Video: What is AdWords?
When it comes to advertising online, many websites will charge you by the mile, that is for every thousand impressions. But this doesn't tell us much about how many customers are actually viewing our ads.
The first step is of course to ask about unique users - how many physical people out there are visiting the website. Now at least we can determine how many potential customers we're paying to display our ad to and how much it costs us per customer.
But if our goal is to get more visitors to our website and ultimately more customers, we're only really interested in those unique users that are likely to be interested in our product or service. We'd rather target a smaller but more relevant unique user base, resulting in lower costs and higher returns.
So how can we be sure that a customer has a high interest in our product or service?
The answer is context and clicks.
If we place our ad next to content that is highly relevant to our service, we increase the chance that the visitor to that page may be interested in our ad. With contextual advertising, we also decrease the risk of irritating people with irrelevant ads.
Contextual advertising may include placing your ad on a niche website that has a close fit with your product, or even better, next to an article that is actually about your product. But these can be hard to find and limited in reach.
One of the most powerful forms of contextual advertising is search engine marketing. If you advertise on Google, you can choose to show your ad only to those people searching for terms related to your business. So not only are you showing your ad only to unique users likely to be interested in your offering, you're showing it at the exact time they are looking for you. With millions of people searching on Google in South Africa every day, you're also maximising your reach.
But the real proof of an interested consumer lies in whether they choose to click on your ad and actually visit your website. Search engine marketing applies this pay per click (PPC) model. When you advertise on Google, you don't pay to show your ad, you only pay when someone actually clicks on your ad and visits your website.
Now let's take it one step further: what if you could choose how much you wanted to pay per click? Google AdWords is an example of a pay per click advertising solution that allows you to do this.
But how would I know how much to pay per click?
What we really want to pay for, ultimately, are not impressions, not unique users, not even clicks - but leads and conversions. If you know how many clicks it takes to get one lead, and how many leads it takes to get one sale, then you could work out what the maximum is you should be willing to pay per click and still have a positive ROI.
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