Understanding Online Paid Advertising

www.SmallBizInternetMarketing.com.au 1
TARGET ADVERTISING
Only pay when it works.
Pete: In this session, I’m going to be talking about targeting advertising. I’m impatient. I
can’t wait months for SEO to kick in. I like to get my results today. So I want to talk to you
about how that can happen, how you can get your website on the front page of Google
straightaway. It costs money though. But if we manage it properly and we measure it, and
we then manage that measurement, we’ll be able to make some money out of it. I want to
talk about target advertising.
Google AdWords
Google AdWords program, for those of you
who don’t know the Google AdWords
program, basically when you go to a search
results page, the yellow section at the top
above the natural listings and the things
down the right-hand side are sponsored links.
So you can pay to get your website ranked straightaway for the keyword you want to
target. So this is a good way to fast track some of the testing things so that you have a
website that works before the SEO kicks in.
The big thing with Google AdWords is it’s pay-per-click advertising, not your traditional pay-
per-view advertising. In most traditional marketing, with radio, TV commercials, magazines,
you’re paying for the fact that people are going to view the advert, not that it works. If your
advert gets viewed by a lot of people but no one does anything, you still have to fork out
the $2,000 in media buy. With online advertising and pay per click, you only pay when
people respond to your marketing. It is the best form of marketing spend you can ever
have.

Why AdWords?
So just to reiterate. Why do AdWords? Firstly,
you get to target people who are actively looking
for your product and services. So unlike
traditional media where you are hoping to
interrupt people by buying a billboard or
interrupt people who are reading a magazine,
this is where you are in front of people who are
actively looking.
They’ve taken a proactive stance and they’re doing something, hopefully have their wallet
half open already, looking for the products and services you sell. So it’s much more
targeted, less wastage, which is a big thing.
As I said before, you only pay when someone responds. So your advertisement can be seen
by thousands of people. But if no one responds, you don’t pay a single cent. So you’re only
paying when material works, which is the best way to spend money. The other thing is you
get to pick the search phrases. So you go in and say, these are the keywords I want to target.
These are the keywords I’m targeting. These are the businesses and phrases I want to be in
front of. And you will go in and bid on that keyword. I will show you how to do that in a
moment. As I said again, it’s measurable which means it’s manageable, which means you can
control it.
How does AdWords work?
So how does AdWords work? From a pay-per-
click perspective, it’s an auction system. So the
price you pay is your maximum bid you’re willing
to pay for that keyword times a quality score. So
each cost is basically a keyword level. So you
don’t say, I want to pay $1 for every single click
for every keyword. It’s all based on individual
keywords and you pay differently per keyword.

So it’s the maximum bid, which is pretty straightforward, times three factors that make up
the quality score. Google has this thing called a quality score, which to them is a way to
just not give a person with the biggest wallet the best advert. It comes down to other
factors as well. These factors are click-through rate, which is the percent of people who see
your ad and click on it. So the more effective the ad, the higher people click through, the
cheaper your bid is going to be.
Relevance, how relevant is the ad to the keywords. If you’re bidding on blue shoes and
your advert says, we sell red shoes, it’s not that relevant. So Google penalizes you for that.
Also the landing page; it’s important that the webpages that your site has, the pages that
your ads are pointing to, match the keyword. So you have a website about red shoes or a
page about red shoes. You’re bidding on blue shoe and you send people who Google blue
shoe, who’ve seen an ad that says blue shoe, and land them on a page that says red shoes.
You’ll get penalized for that. Google will track that.
So it’s important that you build websites around different keyword phrases and each
keyword you bid on, point them to those relevant pages rather than just your home page.
I’ll go through all that in a moment as well.
How do you set up an AdWords account?
Setting up an AdWords account, I thought
again, let’s be interactive. Rather than me talk
to slides, let’s jump inside and set up an
AdWords campaign for somebody. It is really
basic, getting an idea of how it all works, and
then we can go deeper later on if we need to.
I’m not going to walk through setting up the account, registering an account. Just go to
Google.com/AdWords and then just follow the prompts. It’s literally put in your e-mail
address, put in your contact details, your billing details, all pretty straightforward. If you
can get here, you can set up an account.
Before I go into this, I’ve just logged into a Google account I already have open and we’ll
build a campaign for somebody. What are some niches? I want to get an easy niche that
everyone can understand. What are some business areas we can pick? Small business
service marketing. I’d rather do a product it just might be easier. Physio is more of a
business.

Basically, this is the face of your AdWords
interface and the management software. It’s
broken up into campaigns, ad groups and a
bunch of settings. So we’ll go through the process
of setting up a brand new campaign. That’s the
high-level. You have campaigns. And then inside
that, you have the groups and the adverts, and so
on. That will make sense as we go through this.
So we simply hit new campaign because that’s where we’re going to start. It’s simply a
wizard that you walk through. So first and foremost, we’re going to call this physio
campaign. As you do this more and more, you refine it.
The first thing you can do is choose its locations. Unlike SEO general search results, not
Google Local, just general search results, your listing will pretty much appear for anybody
in Australia who searches. With Google AdWords, you can target that. So if you’re a physio
in a particular area, you can say, I only want my ad to show when people in my area search.
So let’s do that. We’ll go state Victoria. We want to search one or more locations.
I want to limit this a little bit more, so we’ll go to search. What area are you in? Bayside
Melbourne. There, it’s given you an area of Bayside. So I’m just going to remove Victoria
and let’s just say Melbourne City. I’ll put in Hampton. So this is Hampton with a certain
radius around it. Let’s say within 15 kilometers of Hampton. So you can literally add this
area, you will receive very little traffic. Obviously, you’re not going to see as much traffic as
if you went for the whole of Victoria. But there is no point in your ad showing to people in
Bendigo. So it’s going to show your ad in those areas.
So yes, you’re going to get fewer search results as
it showed. But it’s going to give you a higher click-
through rate because if your ad showed for people
in Bendigo, they’re not going to click on that ad.
So that click-through rate is going to be low which
I said before, which is going to mean your quality
score is going to be low, which means you’ll pay
more for the click.
Question: Because you’ve got half the ocean there, can you move the circle across
and maybe have a different centre, so it encompasses Hampton?

Pete: You can. The only issue there is no one can be searching in the ocean. So it’s not
going to get you impressions. It comes down to how many times your ad is shown. Your ad
is only going to be shown to people who search. So no one in the ocean is going to be
searching. So yes, you will be shown to people searching in Hawthorn and Burwood. Is that
too far for you?
Answer: Yes, probably.
Pete: So let’s go smaller. So let’s say we go out 10 kilometers around Hampton. Let’s just go
five kilometers and say that’s enough. Obviously, you guys get the idea of how that works.
So it’s just going to show the ad to people in that area. Obviously, you can play around
with that based on your own niche and you own business, and things like that.
So then let me move down to network devices. Let me explain it to you. Google has their
search results page, which is the first box. So you want your ads to show up on the Google
search network when people search. It’s pretty obvious.
There are also search partners which I prefer to turn off. Google license or rent, or lease
their search results to other pages. So other people who have search engines have built
search engines with the aim of showing Google’s results on that page, and they hope to
make money through other advertising and so on. I don’t want to waste my time and have
my ads showing on those pages.
The content network, I’ll take off as well. That’s something slightly different. The content
network is if I have a website about bungee jumping, just an information site talking about
my passion for bungee jumping or whatever it might be, I can run Google ads on my
website.
So Google crawls my site and sees what pages and what words my site’s about, and will
run ads on that site, and I’ll get paid if people click on it. So as the site owner, I will get paid
if people click on Google ads. That’s the content network. I tend to run a separate
campaign for the content network if I want. I’m going to take it off for this example.
Devices, again, really quickly. There are desktops and laptops, and there are iPhones. I’m
going to take off iPhones for this campaign. In your particular niche, people probably
would search for physios on Google on their iPhone. In the telco space, no one is really on
an iPhone saying they want to buy a phone system. It all comes down to your niche and so
on.

Now for bidding, there are a couple of different ways you can bid. I’m just going to go
manual bidding. You set the maximum cost-per-click bid in the next step. What this means
is that you choose the maximum amount you’re willing to spend per click per keyword. It’s
a much better way to do it. You’ve got a bit more control.
Then your budget. How much are you willing to spend a day on AdWords? My suggestion
is that you start with $100. Don’t freak out. You can monitor it the first day and see how
many clicks you get. But it’s just showing Google you’re willing to spend some money.
There are a lot of conspiracy theories out there that if you show Google you’re willing to
spend a bit more money, they’ll help you out. It’s just a conspiracy theory. I don’t buy into
it but you may as well spend $100 anyway.
You can do other funky things as well, which you can play around with later. You can do
scheduling and so on. If you want to run a campaign for a particular period of time, you
can set it with an end date. That MCG launch that I did recently had a specific end date. So
I set up my AdWords campaign for a particular date. And you don’t have to worry about
turning it off, it just turns off automatically. So if I forgot about it, I could have been
spending hundreds of dollars a day without realizing it.
There is ad rotation and so on, which we’ll talk about later on. And you can also do
demographic bidding as well where you say, I only want people who are between 25 and
30 to see my ad. Now it’s not that great from a Google perspective. People have to be
logged into Google with their Google account which obviously limits the users and that
sort of thing. So I’d leave that out.
So the first thing you do is create an ad
group. What you want to do is work out
what keywords are relevant. So you
might say, Melbourne physio, Bayside
physio, St Kilda physio in one group.
Then you might have back pain, fix
back pain in another group. So you
want to make sure that each group is really targeted. You don’t want to have one group
with every single keyword you want to target because the adverts you design are linked to
the ad group. So you want to make sure that is relevant. I’ll explain that in a second.

Let’s call it, the first one is location-based. The headline, we’ll call it Hampton
Physiotherapy Clinic. You only have a certain amount of letters so you can’t go any further.
What’s your value proposition? What’s unique about your business? Why would people
come to you over other people? Health care, fast results and personal health. Let’s just say
for example here, open seven days.
What you can do even if you just display your URL on your basic website, but your
destination URL can be a specific page deep into your site. So if you’ve got an ad group
about back pain, particularly about back pain and you have a page on your website about
back pain, you can make the destination URL/backpain.html, whatever that page is. So
when people click on the ad, they land specifically on the relevant landing page. So not
only does it help Google give you a better quality score, it helps the user. I want back pain,
I land on back pain. So it’s going to get you better bounce rates and better conversions.
Now keywords, this is where you throw in the actual keywords you want to target for this
particular group. Hopefully, as Dave mentioned before, you’ve done all this keyword
research which we’ll talk about a bit more. I won’t go too much into that now. You can
basically work out which keywords you want to target for this group. Let’s just for an
example call it Physiotherapy Hampton, Physiotherapy St Kilda, on and on for this
particular group because we are going to target the actual area.
There are a couple of different ways you can put your keywords in the group. There are
three ways. There is just what’s called broad, which is Physiotherapy Hampton. What this
means is that you’re telling Google, I’m willing to bid on any terms that you think are
relevant to physiotherapy Hampton, not that phrase exactly.
Google will say they think physiotherapy and chiropractic are the same. So someone in
Google says chiropractic services in Hampton, your ad might show up, even though you’re
not that specific. So I always say avoid broad. All broad means is putting the term in just
like this.
What you want to do is put talking marks around it. It’s what is referred to as phrase match.
What you’re saying to Google here is, I want my ad to show up anytime physiotherapy
Hampton is in the search phrase in that order. So if somebody searches the best
physiotherapy Hampton, my ad will show up, because you’ve got physiotherapy Hampton
in that order, physiotherapy Hampton and then a street name, maybe, it’ll show up.

If I put square brackets around it though [physiotherapy Hampton], what it’s basically
saying to Google is, I only want to bid when people search that exact phrase in that exact
way, physiotherapy in those unique words, no other variants around it. So if someone
searched the best physiotherapy Hampton, and I only bid on that word, my ad would not
show because it didn’t have best in it. So you always want to remove any use of the phrase
match otherwise you are going to get so many impressions that are irrelevant.
Question: How would you write it in if you wanted physio and physiotherapy?
Is there a way that you can write physio in with a star or a wild card?
Pete: No, I would do this. I would go physio Hampton as a separate phrase. You want to be
as targeted as you can. Does this make sense so far? So I won’t dump in all the keywords I’d
do in this particular group. Technically if I had the time, I’d probably create different groups
for Hampton versus St Kilda. So you target the ad a bit more specifically as well. But just for
this example, we’ll just do this.
We can click estimated search traffic which is not a great level result. It’s saying here there
are not enough searches in that particular five kilometer radius for those terms to give you
some rough data. But again, it doesn’t really matter because if you only get five searches a
day and you rank number one in AdWords and you get four clicks, you’ve got a success. It’s
not about the most.
Question: Do you have to put them in talking marks or in brackets?
Pete: Yes, because if you leave it without the brackets, if I just put in the physio Hampton,
that’s what Google class as broad match. So they class them as three completely different
keywords. So broad match will show up for chiro Hampton, because broad is basically
saying, I’m being lazy. Google, you do the work for me. Google is doing this to make
money so they’re going to show anything they think is relevant.
If you put the speaking marks around it, it says this is the phrase. So it will show up for
anything with the long tail either side of that, and then the square brackets is the exact. So
you’ve got to put them in separately. If you just leave it broad, you’re going to get so many
impressions of irrelevant traffic. So don’t do that at all.
The only time I ever do that, just to give you a bit of a disclaimer, if I’m starting a campaign
for the very first time. I might, for two or three days, put in broad match just to see what
Google thinks my site’s about, what is relevant, see what other keywords are possible. With
the Analytics data, which you’ll see in the video I’ll send you guys later, you can track what
keywords are being searched.

So you can say, I’m going to bid on broad here. But then coming through Analytics data, it
might show you that you’re getting traffic for chiro Hampton. You can decide, do I want
that traffic or not. You can then turn it off or start bidding on it because it’s going to be
cheaper as well. Does that make sense?
Question: Let’s say you’ve got a website that is ranking in organic search rankings in the
top three. What do you think is more important, to go for the top spot in AdWords or to
claim some of the real estate on the right-hand side of the page by being ranked a little
bit lower?
Pete: I’m going to give you the weird answer. Again, it comes down to your niche.
Personally, I want to be number one all the time. I’ve got a big ego. It does work. It comes
down to testing. If you’ve got different phone numbers, what you can do is, you can test
how many calls did my AdWords get when I’m in position one compared to position three?
It will all come down to the bidding scenario, so it comes down to your particular space.
I know people who have e-commerce sites that aren’t designed to get the phone to ring.
So they sell e-books online or just video games and things like that. They get a better
return on investment being in position number four. They don’t get as much traffic, but
they get, for whatever reason, their bids are lower, the traffic is less but that traffic converts
better. It all comes down to testing again.
So the next thing we do is just work out what our maximum cost-per-click is. This is the
maximum price we’re willing to pay per click. Let’s just say I’m willing to pay 50c. We’re
going to have to spend 50c every time someone clicks on your ad. Is that a better spend
than paying $2,000 in a local Melbourne newspaper to hopefully get some impressions?
You’re paying 50c per click for someone who is interested. It’s the best ROI you’ll ever have.
So let’s save this as a group. So here you’ll see now, on the left-hand side you’ve got physio
campaign. You’ve got location-based and that’s the ad you’ll see here, and these are the
keywords we’ve got here. I’m going to let this run throughout the day. And if we’ve got
time at the end of the day, we’ll see if it gets any impressions and I’ll buy you some traffic.
What we also want to do, a couple of things from a testing and split-testing perspective
that I spoke about in the last session, like everything, you want to split test. If you click on
the ads tape here, it takes you back to the actual ads which are running in that particular
group. I always recommend, you want to run a couple of different ads at any given time to
work out which one is best. How do I know that ad is going to be the best converting ad?
Like the split test data, 4% to10% conversion rate, what would you rather? You’d want
more traffic.

So if we simply click here on new ad, and we can go text ad; I won’t bore you with all the
other possibilities. You’ll see a pending warning. Because what Google does is it goes and
vets it to make sure the ad doesn’t have any bad language in it and it is relevant, just a
baseline.
Let’s pick a different headline. Let’s say Physio Clinic Hampton. Open seven days. Even
sometimes the order makes a big difference. What street are you in? Hampton Street. Full
service plus rebates. I don’t know if you’ve got that Medicare thing.
Obviously, you know this better than I do once you know your business, but just play
around with this. Even to the point where you test things where the display URL doesn’t
have a www can make a difference, a significant difference. Just the conversion and the
click through, it’s very strange. But all these things can make differences, so you want to
keep testing.
So you’ll put in two ads and what will happen is, as the impressions come up, Google show
the ads evenly. So the first person, whatever the keyword might be, physio Hampton,
they’ll show the first ad. To the second person, they’ll show the second ad. And over time,
you’ll see which ad gets a better click-through rate. That’s the winning ad. So you can
delete the losing one and try again with another one, keep them making them race against
each other. There are some funky ways you can do it moving forward.
Let’s quickly add in another group of the ad groups. I’ll add in a second group here, just
using this campaign as an example. Let’s call it back pain. This is a quick example of how
you target different things. So that’s back pain, headline is: Got back pain? It’s all about
testing different headlines and things like that. Need a Quick Solution to Your Back Pain?
Visit us in Hampton.
Then if you had a page that was /backpain.html, you’d put in a destination URL so when
that actual back pain ad comes up, it goes straight to the relevant page. That page would
be saying, Hey, Have you Got Back Pain? We Can Fix It. Call this Number. You’d have a big
phone number, little video testimonial saying, I had back pain. I couldn’t stand up, got in
my car and drove home.
So the keywords here you would be going back pain, so you would put it in both options,
lower back pain. I know there are some typos here but deliberately, because people might
search lower back pain like that, lowr back pain, so you want each keyword is different.
Google treats every keyword as a different bucket.

Question: Why do you do square bracket and talking marks? Don’t they overlap?
Pete: The square brackets are the lowest model in terms of I want to bid just on this word.
If you bid on lower back pain with a square bracket, you’ll only show up if someone
searched lower back pain. So you’re right though, with the phrase match which is the
talking marks, it will show up for lower back pain which is the exact match, but also
anything either side of those words.
The reason you want to do it separately is technically, yes, one would pick up traffic from
the other one. Because you want to bid on them separately, you want to put them in
differently. Google will charge you differently for both ads. So if you’re more targeted, it
will be cheaper. So an exact match should be a cheaper click than the other because it’s
more relevant.
Question: So if you typed both of them in, you’ll end up
being able to buy some of your clicks cheaper.
Pete: The exact match, which is the square bracket, will be a cheaper click because it is
more relevant to the person. You’re saying, I only want to target this particular phrase.
You’re being more targeted, so Google is going to reward you through their relevance
aspect of the quality score.
With a phrase match you’re being a little lazy and saying, I just want this and anything else
you can give me. If you have broad match which is no brackets, you’re being super lazy.
Google is going to say, well, you’re making us work. We’re going to charge you more.
You’re making us work more.
Question: Just a quick one. My main competitor who has Google AdWords, she seems to
appear everywhere I go. I go into different directories and there is her ad. And I go into
some related page and certification body, and there she is again. How does she get her site
in all those places?
Pete: It would probably be the content network that I ticked off before. Basically what can
happen is, these other websites about the industry, the way they make money, they’re
going to run ads on their site. They say, Google, I want to use your services to run the ads.
So basically as an advertiser, if you tick content network, your ads will show up when these
keywords are on the pages that people have the AdWords ads on. So if someone has a
website about lower back pain, and their copy and their website talks about lower back
pain, and they have Google ads running on their site as a way to make money, and this is
ticked with content network, this ad will show up on that page because that page talks
about lower back pain. Does that make sense?

Question: So that’s a pretty good strategy.
Pete: It doesn’t seem to convert as well. Again, it comes down to a testing thing. I keep
saying testing, but that’s what it comes down to. It’s not going to convert as well because
again you’re interrupting people. If people are searching, they’re actively looking. Ads on
the side of another web page, they’re not looking for the ads, they’re looking for the
content. You’re trying to interrupt them so it’s not going to be as high conversion rate, as
high click-through rate. Even the actual traffic you get when they click through doesn’t
seem to convert as well either.
Say for back pain, I’m going to pay $1.20 a click because back pain is going to have more
competitors than Hampton physio, so you’ll find you’ll probably have to pay a bit more for
the click.
Question: I just had a question with the location. When you set the radius before,
how accurate is that? If their ISP is in the middle of Melbourne, will it pick up that?
Pete: That is a catch, it’s based on their IP address. It’s getting better. Google and the
internet is getting better. The IP addresses are becoming a little bit more not static but
they are coming on the fly. So you can work out where you are.
I can type, where is my IP, and see where it thinks
where we are. It thinks we’re in Preston. So it
knows where we are and I doubt that their server
is in Preston. So it’s getting pretty smart at
working out where you are. But you will find that
there will be people in the area, 5% to 10% of
people who are in that area searching, won’t show it accurately. It’ll think they’re
somewhere else. But it’s one of those things you are willing to lose that 15% of traffic and
impressions for the benefit you’re going to get not having to show your ad somewhere
else. I would say, yes, I’d happily take that.
Question: Pete, a couple of questions and an idea. For a retail bricks and mortar place or
even non-bricks and mortar, putting the phone number in the ad is often a good idea
because they won’t click on the ad but you’ll still get the enquiry.
Pete: Yes, absolutely. We’ve tested in our business, it didn’t work for us. But again it comes
down to testing. A lot of people do it and this is where you have a separate phone number.
So you put a separate phone number as opposed to any other number in the advert to see
if it gets called.

That’s what we did and we found it didn’t get enough calls. It reduced the click-through
rate but it didn’t increase the calls enough. The end result was fewer conversions. Yes, you
might get more calls from it. But at the end of the day, if it lowers your click-through rate,
which means fewer people see your site, which means fewer people call you. At the end of
the day, it’s not a good thing.
Question: It’s fickle, isn’t it? Two Questions. What is the best? Because you’re manually
keying in keywords. There obviously is a keyword generator. Is Google the best
or is there a better one that you would recommend?
Pete: There is a great tool from some Melbourne guys called Market Samurai. Basically, it is
a software package that does some amazing online research things. Basically it scrapes the
Google tool. It gets a starter from a Google tool but as well it has some locations. It does
some crazy algorithm math in the background. I won’t get into that but just Google or go
to marketsamurai.com. It’s a really good piece of software with a 30-day trial and that sort
of thing.
But what you can do, to give you an idea, if I
go to keywords, I’m just going to add some
keywords into this group as an example and
give you a way to do it. On the right-hand
side, because I’ve got some keywords in this
group, now I’m going back to add more
keywords to give you some ideas. On the right-hand side, Google is saying, here are some
other keywords that might be relevant and worth bidding on. So I can add in lower back
pain, lower back pain causes, and it throws them all in for you.
You can also go to the keyword tool, which is a sneaky little way and – do you know, a
competitor’s website? Brightonphysio.com.au. If you go in here, Sports and Spinal, you put
in the website enter, it’s going to go off and crawl their website and see what their
website’s about, try and work out what keywords their competitors are about. You can put
your own website in here obviously and it will pull up what keywords your website’s about.
But you hopefully know what you’re targeting. This will tell you what your competitors are
targeting. So that’s a way to grab some other keywords.
Question: My last question is, where I often fall down with AdWords is choosing the budget
per keyword. You put in 50c on one, $1.20 on the other. Clearly, you might end up with a
list of a hundred keywords each of which doesn’t need a dollar or a 50c. How do you
determine the optimal budget?

Pete: A couple of things. It is a management thing, so it’s continually looking at the
account and just regularly looking at it and seeing, ok where am I positioned. I’m position
number one and I’m paying 50c. I always regularly go into our accounts and reduce out
bids. Over time, you should be able to get cheaper and cheaper clicks. The higher your
quality score gets, the more click-through rate you get, the more traffic you get through
AdWords. You should be able to keep lowering your bid and not change your position.
Over time just keep going 5% here, 5% there, just lower your bids by 5%. Google has a tool
called the AdWords tool. Funnily enough, it’s a software package you can download and it
gives you a lot more management ability.
You can run reports like, I want to reduce every ad that’s positioned over the last 30 days in
position one. I want to reduce the cost per click by 5%. Click, it does it automatically. Free
software is the Google AdWords tool and you can do that magical automatic thing to
reduce your bids easily. You don’t have to go into every hundred individually. This comes
down to testing again. Like I said before, being number one might not be the best way to
get the best ROI for you.
So you’ve got to work out at number one I get this much traffic which converts at this,
which costs me this per lead. If I’m at position three for a couple of weeks, what is my cost
per lead? At the end of the day, it comes down to what you’re willing to pay per cost per
lead. It’s not cost per click. At the end of the day, you’ve got to do the math. It’s traffic, cost
per this, how many enquiries do I get, that’s my true cost per lead. Sometimes you might
find that doing a magazine advertisement might give you a better cost per lead. I doubt it,
but you’ve got to do the math. It comes down to that.
That’s basically how you go about setting up an AdWords campaign and going through it.
It’s a very introductory process and how to get that going. I just want to go back to some
management things as well. Are there any more questions about this from an actual setup
perspective?
Question: Just getting back to my ubiquitous competitor. She’s the only person in my
industry I know who has Google AdWords. So the scenario I can imagine is that I get
this Google AdWords campaign and then there’s the two of us up there, competing
away madly. And she notices this and ups her amount per click. And then I up mine
and she ups hers. And we’re just in this circle. Is there any way to manage that so that
you’re not out of pocket?

Pete: Decide not to bid for number one. Decide to be happy with number two. Try it.
Potentially, and this is another soapbox moment for me, she might be paying a third-party
company to do it. You have no idea. They may be bidding on broad phrase match things
and don’t really manage it properly. All these third-party companies who do it, they’ve got
a 21-year-old kid who doesn’t know anything about AdWords or running the AdWords
campaign.
We hired a kid a while ago who’s been with us for 12 months now who basically runs the
AdWords work and he came from a company where he did AdWords. He got told on the
job, we sold an AdWords client. He said, what’s that, and he was told I don’t know. Figure it
out. He had to basically create an AdWords campaign for a client just by working it out and
they’re charging a 20% management fee. Twenty percent of their AdWords spent every
month is management and he had no idea. It’s a disgrace.
Question: So how many slots are there in that top?
Pete: There are normally two or three at the top of the search results page.
Question: So if you’re second, you’re still up there.
Pete: Yes, so physio Hampton. There are three here. It’s showing one at the top and two at
the side. The issue here is, it comes down to how many people are bidding. The more
people who bid on the actual phrase, the more actual sponsored links are put above the
actual organic because it means more money for them. If there are only one or two people
bidding, what they’ll do, they’ll only show it on the right-hand side.
There’s nothing much you can do. You can’t do anything to control that unless you can
bribe the CEO of Google, and I don’t know anyone who has done that yet. There’s normally
about five or six down the side and a couple at the top. There are about 10 spots generally,
give or take. And it does change randomly, and Google just like to be mysterious and not
tell everybody. I’d be happy to be number two. Bid for number one, see if she counteracts
and work it out.
But it all comes down to what you’re willing to pay per lead. If you’re willing to pay $100
per lead, and you’re getting a 20% conversion rate on your site, so 20% of people who
come through, one in five, you pay $20 a click. Twenty dollars per click gives you five
people. One of those converts. It costs you $100 a lead.

In the US, in the mortgage market, terms like US mortgage and mortgage, $100 a click. It’s
just stupid money but obviously it’s profitable somehow because they’re making $10,000,
$20,000 commissions, whatever it works out to be. There are some spaces where you can
get clicks for 15c, 20c. Some it’s $5, $10, sometimes more.
Question: Is there anything in place to stop a competitor going and clicking on your
AdWords a hundred times to cost you $100 for the day?
Pete: Yes, Google has an algorithm based on the IP address. So they will know if it’s the
same person clicking over and over, you won’t get bid. Google is smart enough to realize
that and it’s just based on the IP address. If they pay a bunch of Filipino people to do that
on different IP addresses across the world, you can’t do it. That’s why you want to get
targeted in certain areas. Say there’s a physio based in Brunswick, they wouldn’t see your
ad. That’s where targeting is good.
If you’re going Australia-wide, if your niche is Australia-wide, you’re going to have a lot
more competitors seeing your ad. And it just domes down to Google doing the right thing
by you. They don’t want to mess up their advertisers because that’s how Google make their
money. They’re like a multibillion-dollar company and 95% of their revenue comes from
AdWords. That’s how they became a big company, is AdWords. That’s it. Their best
interests are to make sure they don’t mess up the advertisers. They’re smart enough for
that sort of thing.
How do you manage AdWords?
Let’s talk about AdWords management and
managing this on a long-term basis. There are
three things you want to manage for. These are
the elements that make up the quality score.
The first thing is the landing page quality. One
little sneaky trick is that if you’re bidding for the
term Hampton physio and you’re already ranking number one in SEO for Hampton physio,
you can’t get a better landing page quality. Google already says in their other algorithm,
which is very similar to the AdWords algorithm, that this page is the best site they can find
on the web for the term Hampton physio. Otherwise, they wouldn’t show it number one.
That’s why it is number one, because it is the best page on the web.

So if you’re sending AdWords traffic to that, Google has to give you a 10/10 because it is
the best page they have on the web naturally, so of course it is going to be the best page
they’re going to show for pay per click. You always want to try and refine that so your
AdWords match the landing page.
You don’t want to bid for back pain, physio, chiro, hurt knee, hurt ankle and send them all
to the one page, because again, it is that one page, one purpose method from an SEO
perspective, from a conversion perspective, and from an AdWords perspective.
You want to target each phrase or each ad group to a particular landing page so that it
matches from a user perspective. If Google see that you’re bidding on a keyword, the
keyword’s in the ad somewhere and the keyword’s on the page, it will reward you for that.
That’s basically what the relevance thing comes into.
So split testing your adverts, having one or two adverts running at any give time is
important because it will help your click-through rate. One thing that we do which is a little
bit of a trick from a split testing perspective, not only for AdWords but also for split testing
even with direct mail and so on, we do an AAB split test.
So if we’ve got an ad group running, we’ll run
three different ads in that group. What we’ll do is
A1 which is the first advert. We’ll literally replicate
that exactly. So if we have a winning ad that’s
winning right now and it’s getting a click-through
rate of 10% or whatever it might be, we’ll run that
ad twice, identical in the same group.
Then we’ll run a B2 which is the competitive one. So what will happen over time, A1 is
going to get 33% of impressions, the identical one will get 33% and the last, B2 will get
33%. So all you’re doing is risking 33% of your impressions on a testing ad. You know this is
working, you know what sort of percentage it is getting. If you run two of these ads you’re
running, 66% of the impressions are getting the ad that you know works. You’re only
risking 33% of those impressions on an ad that my bomb and may be dead.
If you just go an AB, it’s 50/50, so half your impressions could be an ad that kills. Does that
make sense? If you want to get precise, you can go A1, A2, A3, B1. So you’ve got 75% of
your impressions are coming from the ad that you know that works and 25% is just to the
ad that you’re testing. So it’s just a way to reduce the risk of split testing and getting the
relevance right. You want to keep an ad that’s working up there.

You want to keep working on click-through rates. So by doing different ads, it’s going to
increase your click-through rate. And you want to keep you’re click-through rate high,
because the higher the click-through rate, the lower the cost per click. So out of the three
things that make up that quality score, the click-through rate is basically the most
important. The higher the click-through rate, you’re showing Google and the users that it is
more relevant.
What would Google do?
The theory behind this and the mentality you
should have in your mind as you’re going
through AdWords is the theory of what would
Google do. Basically, the three things when
you’re trying to split test ads, put keywords in
there, whether I’m going to go for a phrase
match versus an exact match, or a broad match keyword phrase, or how targeted my
group’s going to be, you go through this three-step process. What’s Google’s objective?
Their objective, as Dave said earlier, is to serve the most relevant ads possible to ensure the
user has the best experience.
They want, when someone searches Hampton physio, that all the results that person sees
relates to that person and is going to help them. They don’t want to show a physio in Mt
Eliza or Brunswick. They want to show one in Hampton, so they want to make sure it is
relevant.
So how does this situation relate to that? If I’m going to put in some keywords for migraines,
because migraines can be caused by back pain which you could possibly fix. So if you were
going to bid on migraines and you were bidding on the term migraine and you’re showing
a physio ad, Google is going to say, well, is that really going to help the user get the best
experience? If they want results for migraine possibly, but migraine in general is not that
relevant to physio.
You want to think from Google’s perspective. Are they thinking that migraine is a term that is
relevant to physio? They’ll probably say no. It’s not someone sitting there saying, yes, it’s
relevant, no it’s not. It’s a computer and algorithms, so it’s obviously not so much human
interaction.

Would Google penalize this or would they applaud and reward it? So if you’re bidding on
the term migraine, are they going to penalize you for bidding on migraine or are they
going to say, congratulations, you’re doing the right thing and reward you? Most likely
they’ll penalize you and charge you more because the quality score is not going to be
there because of the relevance and that sort of thing. They’ll up your bids.
Your maximum cost-per-click may be 50c like we put in before. You’ll probably pay only
30c a click. That’s your maximum bid. It doesn’t mean you’ll pay that. You’ll only pay 1c
more than the person who is number two.
If number two is only bidding 30c and you’re bidding 50c, they won’t charge you 50c.
They’ll only charge you 31c. It’s all that algorithm in there. People say, what if I do this, how
is this going to work? If you go through those three questions in your mind, that will pretty
much answer what will Google do. If you were Google trying to give the user the best
experience, would they reward you and reduce your click-through rate by having the right
keyword in the advert and on the landing page? Of course they are giving the user a better
experience. They’ll reward you and drop the cost per click. If you’re doing something a bit
shady, they’ll slap you.
If you, for example, bid on hotel reservations as an example and sent traffic to Hampton
physio, they’ll cancel that keyword and say it’s not relevant. They’ll let you bid on it for a
couple of days and charge you through the nose for it, and then say, sorry, you’re not
being relevant at all, and just disable the keyword and not allow you to bid on it, or charge
you through the nose and make you pay $5 a click because they don’t think it’s relevant.
That’s pretty much the AdWords overview. I hope that’s given you a bit of an idea about
how to get traffic to your site really quickly and you don’t have to worry about and wait for
SEO. It hopefully helps you test things. If you’re testing different landing pages and things
like that, it’s a great way to fast track it. You can get traffic today for particular keywords.
You might find that targeting back pain for physio, you might spend all this time and effort
and resources and money doing SEO for back pain physio, but it doesn’t convert for
whatever reason. If you put a page up there and send AdWords traffic to it, you can see
that page convert and make you money and get you leads before you worry about doing
SEO. I always say, before everything we do, we do AdWords first to see if it converts. Traffic
is irrelevant if it doesn’t convert. I want to get conversions first so I pay to make sure the
conversion works.

Then, yes, this is profitable, profitable AdWords. I’ll keep spending it but then I’ll go and
invest the time and resources and effort in doing the SEO because I know once I rank
naturally number one, I’m going to get more traffic. Number one in SEO gets far more
traffic than number one in AdWords. People are wising up to know the difference. Natural
listings will get more traffic so don’t waste your time SEO-ing something that is not going
to convert. You can test it through AdWords, so it’s a big reason why I say, use AdWords in
your business just to test things first and foremost. If it is profitable long term, keep it
going to help the business.
Thank you guys.

Understanding Online Paid Advertising

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