should be split into granular ad groups. Then specific ad text should be written tailored especially to each individual ad group.

4) Measure and Track Conversions

One of the core rules of proper search engine marketing is to track your conversions ruthlessly. Measuring your campaign’s effectiveness lets you see where you’re making mistakes as well as what you are doing right and what you should continue putting into practice.

It’s very difficult to make intelligent decisions on how to best grow and improve your online advertising strategy without measuring conversions.

It’s sad that it’s taken eBay approximately 10 years to discover that their ads haven’t been working. Especially considering that it’s estimated that eBay was the second biggest ad spender in the retail & shopping industry.

[Click image for full size infographic]

This means eBay has been flushing billions of dollars down the drain for years without measuring their online ad performance. What else haven’t they been paying attention to?

The lesson here is clear: Set up conversion tracking and keep a close eye on your CPA (cost per action).

If it’s costing you more to acquire a new client via PPC (pay per click) than that client is worth to your business, then you need to optimize your campaigns or change strategy.

The last thing you want to do is throw more money at a crippled campaign. Especially if your budget is in the billions.

5) If You’re Getting Plenty of Organic Traffic, Try Remarketing

For companies like eBay that already are getting a lot of traffic from organic search, remarketing is a great option since you won’t be buying clicks on keywords you already get organic traffic from. Remarketing lets you tag users that visit your site.

For example, users that don’t complete a conversion. When they leave your site, remarketing then lets you show ads relating to whatever the user was previously looking at on your site, with the intent of getting the shopper back to your site.

Imagine a user visits your running shoes page, but then they remember they are overdue to pay a personal expense of some sort. As a result, they leave your site to go pay a bill or perform some other related personal task online instead. As this same user travels around the Web, you can have ads appear on other sites, reminding them of your running shoes and perhaps offering a 10% discount special.

The user then remembers that they wanted to purchase new shoes. They click the ad and complete their purchase.

Organic search traffic generally has a conversion rate of 2-6%, which means that 94-98% of searchers aren’t following through on their actions. Tagging those users and remarketing to them can dramatically improve your conversion rates for organic search.

Paid Search Can Work If You Avoid eBay’s Mistakes

eBay has showcased exactly what not to do with an AdWords account in this case study.

While eBay claims that paid search doesn’t yield results, it’s difficult to take their word seriously considering how many worst practices they’ve employed in their AdWords account.

Implement these lessons and tips in your AdWords campaign and see for yourself how powerful online advertising can be for you and your small business.

The post 5 Lessons You Can Learn from eBay’s AdWords Disaster appeared first on Small Business Trends.

As a small business, understanding the mobile marketing landscape and how Google plans to play in that space will be critical for charting your mobile search marketing strategy in the near term.

Outlined in this mobile infographic are Google’s top 20 mobile products. Included is a report card that grades each product based on quality, adoption, originality, value to users, value to advertisers and other criteria.

Whether you agree or disagree with the product gradings, the mobile infographic provides a comprehensive overview to Google’s exciting portfolio of mobile products.

[Click image for full version]

The post Time For Small Businesses to Take Mobile Seriously [Infographic] appeared first on Small Business Trends.

Today, everyone knows and understands that people continue to be more reliant on mobile devices for their immediate needs now more than ever. Mobile search is even expected to overtake desktop search in volume within the next year.

It’s immediately clear that mobile search is fast growing in popularity and value.

But how much?

You’re about to find out.

5 Mobile Search Statistics and Facts

Google Conducts 30 Million Click-to-Calls Per Month

Click-to-call is among one of Google’s new or improved ad extensions, letting advertisers attach clickable “click to call” links that automatically generate the business’s phone number on a user’s mobile device. Click-to-calls make it super easy for searchers to get in contact with a business in the least amount of time possible.

According to Google, click-to-call is such a popular ad format that Google generates 30 million calls every month as of right now. If your small business relies on getting the phone to ring for orders and inquiries, consider looking into click-to-call extensions in AdWords now.

One in Three Mobile Searches Have Local Intent (Versus 1 in 5 on Desktop)

Searches on mobile devices are 66% more likely to have local intent than a desktop search. Meaning people searching on mobile phones are usually looking for something around them. For example, directions to a business or a phone number to call.

Capitalize on strong local search intent by creating ads and landing pages that make it easier for searchers to call or find your business (see #4 below).

Commercial Intent is Significantly Stronger on Mobile

In a recent interview with Surojit Chatterjee, the head of global mobile search ads at Google, Chatterjee said:

“The time between intent and action is shorter on mobile actions.”

Since mobile searchers are often trying to find a quick answer to a present problem, they have stronger intent and are much closer to making a purchase than a desktop searcher. If a mobile user is searching for emergency road side car service, then the user is probably in need of service right away. A user executing the same search at home, in the evening, is probably in no rush.

So, depending on your business, mobile clicks may actually be more valuable than desktop clicks. Even though, historically, they’ve been cheaper.

Advertisers See a 6-8% Lift in CTR with Click-to-Call Extension

Click-to-call extensions are a tremendous benefit for both users and advertisers. Mobile users can get in contact with businesses quickly and easily, without writing down numbers or navigating cumbersome mobile sites.

Advertisers get better performing ads. Ads featuring the click-to-call extensions along with location extensions can see a 6-8% increase for click-through rates (which can subsequently raise your quality score, lower your costs and improve ad exposure).

Call Reporting Costs 100% Less Than it Used to

Okay, so I forced the “statistic” a little on this last one. But this is great news: Google recently began offering extensive call reporting free of charge. This granular call data was previously available for a fee of $1 per call. But Google has since decided to start providing this data for free.

Ultimately, the only mobile search statistic that matters is the ROI (return on investment) for your small business. New detailed call reports show advertisers the phone numbers of various calls to the business, how long the phone calls lasted and what time the calls occurred. It’s as simple as looking at a phone bill.

This data can help businesses decide what time of day is most valuable for enabling click-to-call extensions, when to have more staff available to answer phones, etc. Measuring the ROI from mobile search is easier than ever.

The Mobile Revolution

Everyone knows there’s a mobile revolution happening. Mobile search is expected to overtake desktop search in volume within the next year and mobile advertising is getting both easier and better.

The great news is that with Google’s recently released Enhanced Campaigns, developing a mobile search strategy for your small business is easier than ever.

Mobile Device Photo via Shutterstock

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This is what an Offer Extension looks like:

You can look for Adwords Offer Extensions, along with a bunch of other updates, in your AdWords account today:

• If your account has been upgraded to support Enhanced Campaigns, then you’ll find the Offer Extension in your AdWords account under Ad Extensions -> Offer Extensions.
• Otherwise, all Google AdWords advertisers should have access to the new Offer Extensions by the end of February.

When users click your offer, they will be taken to a Google hosted landing page that shows your chosen offer details. From there, users can print the deal to use in-store or save it for later by sending it to their Google Offers account.

Small businesses in particular will benefit from this in-store redemption method, which provides local businesses with the ability to track and measure the impact of online advertising on in-store purchases – pretty awesome.

Benefits of Google Adwords Offer Extensions for Small Businesses

The Google Adwords Offer Extension has a lot of advantages for small businesses, such as:

• Cheaper than posting a deal on Groupon or similar deal sites.
• Advertisers maintain direct control over their deals.
• Easy to set up through the familiar AdWords format.
• Draw attention to an existing ad and features clickable buttons that encourage interaction.
• Improve conversion tracking for in-store purchases.
• Clicks on an offer cost the same as clicks on the regular ad.

What Kinds of Businesses Should Use AdWords Offer Extensions?

Any business or company that has used or considered using Groupon or Living Social in the past should use Offer Extensions.  It’s a similar concept without the hassle and ridiculously high costs associated with daily deal sites.

For many local businesses, the in-store Offer Extensions will prove to be the most valuable since a big aspect of a local business’s value exists in their location in relation to the consumer.

Overall, I think this simple (and relatively cheap) ad extension has great potential to drive in-store traffic and is a far better deal for small businesses.

The post Are Google AdWords Offer Extensions Right for Small Businesses? appeared first on Small Business Trends.

Here are five things that small and medium-sized businesses (SMBs) need to know about the new Enhanced Campaigns and how they’ll affect your PPC marketing efforts.

1. Mobile Campaign Management Will be Drastically Easier

The best news to come out of this announcement is that Enhanced Campaigns will be significantly easier to manage. Previously, only the most sophisticated advertisers were really taking advantage of mobile PPC. This is because it was far too complicated and time-consuming for the average advertiser to create separate campaigns for every possible device and location combination. At WordStream, we estimate that currently only 1 in 25 SMBs are running a mobile-specific campaign!

With Enhanced Campaigns, all that goes away. Now you can essentially mark a checkbox that says “I want this ad to run on mobile.” If you just have one ad in an ad group, and you check the box, then it’s going to run across all devices. But if you have an ad group that has the new universal ads and mobile ads in the same ad group, Google will always display your mobile ad to run on the mobile devices. Basically, mobile and desktop ads can now live together, in the same campaigns! It’s going to be a big improvement and time-saver.

2. Your PPC Ads Will be Smarter

Enhanced Campaigns give you the ability to adjust bids based on time of day, location, as well as device (mobile versus desktop). These bidding options mean that you can bid more or less when you ads appear on mobile. You will be able to specify a bid adjustment between -100% and +300% for mobile devices. If you want to opt out of mobile for some reason, you can bid it down by -100%, which effectively turns off mobile search.

Of course, optimizing for mobile is about more than just keyword bids, so Google is also rolling out new ad extension management features. These include checkboxes for various ad extensions, enabling you to specify that you only want your extension to run on mobile or desktop. This way, advertisers can continue to customize the ad experience for mobile versus desktop users. In addition, Google will automatically serve up the right ad based on user context, rather than you having to build out a mobile-specific campaign on your own.

3. Reporting on Mobile Search Got Way Easier and is Now Free

Google has introduced a new conversion type for mobile calls. Traditional conversion tracking, which depends on users reaching a designated web page after completing a goal, doesn’t work well for mobile because the goal completion so often involves placing an order over the phone. So Google is introducing a new mobile advertising conversion type, based on call duration.

As an added bonus, Google will no longer charge an extra fee to use advanced mobile call reporting features.

4. Mobile CPCs Will Go Up

In addition to increasing adoption of mobile advertising, Google wants to close the gap between the cost per click on mobile and the higher CPCs on desktop search. In the past, mobile CPCs have been significantly lower. This was a nice advantage for those larger advertisers and agencies that had the time and expertise to set up and manage mobile campaigns. Now that mobile advertising will be easier and more accessible, competition will increase and costs will inevitably go up. I predict that mobile CPCs will be similar to desktop CPCs by the end of the year.

5. You Don’t Have to Do Anything Now – by Mid-year This Will be Default

Google will make Enhanced Campaigns available as an upgrade later this month. That means you don’t need to do anything right now, if you don’t want to. However, Enhanced Campaigns will become the default around June. All your campaigns will be automatically upgraded at that time. So it’s important to be prepared for the change. If you’re like most small advertisers and you never created separate mobile campaigns in the first place, the upgrade path will be seamless and painless for you. You’ll basically just get a bunch of new options and features in your existing campaigns.

Editor’s Note: We found more about enhanced campaigns on the WordStream blog which has additional detail. You will also find a tutorial on how to create video and mobile ads in AdWords today, as well as a guide on AdWords ad extensions.

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