AdWords is all about relevance and ensuring that Google users see quality ads, which directly relate to what the people are searching for. The system was designed to reward advertisers who create quality campaigns and is monitored through key metrics called Quality Score and clickthrough-rate (CTR). Focusing on relevance will help you pay less and achieve better profits from your ad efforts.
Keep in mind the following basic terms and concepts discussed in this book:
Keywords: These are words or phrases describing your products or services that you can choose to help you to determine when and where your ad can appear
Cost-per-click (CPC): This is the cost for each click on your ad
Pay-per-click (PPC): This is an online advertising model in which advertisers pay for clicks accrued
As you create your campaigns and plan AdWords strategies, focus on relevance by:
Achieving a high CTR: The general rule of thumb is to aim for a CTR of 1 percent and above, though CTR varies widely by industry and the type of keywords.
Keeping healthy Quality Scores: Once you create your AdWords account and start running campaigns, you'll be able to see your Quality Scores at the keyword level. Choose keywords that are relevant and have good Quality Scores and then refine those that do not.
Clickthrough-rate (CTR) is the number of clicks divided by the number of impressions.
CTR (expressed as %) = Clicks / Impressions
Each of your ads and keywords have their own CTRs, indicating how compelling users are finding your ads and keywords. CTR helps you gauge the success of your marketing efforts and it factors into Quality Score.
Quality Score is a measure of how relevant your keywords are to your ads and to your landing pages. It is calculated at the keyword level every time someone does a search for one of your keywords, and ranges from 1 (lowest) to 10 (highest). Quality Score affects your ad position as well as how much you'll pay for clicks. Advertisers with higher Quality Scores are rewarded with lower CPCs and better ad positions.
The Improving relevance and Quality Score recipe in Chapter 11, Optimizing Performance