Assessing the Cost of Advertising

Many keywords are in hot demand by a number of companies. AdWords has a system for managing that demand too. You, the advertiser, must bid on every keyword combination you want to use. Typical keyword rates range from a few pennies to several dollars. It's easy enough to win the bidding process some of the time and thereby get all the ad exposure you want--as long as you're willing to pay the current market price.

Google won't necessarily charge you the top price when someone clicks on your ad. Instead, it will charge a penny more than your nearest competitor. For example, if you bid 48 cents for the keyword combination music classes and your nearest competitor offers 40 cents, your ad will be shown more often, and you'll be charged 41 cents when someone clicks on it. But if other advertisers are offering significantly more for the same keywords (say, 70 cents), Google won't ever show your ad (or charge you a penny).

Fortunately, Google allows you to set a monthly spending limit when you set up your AdWords campaign--that means Google will stop showing your ad when you've used up your allotted budget.

Before you sign up for AdWords, it's a good idea to familiarize yourself with the current market rates for the keywords in which you're interested. If you bid close to (or just above) the current rate, you're likely to get some decent ad exposure. Google provides a tool for estimating keyword prices.

You can use this tool even if you haven't yet signed up for AdWords. First, in the Enter one keyword or phrase per line box, put in a short keyword phrase--your best guess at the keyword combination that would be your most effective buy. Google will use this (and its huge catalog of recent searches) to suggest some good keyword possibilities for your ads. (If you want to look for frequently used variations--for example, pet chow along with pet food--make sure the Use synonyms check box is checked.)

Then click the Get Keyword Ideas button. Underneath, a list of commonly used keyword combinations will appear that relate to your phrase. For example, if you searched for baby music classes, you might also see music classes for baby and baby music classes nyc. Next to each combination, Google will add a series of shaded bars that indicate how many advertisers are competing over that term and how common the search is.

To get some pricing information, in the Choose columns to display field, select Show Estimated Avg. CPC. (This is the average cost per click you'll pay when you subscribe to AdWords.) Then, in the box underneath, enter the maximum price you're thinking of bidding (say, $1), and click Recalculate.

This keyword tool has a few other capabilities--for example, it can scan your Web site and suggest potentially related keywords that you might want to use. But remember, choosing the keywords that most effectively reach your target audience is part art and part science.

Once you understand the bidding system, you'll be able to pick the right keywords and bid a reasonable price. But you also need to think about controlling your costs. Google fields several hundred million Web searches per day, so there's a potential to bring in a lot of possible customers--and to spend a lot of advertising dollars.

Google AdWords has many options, and entire books have been written on the subject. However, it doesn't need to cost much to experiment. Just try a few keyword combinations and limit your monthly budget to a few dollars. For best results, make sure that both the keywords and your ad accurately reflect the product your Web site offers. It's far better to lure fewer people with a more specific ad than pay to have them click through to your site, only to have them leave seconds later when they realize it's not what they want. And although AdWords is a great traffic booster, it shouldn't replace other techniques for generating visits, such as link exchanges, community building, and search engine optimization.