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Monday, May 07, 2007

Top 5 Ways Ignorant Advertisers Lose Money to Google via AdWords

I honestly think Google is profiting from the ignorance of its advertisers, who supply approximately 99% of Google's revenues. By using Google AdWords without understanding how the underlying AdWords system works, many advertisers are transferring wealth to Google at a phenomenal rate. These are the top 5 ways advertisers lose money when using AdWords:

1. Not understanding that contextual advertising is NOT search engine advertising
When most companies think about Google AdWords, they think they are buying keyword ads on Google. That's not the case. By default, when creating a keyword-targeted advertising campaign, the campaign is set to deliver ads on Google, the search network and the content network. Keyword ads displayed on the content network are a form of contextual advertising and not search engine advertising. While it is convenient to create a single keyword ad via the AdWords system which can be used for both search advertising and contextual advertising, tracking results is more practical when separating these very different forms of advertising. For advertisers who don't intend to purchase contextual ads, I recommend opting out of the content network by editing the "Networks" settings (at the campaign level) to look like this:

adwords networks settings

2. Not recognizing that broad match is actually expanded broad match
Advertisers who are not savvy enough to use phrase matches (keywords surrounded by double quotation marks) and/or exact matches (keywords surrounded by [] brackets), simply enter keywords into their ad groups. By default, these keywords are broad matches which are now actually expanded broad matches. Anyone using broad matches has no idea what they're actually buying. I've seen firsthand the dangers of expanded broad matching. To be fair to Google, when I explained the expanded matching flaw in that particular case and the temporary solution I devised, they did credit my client for the untargeted traffic.

To deal with broad matching flaws, I've adopted an exact match bidding strategy for AdWords. The basic idea is to bid on both the exact and broad matches for a given keyword and to bid more for the exact match. Why? Because you know precisely what you're paying for. This strategy can be extended to phrase matches, as well. Example of what an ad group keyword list might look like:

foo bar ** 0.07
"foo bar" ** 0.31
[foo bar] ** 0.55

Note the text in parentheses from this AdWords help page:
Also, expanded matching only applies to broad-matched keywords. The system won't create expanded matches for any of your phrase- or exact-matched keywords. Therefore, if you don't want expanded matching on any of your keywords, you can simply turn them into phrase or exact matches. (Keep in mind that narrowing your advertising focus with phrase or exact matching may decrease the number of ad impressions you receive. However, because your ads will be more relevant to target users, your clickthrough rate may also improve.)
Ah, but isn't that what an advertiser wants? Ads that are more relevant. A higher CTR.

3. Not implementing negative keywords
Keeping in mind that impressions are the denominator in the CTR calculation, it's essential to utilize negative keywords which will reduce unwanted impressions and thereby improve CTR. A list of negative keywords can be created beforehand from keyword research tools. It's also crucial to track the actual keyword searches from search engine traffic on an ongoing basis and to feed those results back into Google ads in the form of negative keywords.

4. Not realizing that the search network includes more than search engine advertising
I don't think most advertisers recognize that the search network is not pure search engine advertising. For example, Google runs a program called AdSense for Domains which "delivers targeted, conceptually related advertisements to parked domain pages by using Google’s semantic technology to analyze and understand the meaning of the domain names." Hmm, when I see the term "AdSense" in the name of a Google product and phrases like "conceptually related advertisements" I think contextual advertising (on the AdWords content network). That's not necessarily the case as evidenced by search network garbage traffic I've seen and this Google help text:
Depending on the design of the site, a parked domain site will be classified as either a search site or a content site. That means your ads may show on parked domain sites if your campaign is opted in to the search or content networks.
I'm not saying all parked domain traffic is garbage. I'm simply saying all of the parked domain traffic on the AdWords search network that I've seen is garbage. Frankly, I don't believe the domain parking traffic conversion myth. Additionally, if an advertiser is opting into (or not opting out of) the search network, their expectation is that they're purchasing search engine advertising. In many cases, they're not. Google could solve this flaw in their AdWords system by creating a "domain network" as a distribution option in addition to the existing search and content networks. If the traffic converts well, advertisers will choose this network. More importantly, advertisers will be able to track search engine advertising more accurately.

5. Not hiring the right search engine marketing firm
I often find myself in the role of AdWords Tweaker, going in and fixing accounts that a bigger firm has implemented poorly. It's amazing how many AdWords accounts combine search engine advertising with contextual advertising, only use broad matches and don't employ negative keywords. (No, I'm not recommending my search engine marketing firm.) Many small advertisers don't even need a search engine marketing firm to handle their AdWords spend. If they have someone on staff who is Internet savvy and can take the time to study the AdWords Learning Center, from what I've seen, they might be better off DIY. Whether AdWords management is done in-house or outsourced, though, someone at the company should understand the AdWords system well enough to make sure the advertising is meeting the company's goals. Comparing this to another industry, I trust my CPA, but I want to understand the tax returns before I sign them. ;-)

NOTE: This is my entry in the Problogger "Top 5" Group Writing Project.

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12 Comments:

Anonymous Rafi said...

This is a good article I understand the marketing strategy is more useful to people If anyone know about this type of information they get lot of uses so farther information visit the site marketing strategy

Tue May 08, 04:15:00 AM EDT  
Anonymous j. noronha said...

Just bookmarked your post, I'm going to start a campaign on adwords and it'll be very useful

Wed May 09, 04:00:00 AM EDT  
Anonymous Marc Kantoori said...

Finally someone talking in a 'make-sense' way about Adwords. Great article. Too bad it did not land in my Top5 top5 entries for the Problogger contest ;)

Wed May 09, 04:32:00 AM EDT  
Blogger janettetoral.com said...

Very helpful post and will definitely review them as I prepare for my next AdWords campaign.

Wed May 09, 07:47:00 AM EDT  
Blogger crazy4bass said...

Great post Richard, lots of helpful thoughts on Adwords. Subscribed to your feed.

Wed May 09, 09:55:00 AM EDT  
Blogger Richard said...

Thanks for all of the positive comments. I'm an "open source" kind of person and believe in sharing information. AdWords is complicated and the system keeps changing. Not all of those changes actually benefit advertisers. I don't think Google's intentionally taking advantage of advertisers' lack of knowledge about the platform. They simply cannot see things from the point of view of the end user, the advertiser.

Google does provide some very useful resources: Learning Center lessons, Inside AdWords blog, AdWords Help group. I answer questions there as Rich@Apogee.

Wed May 09, 10:06:00 AM EDT  
Blogger Brad Shorr said...

Excellent post--the detail is very helpful.

Wed May 09, 10:09:00 AM EDT  
Blogger Richard said...

Marc Kantoori - Your URL didn't post properly. I'll post a link to your top 5 for the group writing project. No worries that my post isn't on your list. ;-)

Wed May 09, 10:09:00 AM EDT  
Blogger christine said...

Hi Richard,
Good post. My list would probably have been the same. I'm already a subscriber to your blog but came through from problogger this time.

Thu May 10, 01:50:00 AM EDT  
Blogger Richard said...

Thanks, Brad. I like your post about business blogs.

Christine - Glad you found the post useful and are a subscriber. ;-)

Thu May 10, 01:38:00 PM EDT  
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Fri Jun 01, 12:18:00 PM EDT  
Anonymous Anonymous said...

very informative. This would mean however almost no traffic if going exact match or phrase match since my broad match estimates are already 2 digits clicks per day. This is the only big drawback. So I guess you need to up your campaigns, keywords to get substantial click volume. It seems that if you really didn't want to loose money one should eliminate broad match all together don't you think?

Thu Mar 27, 12:16:00 AM EDT  

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