Did you know that Google gets over 1 billion searches per day?

Just writing out the number is mind boggling:

1,000,000,000

That’s a lot of zeros.

And that’s PER DAY on the Google search engine.

Those searches are actually split through SEO and the paid listings run through AdWords.

If you want a piece of that 1,000,000,000 pie, then you need to get your website ranking high through natural search or AdWords (or both).

I love it when my webpages rank high naturally. It’s free traffic and I’ll take all of that I can get.

But AdWords can work well also, especially if you spend the time to properly optimize your ad campaigns. Even though you have to pay for AdWords listings, as long as you can make back more than what you’ve spent, it’s well worth it.

A really nice advantage of AdWords is it’s faster than SEO.

Another one is that as long as you have conversion tracking set up through your AdWords account, you’ll be able to see exactly how much you spent and what you earned. You can track all this right down to the keyword.

While you can create a campaign within the AdWords interface and have your ad running in just minutes, the reality is that before you’re able to maximize your profits with AdWords you’ve got to learn how to use it. Even the top PPC experts will tell you they’ve got to run their campaigns for a while to collect data. From there they analyze the results and fine-tune their settings for higher profits.

Like the experts, you need to go through this fine-tuning process to maximize your profits from AdWords. There’s really no way around this step.

If you’ve ever tried AdWords and didn’t get the results you were hoping for, it might be because you didn’t refine your campaigns.

Conversion Tracking is Vital

Many businesses set up an AdWords campaign only to turn it off for good because it wasn’t immediately profitable.

Worse yet, they let their campaigns run even though it’s not bringing in a profit. No one would do this intentionally, but if you aren’t tracking sales from your ads you really have no idea if you’re spending more than you’re earning.

You cannot spend money on AdWords and hope your profits go up by that amount each month. You have to actually track the ads and see if they’re directly resulting in sales. Otherwise, an increase in your profits may be due to something else and your ad spend could be doing nothing for you.

AdWords makes it easy to set up conversion tracking so you can see exactly which parts of your campaign are turning into sales for your business and which parts are not. Deleting or making adjustments to the parts that aren’t will dramatically increase the profits from your ads.

Every day that passes is a day your campaign could have been profitable. You just need to learn how to fine-tune your campaigns and then spend the time doing it.

The main takeaway is that although you can get an ad up and running in just minutes, to see great results you’ve got to be willing to give it some time. That time will help you make your ad campaign more profitable because you’ll be able to make the right changes based on the data you collect and analyze.

And the nice thing is you don’t have to be a rocket scientist to analyze AdWords.

I’m sure you know if you spend $50 and make $125 that you’ve made a profit of $75. If you can understand that logic—even if you need a calculator to do the math—then you can optimize your AdWords campaigns.

Benefits Breakdown

Here are a few benefits of using AdWords:

1. It’s scalable. Once your ad campaign is set up to be profitable, the only limit is the amount of traffic available in your market. You can increase the number of sales you’re getting through AdWords by finding more keywords that convert for you.
2. You can use AdWords with any budget. It works for businesses with very small budgets (as little as $100 a month) up to those spending millions in advertising.
3. AdWords will help you gain extra traffic and sales. It’s best to use it (or any other method for generating traffic) with additional traffic sources like SEO, Facebook ads, or ads running on Yahoo and Bing. It’s always smart to diversify where your prospects and your customers are coming from.
4. It’s a direct response marketer’s dream come true. If you’re interested in making a sale or getting visitors to take an action on your site then you’ll love AdWords. The platform allows you to put tracking code on your thank-you pages (the pages a visitor is taken to right after they buy or sign up) and your AdWords dashboard will track all the conversions.
5. It has full tracking capabilities. You’ll be able to track all the way down to the keyword level. Depending on which keywords are converting for you and which are not, you can just adjust your bids. The goal is to optimize your whole campaign around conversions. That way you know exactly which keywords and ads are working and which are not. This gives you the information you need to adjust your campaigns for maximum profits.
6. AdWords helps you collect conversion information. You can use AdWords to collect data about which keywords convert best for you. You can use this knowledge to shortcut your trial and error with other advertising platforms. That means you now know exactly what keywords you should try to rank high for in the organic search results.  Instead of optimizing your web pages for a variety of keywords that may or may not increase your profits or sign ups, you can focus only on those that you know result in a benefit. This saves you time since you won’t have to chase after keywords that don’t perform.
   You do have to pay for your AdWords ads, but again, if you can get your campaigns to be profitable, then you’re coming out ahead.

How AdWords Works

AdWords is based on an ad auction system where businesses bid on keywords.

They’ve got two networks. The Search Network which runs the ads on Google.com and the Display Network. I’ll just cover the Search Network here as the two networks are very different.

When a searcher types a keyword into the Google search engine, AdWords determines which ads to show and how to position them.

The system selects the ads from a pool of those that are bidding on that particular keyword.  In general, the higher the bid, the higher the position of the ad.

As an advertiser, the position of your ad is important. According to eye tracking studies, the top left of a webpage is the spot that gets noticed the most. If your ad shows up in the top paid spot of a Google search results page, your ad is more likely to be seen than any of the other paid listings on the page.

AdWords assigns a quality score to each keyword you bid on to help Google reward relevant ads.

If you sell eye glass cases and you bid on the keyword ‘cases for eye glasses’ your ad will be viewed as relevant (by visitors and by the AdWords system) for that search term. You’ll be rewarded for showing such a relevant ad by getting a higher position for less cost. However, if you bid on ‘wine glasses’ then your eye glass cases ad will not be viewed as relevant. AdWords will adjust your quality score to make it more expensive for you to bid on that term.

AdWords uses your click-through-rate (CTR) to help figure out your quality score. If out of a 100 impressions, or views, two people click on your ad then your CTR is two percent. That’s a decent CTR and indicates to AdWords that your ad is relevant or you wouldn’t have as many people clicking on it.

Now let’s say out of 100 impressions no one clicks on your ad. Maybe it takes 1,000 impressions before anyone clicks on it. This might hold true in the wine glasses example. If you bid on the keyword ‘wine glasses’ and your ad mentions ‘eye glass cases’ it might really take that many impressions (or more) before you get a click. That turns out to be a CTR of 0.1 percent, which is not so good.

In that case, AdWords gives you a low quality score for that keyword. And you’ll have to pay more to get a high position. It’s their way of discouraging you from bidding on that keyword at all.

The amount of the bid along with the relevance of the ad, keywords, and landing page are factored together to determine where your ad will be positioned on the results page.

What Profit Margins Work Best with AdWords?

This can vary across the board. Obviously, the higher the profit margin on your product or service the better. But in some markets you simply can’t justify an expensive price tag.

I was spending about $1500 a month and earning about $9000 a month at one point on products that were only in the $20 to $30 range. So that was a profit of about $7000 a month. I had to sell hundreds of products to make that kind of money, but the demand was high enough that selling so many products was possible. In that market, it was possible to earn a decent amount even with a low priced product.

But not every market is going to be like that.  For one thing you have to consider your competition. If you enter a market with a very inexpensive product while everyone else charges much higher prices, you’ll have a difficult time making AdWords work for you. That’s because your competition will drive up the bids for your keywords. In this case in order for your ads to show on the first page of the search results, you may need to spend more than what will allow you to make a profit.

But there are ways to work around that situation.

One way is to bid on long-tail keywords, which are very specific and usually consist of several words, sometimes three, four, even five word phrases, or more. These keywords are often cheaper and have less search volume, meaning not as many people search for them. For that reason they are often overlooked by the competition, especially those with big budgets because it takes more time to find and organize long-tail keywords. But if you take the time to target these types of keywords, you can greatly increase your chances of profiting with AdWords.

Collecting Email Addresses or Going for the Sale

Figuring out if your primary goal should be to make a sale or to collect email addresses really depends on your business model.

Every business is unique. Looking at what your competitors are doing will help serve as a guide. Keep in mind that not all AdWords advertisers actually track their conversions or know what they are doing. However, if most of them are running ads straight to a sales page, then you can presume at least some of them are actually tracking and coming out ahead with this strategy. So you may be able to earn by sending people to a sales page too.

It’s at least a good starting point. If you’re already set up to make sales and don’t have a way to collect emails right now then it’s best to start by using your sales page (or a modified version of it) as your landing page. It’ll help you get up and running faster.

And you can always test out the impact collecting email addresses has on your conversions later on.

If you’re going to try to collect email addresses, make sure what you’re offering in exchange for a visitor’s email address is leading them toward purchasing whatever it is you offer.  For example, a free trial is a great way to target both collecting emails for further follow up and instigating sales at the same time. You can offer a free trial or free download with or without a credit card.

A free trial is great because it exposes people to your product or service.  If you require an email address to sign up, you can follow up with them later on.

It’s easier to convert people to a paid version of your product or service once they sign up for a free trial. You know they’re interested in what you offer.

To really drive this point home let’s use a software company as an example. This fictitious company offers online project management software. If they offer a free ebook on project management they may get a lot of people who sign up for it, but will they convert?

Probably not nearly as well as if they offered a free trial for the project management software itself. People who sign up for the free trial get to see the software in action. And you know they’re interested in the exact product offered or they wouldn’t have signed up.

This won’t work for every business.  If you run an ecommerce store you probably want to lead people straight to the order pages of your products. In that case you’d set up conversion tracking and your goals would be purchases.

If you’ve got a training product or ebook then you might want to start by sending people right to the sales page and track purchases. Later on you can try changing a few of your landing pages to a free trial email sign up offer, which could be a free chapter or free video, along with email follow-up and see if that improves your conversion rate.

If you don’t have a product or service and instead earn money through affiliate marketing you can send people to your sign up page offering a free newsletter or free download. Then follow up with them and tell them about the products or services you make a commission on.

Ultimately what you want are sales so it can make the most sense to start out by having sales as your primary goal. Compared to making sales, there are many more moving parts to an email marketing campaign. If you’re just starting out, this may only complicate things for you and slow you down.

Either way, once you’ve determined your goal, set up conversion tracking. You may want to also enable Google Analytics or a similar tracking package. Analytics allows you to track more goals and gives you even more insights into the people visiting your site.

AdWords Analogy

I know a lot of people are scared to buy traffic. But here’s an AdWords analogy for you that might help you see how this can be worth your time …

Let’s say you figure out a system for winning with lottery tickets. Not a huge win, but you can go to the same store at the same time and spend $100 there every day.  As long as you select a certain combination of lottery numbers, you generate somewhere around $200 for your $100 lottery ticket investment.

It may have taken you several weeks to get that system down and you probably lost a little money while working toward figuring it out. But once you figured it out, it seemed to keep working for you.

So each day you grab all those tickets and take them home. Over a month you spend $3000 ($100 x 30 days) and your winnings are $6000, which puts you at a $3000 profit.

You’re spending $3,000 a month. But you’re earning more than enough to cover your costs and make a nice profit. Do you let the fact that you’re spending money turn you off from this little money making endeavor?

I hope not.

You’ll want to check on it daily and make sure your system is still working. And that’s how it is with AdWords. You figure out the system; that combination of keywords, ads, landing pages, and budget settings. Once you put it together you can keep earning from it.

You will need to keep a watchful eye on the system. You may need to tweak things.  But as it is you’re earning more than enough to cover your spending and make a worthwhile profit.

That’s how AdWords works.

And if you’re able to get to a profit, the skills you learn on the road to getting there can transfer over to a lot of other traffic generation methods as well. That only helps your business gain traffic from as many different sources as possible.

Have you used AdWords to bring in extra traffic with any luck? If you’re willing to share your story tell us about it in the comments box below.