photo credit: adjustafresh

Adwords is a great, instanteous way to turn traffic on for your site. But it can get expensive, fast.

So we're going to go over one way to quickly lower the costs of your campaigns.

But first some basics about AdWords.

Adwords uses a formula to determine your ad position - bid amount times the keyword quality score.

Quality Score?

Quality score is determined by your keyword's clickthrough rate, relevance of your ad text, historical keyword performance, and other relevancy factors.

Got it? So there's the relevancy, clickthrough rate and some other hand waving. What we're going to concentrate on is the clickthrough rate for this exercise.

The end result is - the higher the clickthrough rate, the less you have to pay for the positions you want. For example, if you have a twice the click through rate of your competitors, you only need to have 1/2 the price to get the same ad position.

Fantastic! But how do I…

Get A Better Clickthrough Rate?

There are 3 major things you can do to increase your clickthrough rates:

1. Have higher positioned ads - This may be completely obvious, but the higher positioned ads get better clickthrough rates! (Generally they have lower conversion rates, so you need to find your business' 'sweet spot'.)
2. Put the keyword in the headline. This may mean you have a lot of smaller adgroups - but the effort is well worth the money you'll save. This also positively affects the relevancy determination used by google (see quality score above) acting as a one-two punch to help you getter better position.
3. Split Test. You have to be constantly split testing your ads and determining new winners. Slowly but surely you'll increase your clickthrough rate. This is more of a long term strategy. But you should be split testing from the beginning, so don't ignore it.

Early on, before you have any relevancy score, the only way you're going to be able to get a higher ad position is by…

Bidding High

Counterintuitive to saving money? Yes.

But after you have 10-100 clickthroughs at ad positions 1-3 with (hopefully) above 5% clickthrough rates, you'll notice the minimum bid for each keyword has been lowered. What was once $0.30 is now $0.08. Once this happens, you'll slash your bid prices and you'll be able to maintain a good position at a much lower cost.

You could reach the same place by bidding low and consistently split testing over the coming months until your clickthrough rates are high enough to lower your bid prices. But that's months of testing and paying the default minimum bid prices (if not more…). I think spending a couple of days to a week paying higher prices will save more money and time in the long run.

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