Google Adwords are the sponsored listings you see at the top and to the right of search when you use Google. They can be the top zero to three listings. For some searches they will not appear at all.  The big benefit to advertisers is that the advertising is interest based, ie you are always promoting to the market that is already looking for your products. Advertisers can also choose to display their ads on Display Network sites in the growing Google Network.

The Google Search Network

Ads are targeted based on a user’s search terms across not just Google but Google powered search engines such as AOL.

The Google Display Network

You can use images, videos or animation to display on sites that match your keyword groups. You can target websites that have partnered with Google (display partners), YouTube, and specific Google properties. This includes a range of media such as Sydney Morning Herald. The Google AdWords Display Network reaches over 70% of unique Internet users around the world.

• Placement-targeted ads on the Display Network : You can choose which websites your ads are placed on directly. If you see that SMH.com.au has Google Ads, you can advertise there.
• Adding audiences to your Display Network campaign: You can also ad an audience, whether it is someone who has visited your site before, or a demographic.
• Display Network bids: You can place a bid to display an ad on any website that fits your keywords.

A keyword-targeted ad is ranked on a search result page based on the following formula;

Bid × Quality Score

What is the Quality Score?

A Quality Score is calculated every time your keyword matches a search query — that is, every time your keyword has the potential to trigger an ad. Quality Score is used in several different ways, including:

• influencing your keywords’ actual cost-per-clicks (CPCs)
• estimating the first page bids that you see in your account
• determining if a keyword is eligible to enter the ad auction that occurs when a user enters a search query
• affecting how high your ad will be ranked
• In general, the higher your Quality Score, the lower your costs and the better your ad position.

The Quality Score for Ad Rank on Google and search partners is determined by:

• The historical clickthrough rate (CTR). If you get a lot of clicks on your ad, you get a better score.
• CTR of all your ads past and present
• CTR of the website you are advertising
• The relevancy of the ad and the ad group
• The quality of your landing page
• Google also claims “Other relevance factors”, which may include things like site speed, site relvance and PageRank.

Improving your ranking

The number one method of increasing your ad ranking without spending any more money is to increase the relevancy of your ad and adgroup. The best way to do this is to group your ads by keyword grouping and have relevant ads. Make sure your ads are pointing at pages that are as close to identical in copy as possible.

The second main method of increasing your ad ranking without increasing spend, is making the ad more enticing. This will increase the click through, and increase your ranking.

What are the criticisms of Google Adwords?

• Anyone can come in and start bidding higher than you. It doesn’t matter how long you have been using Adwords for, anyone can jump in ahead of you if they bid higher.
• The Ad Rank Method is too opaque. Whilst there is some indication of how the AdRank and Quality Scores work, there is no clear indication of what you and your competitors are doing. If Google want to increase the price of adwords, they can.
• They can remove your listing at any time.
• Anyone can click on your ad, with or without intent to purchase. This could be your competitors, someone looking for a job anyone.