More on the Subject of Google Adsense
Adwords sells ad space which shows up in Google’s search terms. When someone searches for a specific term, you can buy advertising space within those search results.
For instance, if we are selling books, we might want to advertise on search terms such as books, e-books, etc. Then when a user searches for one of these terms on Google, our ads will appear alongside the search results for those keywords. With Adwords, you are only charged when someone clicks on the ads that you have created.
So, how much are we charged for a click? Well, the amount you are charged varies significantly depending on several factors.
The first factor determines the amount you are charged is the amount that you are prepared to pay for each click. This is known as your “maximum bid,” and you can change it at any time for any of the keywords you are bidding on. You will not always be charged your maximum bid, but the higher you set it, the further up the sponsored results box you will go. The higher up sponsored results box you are, the more clicks and traffic you will get. The Adwords system ranks you from top to bottom, and it is better to be higher up the results.
The second factor that governs how much you are charged is the amount of people who click on your ads. The number of times that our ad is clicked on per hundred views is known as our “click-thru rate.” For instance, if 100 people search for “basketball” and 5 of those people click on our ad, then we have a 5% click-thru rate. This is an exceptionally good click-thru rate for such a broad search term.
Your click-thru rate is the most important factor in determining how much you pay for clicks, and you should never forget that fact. It is always better to aim for a higher click-thru rate because click-thru rates are used in Google’s “quality score”; and this affects both the amount that we are charged for an ad, and our position on the page.
This is because Google wants the ads to be relevant to the search term. If an ad is not relevant, users won’t click on the ad, and with a low click-thru rate, the advertiser will get charged higher and higher amounts to maintain the same position.
Gradually the advertiser who ignores his CTR dies a slow and expensive death.
This gives users with relevant ad copy an advantage over the competition. Ideally we want to be one of the first ads displayed, but paying as little as possible per click. This can only be achieved by having a very high click-thru rate, and you only get a high click-thru rate by having very relevant eye catching ads. If you get everything else wrong with Adwords, but you have relevant and eye catching ads, and then you will succeed. With Adwords, click thru ratio is king and your CTR really down to good ad copy”