In a nutshell, Google Adwords is Google's advertising system on its search engine platform. It is similar to how a person comes across an advertisement in the newspaper and is influenced to buy a product, except it is online. Almost every business nowadays use this platform in order to advertise, as there are so many potential customers on Google searching for products that they need. As of 2017, there are around four million Google searches a day!
How it works
Imagine being a potential customer of Nike who wants to buy a new pair of shoes. The first thing to do would be to go onto Google to look at pictures or websites for the kind of shoes that Nike has, and keywords that might be typed in the search bar could be "Running Shoes Nike". These keywords that potential customers use to find products are what advertisers bid for on Google Adwords. Once advertisers have successfully bid on these keywords, their advertisements will appear alongside the search results page for that keyword.
Above is an example of the advertisements that can appear on a Google search results page. Usually, the highest bidder with advertisements that are deemed useful and relevant to Google users will be able to occupy the best position on the results page. By being useful and relevant - users who google the keywords actually click on the advertisement because the information provided is relevant to them.
This position, numbered 1, is the top of the results page on the left. It guarantees that users would see the advertisement, which increases chances of them clicking on it. Subsequent advertisements appearing below or on the right side of the page will be numbered 2, 3, 4 and so on.
There are two kinds of advertisements. One is text-based which consists entirely of words, and another is visual-based which contains a picture of the product and some basic information.
Every time a user clicks on the advertisement, Google charges the business per click, which is why these Google advertisements are called Pay-Per-Click (PPC) advertisements. The factors that will influence the Cost-Per-Click (CPC) are
1. How much competition there is for advertisement space
2. The relevance of the ad to the search query
3. The quality of the landing page
4. The budget per click that was set
The relevance, quality of the landing page and click through rate (CTR) determines the quality score, which Google uses to evaluate how useful and relevant an advertisement is.
The business can bid multiple keywords and group relevant ones in an advertisement group. for example, an advertisement group could be about running shoes. All keywords relating to running shoes would be grouped under that. With multiple groups, the businesses can group them all under one advertisement campaign. A possible advertisement campaign could be for shoes in the company, which consists of different types such as running, walking, fashion etc.
Armed with the knowledge of what Google Adwords is and how it works, businesses can now start their own Google Adwords campaign for products in the future!