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AdWords and AdSense Primer – Questions from Ron Amok

My friend Ron sent over a question asking for clarification on this post from Google – they are doing placement targeting and CPC for placement targeting. What does this mean? Here’s a play by play to get you started.

Back in the dark ages of Google Adwords (like 2 months ago), there were two places to run your ads. You could buy words that would show your ads when people searched for them in Google. In other words – if you bought “Donuts” and somebody searched on Google for “Donuts” your ad would show up on the right side of the Google Search Engine Results Page (or SERP for the hardcore insiders).

This is grossly simplified, there are a lot of things that go into whose ad shows up and where on the page, and there’s a bidding process along with a determination of the quality (read – spamminess) of your ad.

The next step was to provide this same functionality to websites other than Google – and thus was born adsense (keep in mind I am not a Google historian, I have no idea about these timelines really, I have a tough time remembering breakfast, never mind when this stuff rolled out. For a great history of Google check out John Batelle’s “The Search“).

Adsense allows other websites to run the same ads that show up on the Google SERP. For example if you scroll to the bottom of this page you will see a bunch of google ads, some of them may even include “Donut” “SERP” or “Help with Google Adwords”. For having Adsense on your site Google pays you. I’ve had it running for a year and I think I’ve made 72 cents or something. I don’t care because I did it to learn, but there are people who live comfortably just doing lots of this.

Once Adsense went live, Adwords users had the opportunity to have their ads run outside of the Google site (don’t worry if you are getting confused, I’ve been running with this for about 3 years now and I still have a hard time keeping Adwords and Adsense straight).

Just to make things interesting the payment model was changed. For ads that showed up on Google SERPs the advertiser was charged each time an ad was clicked – cost per click, or CPC. For ads showing up outside the Google SERPs you would pay per impression (each time the ad appeared whether it was clicked or not). This is the model is common in the newspaper and magazine industry, and is called cost per thousand, or CPM for those of you with Latin skills ( N.B. – just to get more Latin on your ass – once in a great while you will still see MM around being used for Million, that’s a thousand thousand to your homeboy Caecilius).

Hell, where was I… You’ll notice that sales guys love CPM because if you are selling ads it gets expensive quick and it doesn’t matter how much the ads suck or how much readers ignore them. As a result there are many Marketeers that see this as wasted spending.

Originally you would only vote yes or no on sites beyond Google, this could cause problems if your ads show up on sites you don’t want them to – such as an Army recruiting ad showing up on the website for the San Francisco Gay Pride parade… etc. Eventually the functionality was added to include/exclude certain websites (URLs). I haven’t played around much deeper than that, I’m not sure how good the tools are out there to determine where you want to be.

With this latest announcement you get more granularity, you don’t just have to show up on the Daily Planet, you can choose just the Daily Planet Sports Page. They’ve also added CPC pricing to make it easier for people to test it without blowing their budget. There’s some huge opportunity here, every Pizza shop should lock down all the searches in a 5 mile radius for Pizza, same for Funeral Homes, Florists, anybody whose business is Geo targeted.

Hopefully that answer gets you on track, for more commentary on Google check out this week’s Marketing Over Coffee, and feel free to send any additional follow up questions, or request for clarification on the above.

For more information this link to the Adsense blog can then lead you to their help center and learning center, both great resources.