Google AdWords is Google's main advertising product and main source of revenue. Google's total advertising revenues were USD$28 billion in 2010. AdWords offers pay-per-click (PPC) advertising, cost-per-thousand (CPM) advertising, and site-targeted advertising for text, banner, and rich-media ads. The AdWords program includes local, national, and international distribution. Google's text advertisements are short, consisting of one headline consisting of 25 characters and two additional text lines consisting of 35 characters each. Image ads can be one of several different Interactive Advertising Bureau (IAB) standard sizes.
Sales and Support for Google's AdWords division is based in Mountain View, California, with major secondary offices in Ann Arbor, Michigan, the company's third-largest US facility behind its Mountain View, California, headquarters and New York City office. Engineering for AdWords is based in Mountain View, California.
Pay-Per-Click advertisements (PPC)
Advertisers select the words that should trigger their ads and the maximum amount they will pay per click. When a user searches on Google, ads (also known as creatives by Google) for relevant words are shown as "sponsored links" on the right side of the screen, and sometimes above the main search results. Click-through rates (CTR) for the ads are about 8% for the first ad, 5% for the second one, and 2.5% for the third one. Search results can return from 0 to 12 ads.
The ordering of the paid-for listings depends on other advertisers' bids (PPC) and the "quality score" of all ads shown for a given search. The quality score is calculated by historical click-through rates, relevance of an advertiser's ad text and keywords, an advertiser's account history, and other relevance factors as determined by Google. The quality score is also used by Google to set the minimum bids for an advertiser's keywords. The minimum bid takes into consideration the quality of the landing page as well, which includes the relevancy and originality of content, navigability, and transparency into the nature of the business. Though Google has released a list of full guidelines for sites, the precise formula and meaning of relevance and its definition is in part secret to Google and the parameters used can change dynamically.
The auction mechanism that determines the order of the ads is a generalized second-price auction. This is claimed to have the property that the participants do not necessarily fare best when they truthfully reveal any private information asked for by the auction mechanism (in this case, the value of the keyword to them, in the form of a "truthful" bid).
AdWords features
IP address exclusion
In addition to controlling ad placements through methods such as location and language targeting, ad targeting can be refined with Internet Protocol (IP) address exclusion. This feature enables advertisers to specify IP address ranges where they don't want their ads to appear.
Up to 20 IP addresses, or ranges of addresses, can be excluded per campaign. All ads in the campaign are prevented from showing for users with the IP addresses specified.
Location-based exclusion is also offered as a method of narrowing targeted users.
Frequency capping
Frequency capping limits the number of times ads appear to the same unique user on the Google Content Network. It doesn't apply to the Search Network. If frequency capping is enabled for a campaign, a limit must be specified as to the number of impressions allowed per day, week, or month for an individual user. The cap can be configured to apply to each ad, ad group, or campaign.
Placement targeted advertisements (formerly Site-Targeted Advertisements)
In 2003 Google introduced site-targeted advertising. Using the AdWords control panel, advertisers can enter keywords, domain names, topics, and demographic targeting preferences, and Google places the ads on what they see as relevant sites within their content network. If domain names are targeted, Google also provides a list of related sites for placement. Advertisers may bid on a cost-per-impression (CPM) or cost-per-click (CPC) basis for site targeting.
With placement targeting, it is possible for an ad to take up the entire ad block rather than have the ad block split into 2 to 4 ads, resulting in higher visibility for the advertiser.
The minimum cost-per-thousand impressions bid for placement targeted campaigns is 25 cents. There is no minimum CPC bid, however.
AdWords distribution
All AdWords ads are eligible to be shown on www.google.com. Advertisers also have the option of enabling their ads to show on Google's partner networks. The "search network" includes AOL search, Ask.com, and Netscape. Like www.google.com, these search engines show AdWords ads in response to user searches, but do not affect quality score.
The "Google Display Network" (formerly referred to as the "content network") shows AdWords ads on sites that are not search engines. These content network sites are those that useAdSense and DoubleClick, the other side of the Google advertising model. AdSense is used by website owners who wish to make money by displaying ads on their websites. Click through rates on the display network are typically much lower than those on the search network and are therefore ignored when calculating an advertiser's quality score.
Google automatically determines the subject of pages and displays relevant ads based on the advertisers' keyword lists. AdSense publishers may select channels to help direct Google's ad placements on their pages, to increase performance of their ad units. There are many different types of ads that can run across Google's network, including text ads, image ads (banner ads), mobile text ads, and in-page video ads.
Google AdWords' main competitors are Yahoo! Search Marketing and Microsoft adCenter.
In 2010, Yahoo formed a partnership with Microsoft, giving Microsoft the control over powering the Yahoo search marketing ads. Both accounts are now run through Microsoft AdCenter. When ads are displayed on Yahoo now, it is powered by Microsoft AdCenter and is run through the Microsoft software interface.
AdWords account management
To help clients with the complexity of building and managing AdWords accounts search engine marketing agencies and consultants offer account management as a business service. This has allowed organizations without advertising expertise to reach a global, online audience. Google has started the Google Advertising Professionals program to certify agencies and consultants who have met specific qualifications and passed an exam. Google also provides account management software, called AdWords Editor.
Another useful feature is the My Client Center available to Google Professionals (even if not yet passed the exam or budget parameters) whereby a Google professional has access and a dashboard summary of several accounts and can move between those accounts without logging in to each account.
The Google Adwords Keyword Tool provides a list of related keywords for a specific website or keyword.
Google Click-to-Call
Google Click-to-Call was a service provided by Google which allows users to call advertisers from Google search results pages. Users enter their phone number, Google calls them back and connects to the advertiser. Calling charges are paid by Google. It was discontinued in 2007. For some time similar click-to-call functionality was available for results inGoogle Maps. In the Froyo release of Google's Android operating system, in certain advertisements, there is a very similar functionality, where a user can easily call an advertiser.
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