Google is, without a doubt, the 500-pound gorilla of search engines. The official AdWords site says they reach over 80% of internet users - and that may be an understatement. As such, AdWords (Google's search advertising solution) is not only essential but is usually the most important part of any paid-advertising internet marketing campaign.

What is Google AdWords?

AdWords is Google's contextual advertising product. If you've ever searched with Google (who hasn't?) you've seen AdWords ads displayed at the top and to the right-hand side of the normal search results page. Google provides context-based ads – that is, ads are served which correspond to what you've typed in. The ads are sometimes so relevant to what they're looking for, often searchers don't even realize they're ads.

How does Google deliver relevant results?

Google made it a priority when it first decided to offer ads on its search engine to make sure the ads were relevant to what its users were trying to find. To do this, they decided to evaluate ads and place them primarily by how useful they were for their users. They do this by calculating the "click-through rate" of each individual ad.

Click-through rate is calculated as follows: say a certain keyword is searched for 100 times which you have bid on, and your ad is displayed 100 times. Of those 100 times, your ad was clicked on 5 times. This would give you a click-through rate of 5% (5 clicks divided by 100 displays).

Google then uses a combination of click-through rate and bid price to decide where to place the ad (1st, 2nd, 5th, etc.) and how often to display the ad. What most advertisers don't realize is that the click-through rate of their ads is more important than their bid price. It's important to note this is different from Yahoo's search advertising, who always gives the top position to the highest bidder.

The Advantage of Being Relevant

By focusing on click-through rate, you can not only make their ad appear more often than their competitor's, but you can actually spend less money for more traffic. Here's a simple example: say your competitor has an ad which he spends $1 per click on and has a 1% click through rate. If your ad had a 2% click through rate, you could spend $0.50 and still get placed higher and receive more traffic than your competitor. By increasing the click-through rate for your ad, you are able to not only get better positioning but actually able to reduce your overall cost per click.

Strategies for improving Click-Through Rate

The best way to determine the most effective ads is through trial and error. Before beginning a campaign however, it's best to separate keywords into logical groups and to write different ads for different groups (this is why Google provides the "Ad Groups" function). This way, an ad which discusses your trial experience will appear for a term containing "trial lawyer" and another ad which highlights your car accident practice area will appear for a term containing "car accident". Makes sense that these would get higher click-through rates, correct? They're more relevant to what the searcher is trying to find. The most important thing however is to continually tweak and monitor all of your individual ads' performance – the best way to improve future results is by analyzing past results.