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If you do it right, Google AdWords can be a great way to get a large number of targeted visitors to your website quickly and at minimal cost. But do it wrong and you could end up spending a lot of money for a very low return.

What is the Google AdWords system?
Google AdWords is the system used to control the sponsored links that appear in classified ad style boxes to the right of the main search results in Google. For some Google searches, a couple of AdWords ads will also appear above the main search results.

Advertisers pay Google for every click their AdWords ad receives. There is no separate fee for the ad being displayed.

How does it work?
As an advertiser, the first thing you need to do is create an AdWords account with Google. Then you create an advert for your site. The advert consists of a title, two lines of text, and a fourth line showing the address of your website.

You then choose relevant keywords and keyphrases to bid on. For example, if you ran an online perfume store you might bid on "buy perfume", "perfume shop", "cheap perfume", etc. You could also have more specific keywords, such as "buy D&G perfume", "buy Calvin Klein perfume", etc.

Finally, you tell Google your maximum bid price for your keywords. This is the maximum amount you will pay each time someone clicks on your ad. The more you are prepared to bid, the better the position you will get on the search results page.

How does Google decide which ads to show?
There are two basic factors that determine which AdWords links are shown for any particular search. One is the amount that the advertiser has said they are prepared to pay per click. Someone who has bid 50p for a particular search term is likely to appear higher up the list than someone who has only bid 10p.

The other factor in determining ad positioning is how relevant the advert text is to the Google search that has been performed. For example, if someone searches for "Buy D&G Perfume", then an advert whose title text reads "Perfume Shop" will probably be considered less relevant than one that reads "D&G Perfume".

Google uses a combination of bid price and relevancy to determine whereabouts on the page your ad will be displayed.

Making AdWords work for you
When I set up my first AdWords campaign a few years ago, I didn't fully understand the subtleties of how Google's system worked. As a result I ended up paying about £5 per click for highly competitive search terms and losing a fair bit of cash in the process.

Then I signed up for a free email course on Google AdWords written by Perry Marshall, author of The Definitive Guide to Google AdWords, and discovered how to do it properly.

Some of the key things I learnt from Perry were:

1. Don't have one ad with hundreds and hundreds of general keywords. Instead, have lots of ads and make each one really tightly focused on the handful of keywords associated with it. In this way, each of your many ads becomes much more relevant to its search terms. As discussed above, relevancy is one of the factors Google uses to determine the ranking of your AdWords ad.

2. Avoid bidding big money for broad and highly competitive keywords. Instead, look for search terms that are less common (but still common enough to generate plenty of searches) and which will cost you a fraction of the price. There are plenty of online tools to help you do this, such as The AdTool.

3. Learn how to interpret the comprehensive reports and statistics that Google AdWords can give you. By monitoring these on a regular basis you can see what bits of your campaign are working and what bits aren't. Ditch the bits that aren't working and work on further refining those bits which are.

4. Get to grips with the way AdWords uses broad and exact keyword matching. Understanding this can make a big difference to the costs of your pay per click campaign.

5. Think carefully about how your ad text reads. Always run two different ads per group. That way you can try out different wordings in each ad and compare them to see which gives the best clickthrough rate.

Perry Marshall explores all these ideas (and more) in great detail in his book The Definitive Guide To Google AdWords.

For people who don't want to buy the entire book, he also runs a free five day email course, where you can pick up plenty of tips to get you started on a successful AdWords campaign.

David Miles is the webmaster of the Advice 4 Businesses website - at http://www.advice4businesses.co.uk - where you can find a wealth of free information on starting or running a business.

This article is copyrighted. You are welcome to reproduce it free of charge on your website so long as this author bio text and all links are left unaltered.

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