Adwords

The concept for what eventually became AdWords was pioneered by Bill Gross, the founder of Idealab, who based the idea on the yellow pages. At first, Google tried to buy out the idea but was unsuccessful, and eventually ended up launching AdWords in 2000 instead. However, since AdWords followed the original Bill Gross model so closely, legal action enevitably followed, which Google and Idealab eventually settled. AdWords is now Google’s most important and valuable advertising product and its biggest source of revenue.

In the beginning, AdWords advertisers would pay Google a monthly amount in exchange for Google setting up and managing their ad campaigns. Soon after, Google introduced the AdWords self-service portal to service small businesses as well as those who preferred to manage their own campaigns. In 2005, Google began providing a campaign management service called Jumpstart to assist advertisers in setting up their campaigns, however this service has since been discontinued.

Today, AdWords offers pay-per-click (PPC) advertising, and placement targeted advertising (formerly known as site-targeted advertising) for both text and banner ads. The AdWords program includes local, national and international distribution. Google’s text ads are short, with just one title line and two content text lines. Image ads are also available and can be one of several different Interactive Advertising Bureau (IAB) standard sizes.

Pay Per Click Advertising (PPC)

Pay Per Click or PPC is a form of Internet advertising that is used on content sites (like blogs for example) as well as search engines and ad networks. Advertisers post ad content with various web hosts and the host is paid only if and when their ad is clicked. The term “pay per click” literally means what it says; the advertiser pays each time a visitor clicks on the ad.

Google AdWords is currently the most popular PPC provider (the next most popular are Yahoo!, MSN and Ask). When a user searches Google’s search engine on www.google.com or the relevant local/national Google server ads for relevant words are shown as “sponsored links” on the right side of the screen, and sometimes above the main search results.

How the paid-for-listings are ranked depends both on other advertisers’ bids (PPC) and the “quality score” of all ads shown for a given search. The quality score is calculated using a formula that takes into account historical click-through rates, relevance of an advertiser’s ad text and keywords, and advertiser’s account history and other factors as determined by Google. This quality score is also used by Google to set minimum bids for an advertiser’s keywords. While a list of guidelines for sites is available from Google, the precise formula and its definition of “relevance” remain trade secrets.

Placement Targeted Advertising

In 2003 Google introduced site-targeted advertising. With placement targeting, it is possible for an ad to take up the entire ad block rather than have the ad block split into one to four ads, resulting in better visibility for the advertiser.

Using the AdWords control panel, advertisers enter keywords, domain names, topics and demographic targeting preferences, and Google then 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 (CPI) or Cost Per Click (CPC) basis for site targeting. The minimum cost-per-thousand impressions bid for placement targeted campaigns is twenty five cents, however there is no minimum bid for CPC.

By: lsorell

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Lou Sorell, Internet