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AdWords is Google's flagship advertising product and main
source of revenue. AdWords offers pay-per-click (PPC) advertising, and
site-targeted advertising for both text and banner ads. The AdWords
program includes local, national, and international distribution.
Google's text advertisements are short, consisting of one title line and
two content text lines. Image ads can be one of several different
Interactive Advertising Bureau (IAB) standard sizes.
Pay-Per-Click advertisements (PPC)
Advertisers specify the words that should trigger their ads and the
maximum amount they are willing to pay per click. When a user searches
Google's search engine on www.google.com, ads for relevant words are
shown as "sponsored links" on the right side of the screen, and
sometimes above the main search results.
The ordering of the paid 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 and the
relevance of an advertiser's ad text, keyword, and landing page to the
search, as determined by Google. The quality score is also used by
Google to set the minimum bids for an advertiser's keywords.
The auction mechanism that determines the order of the ads has been
called a "generalized second price" auction. It is a variation of the
Vickrey auction.
Site targeted advertisements
In 2003 Google introduced
site-targeted advertising. Using the AdWords control panel, advertisers
can enter keywords of interest, and Google offers to place ads on what
they claim are relevant sites within their content network. Advertisers
then bid on a cost per mille (CPM) basis for placement. Advertisers can
also enter domains directly. Google will provide a list of related sites
that you can select along with your entered site.
Site targeting campaigns are mainly designed for branding purposes, as
the ROI will almost always be considerably lower than a traditional
content-targeted campaign. Your ad will take up the entire ad block (as
opposed to being 1 of 4 ads in a traditional AdSense ad unit), which
will make it more prominent but cost quite a bit more.
The minimum CPM you can set on a Site-Targeted campaign is 25 cents.
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.
The "content network" shows AdWords ads on sites that are not search
engines. These content network sites are those that use AdSense, the
other side of the Google advertising model. AdSense is used by
publishers who wish to bring traffic to their websites. Click through
rates on the content 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 better track performance of their ad units. There are many
different types of ads you can run across Google's network, including
text ads, image ads (banner ads), local business ads, mobile text ads,
and in-page video ads.
Google AdWords' main competitors are Yahoo! Search Marketing and
Microsoft adCenter.
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
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