Responding to my “Don’t Be Too Google Pushy” post, Susan Cross asked:

“How about using Google AdWords to direct traffic to your website? Do you think that is a worthwhile proposition? From their info, you only pay per click, so if nobody clicks on your ad, it doesn’t cost you anything. You can also set a maximum per day amount you want to spend and the ad will supposedly disappear once that maximum is reached (if you should be so lucky!).”

Actually, I wrote a rather lengthly response on our WriterWeekly Forum about this subject. I’m reprinting it here:

There are two major pay-per-click systems - Yahoo’s Overture and Google’s Adwords. There are lots of minor ones too, but they probably won’t get you much in the way of results. Between Overture and Adwords, you are covering about 95% of the searches done online.

The idea behind pay-per-click, for those who don’t know, is that you bid on keyword phrases in the search engines. When someone searches on a keyword phrase you’ve bid on, your ad pops up along with the search results. If you bid the most, your ad is listed first; bid the second most, your ad is listed second; third most, listed third, etc…

Google’s Adwords is a complicated system. Lots of variables and things happening behind the scenes are what determines the amount you’re ultimately charged. I wouldn’t recommend it for someone with no experience in pay-per-click advertising.

Conversely, Yahoo’s Overture is pretty straightforward. I’d recommend starting on that system.

The major difference is that with Overture it is clear what you are spending at any one moment. If the top spot is going for 15 cents and you bid 16 cents, you are now in the top spot. And you continue to pay 16 cents per click until someone outbids you - very straightforward.

With Google, though, the top spot is determined by the click through rate of the ad, as well as the maximum you are willing to bid. So it is actually possible in Google’s system to pay less than the competition, but get the top spot anyway. It is driven primarily by how good your ad is. But the downside of that system is the actual price you pay per click is dynamically generated moment to moment. So essentially you don’t know what you are paying until you’ve paid it. Plus, if your ad doesn’t get minimum click through rate (I think it is half a percent), it drops off the system completely.

Google is so complicated, in my opinion, that you really need to read up on it before running any campaigns. Otherwise, you’ll blow through a lot of money quick (I did, and I’ve bought and sold online advertising for 10 years). The best book on the market is Andrew Goodman’s “Winning Results with Google AdWords“.

Here are some other observations about pay-per-click advertising:

1.) It works best with high-dollar products and services. I’ll run some numbers to show you what I mean.

If you have a book you are selling for $8.95, and buy a keyword for 10 cents a click (the cheapest you can pay), and for every 100 people that click, one person buys the book, you are losing money.

100 clicks x 10 cents = $10.00 to get a buyer, who you sell an $8.95 product to. Gross loss: $8.95 - $10.00 = -$1.05

If you can get more than 1 in 100 to buy, then the numbers start to look better, but it is still tough.

Now, say the product is $100, with the same conversion rate. Now the numbers are:

100 clicks x 10 cents = $10.00 to get a buyer, who you sell an $100.00 product to. Gross profit: $100.00 - $10.00 = $90.00

See? The numbers are much better in this case.

2.) You want to be in position number 1, 2, or 3. Both Yahoo and Google syndicate their search results, and the advertising that goes with it, to other sites. But many of those sites only run the top 3 advertisers. Some go down to the top 5, but being in the top 3 will assure you appear in most places.

3.) Be sure the ad is descriptive. Use the search term in the ad itself. And make sure the keywords you pick are narrowly defined (”abusive relationships” is better than “relationships”. “how to get out of an abusive relationship” is even better than both those.) If you aren’t specific, you’ll get a lot of “tire kickers” who click on your ad just to get more info, only to find out it wasn’t what they were looking for. If they click, you pay - regardless of how unqualified they are.