How to Set Up a Basic Adwords Campaign

Alright, you have set up your very own Google Adwords account, and now it is time to make your first Adwords campaign. In our previous post, we quickly covered the basics but in this post, we will get into some more specifics. Here are the basics of how to set up an Adwords campaign.

Before you start, it is very important that you have a product or service that people are looking for (on Google). Use Google’s Keyword Tool or your keyword research tool of choice and check how many searches for your product or service there are. You want to look at the number of monthly searches for your keyword list based on what you are offering. Make sure the location is set to where you are targeting!

If no one is searching for your keywords, then maybe Adwords is not the best place for you to advertise. But, if people are, bust out your calculator because it is time for some math.

When bidding on keywords, you need to set your max CPC (cost per click). This is the price you pay every time someone clicks an ad that was triggered by your chosen keyword. The things to consider here are your websites conversion rate, the value of a customer, your advertising budget, and your desired profit margin. If you don’t know these numbers, then it is time to guess and also start tracking this information! Here is the formula:

Max CPC = (profit per customer) x (1 – profit margin) x (website conversion rate)

If 1 out of every 100 visitors to your website buys your product, you have a website conversion rate of 1%. Profit per customer is how much you make on each customer. Profit margin is how much you want to take home from your marketing efforts. If you spend 10$ on every customer, and every customer makes you 10$, you are not making money off of marketing because you spend as much as the customer did to make that sale. In effect, this means you did not make any money.

For example, let’s say our profit per customer is $200, we have a conversion rate of 2%, and we want a profit margin of 20%, the formula will look like this:

200 x (1-0.20) x 0.02 = $3.20 Maximum CPC

So we can see that if we want to make 20% off of our Adwords marketing, we can not have a higher CPC than $3.20 on that keyword. Now it is time to consider your budget, because not every person who clicks your ad will convert. If your daily budget is 10$, that means you will get a minimum of 3 clicks a day. Adwords can automatically set your bid, so you will not always bid your maximum CPC. However, if we look at the worst case scenario, where you get 3 clicks per day (3.2 * 3 = 9.6$), and your website conversion rate is 2% (1 out of 50), that means at worst you will get one customer every 17 days.

The reality will probably be very different, but it is good to get a overall picture of how your ad campaign might work. Because the bids will often be less than your maximum CPC, it is crucial to keep an eye on your tracking and data, so you can optimize the campaign in the future when it has collected enough data to show trends.

If your website sells a lot of different goods, you might want to take the average of all customer spending, or the most common (mode) if you want to be more conservative with your numbers, and use that value as the profit per customer.   

Once you have all this set up, you might find that your maximum CPC is too low for that keyword (Google will tell you if that is the case.) This means that the other companies bidding on that keyword have set their maximum CPC higher than yours. For you, this means your ads will be showing much less. If your maximum CPC is too low, you will need to reconsider the profit margin you set for your advertising budget, and if you can’t go lower, if might be a good idea not to focus on that keyword (for now).

You can also use the tools at Keywordspy or Spyfu to check your competitors’ historical adwords data and get an idea of how much they are bidding on these keywords.

The next step in setting up your campaign is the structure of your account. Campaigns are generally a group of ad groups that fit under the same target or purpose. If you are not running any special promotions or if you are not advertising for a large number of products, having one campaign for the search network and one campaign for the display network (if desired) is adequate.

Within your campaign, it is time to segment your keywords. The reason we do this is because we want our keyword groups, the ads, and the landing pages to be congruent with each other. Look at your keyword list and put them into groups under a common theme. Do not group your ad groups under different types of products, that should be done in separate campaigns. Rather group your keywords into similar words and phrases that target the same overall search term. Ad groups share ads, so you want them to make sense for your ad copy. 

For example, let’s say your company sells tires of different kinds. Your Adwords account structure should look something like this:

We can also separate the adgroups into themes, so if you are selling only one product or service, you should divide your keywords into adgroups that share a certain theme, or feature, of your offering.

Finally it is time to write the ads. When it comes to ads, it can be tricky since Google gives you such limited space. A key thing to remember here is to broadcast your USP (unique selling point). What makes your product different from your competitor’s? It also helps if you have a special offer, like a discount, free trial, or something else alluring that would bring people to click on your ad and see your landing page. You do not have a lot of space for fluff, so it is best to be direct and to the point. Flaunt your features, USP, and offer. If you are not providing free software, you might not even want to, or need to, state your company name. 

Make sure you include the keywords from the adgroup in your ad. You don’t want the ad to talk about just “tires” if it is in the “Winter Tire” ad group. Remember, be as congruent as possible. Make sure you have the ad copy connected to your landing page copy, and that the display URL does not have to be the same as the destination URL, but it has to be the same domain.

Ok, you now have set up your first Adwords campaign. But it is just the first step. Subscribe to our newsletter below to continue getting tips and instructions of how to optimize your campaign. If you feel you got it from here, thats fine too, but you’ll be back.