Remember back when Al Gore allegedly said he "invented the Internet?" Well, he didn't, it was 
So how does it work? You choose keywords/phrases that are related to your products/services, write the text ads that will be shown when someone performs a search for your keywords, set a daily budget and the cost you want to pay every time someone clicks on your ad (C.P.C), and you're ready to run. There is no activation fee and no minimum monthly spend amount.
Ads are called "sponsored links", and appear along with search results on Google, as well as other affiliated search engines and "content sites" in the Google Network. This type of keyword based advertising will help you to reach a highly targeted audience quickly and easily.
Not only can you run text ads, but also image/animated ads - even video. If you're a beginner at pay-per-click marketing, I would suggest you start out with text ads. You'll need to "learn to walk" before you run.
So what does a text ad look like? It consists of a 25 character headline, a description that is 2 lines of no more than 35 characters, and what's called a "display url". This url can reflect any domain you like because when it is clicked upon, the browser will take them to your "destination url". This is set up behind the scenes and does not appear in the ad itself.
A 3 line text ad might sound like a lot of room, but it's not. You've got a small area to make a huge impact on the searcher and make them want to click. Don't underestimate the power of a well written ad. If you don't know a lot about how to write "good copy", I suggest you study up. You'll want to include what's referred to as a "call to action" somewhere in the description. You'll also want to include your keywords if possible in your title and ad copy so they will appear in a bold font when your ad is displayed. For help see: http://www.google.com/adwords/learningcenter/text/18779.html
You also need to send them to the page that's most relevant to your ad copy. This page is called a "landing page", and you'll want to make sure it converts. A conversion happens when the visitor performs the action you intended. For example, signs up for your newsletter, buys your product, etc. With Adwords conversion tracking you'll be given a snippet of code to paste on your web page wherever any conversion takes place. For example, your thank you page. This allows you to track how well your pages are converting. You can also use Google Analytics. For more see -http://www.google.com/analytics/
Now that landing page load time is being factored into "quality score", you'll also want to pay attention to your page's load time. Quicker is better. For more information on this topic see.... http://tinyurl.com/4bsyaq
Now, let's talk about keywords. The biggest mistake most people make is choosing single keywords. You're much better off with two and three word combinations. For example if you sell dog food, instead of targeting a generic term like "dogs", you'd be better off selecting "dog food". Remember, these keywords will be responsible for triggering your ads to appear, so do your homework and choose wisely. Targeting the wrong keywords can be a very expensive lesson.
For help in choosing keywords use Google's tool located at- https://adwords.google.com/select/KeywordToolExternal
When setting up your keywords, you'll also need to choose what's called a "match type". Here are your options:
1) Broad Match: The default setting. Searchers can
enter your keywords in any order and your ads
appear. Not the best option for targeted traffic.
2) Phrase Match: Your keywords must appear in
the exact order for your ads to appear. This is
more targeted than Broad Match.
3) Exact Match: This is the most targeted option.
The searcher must type in your key-phrase
exactly for your ads to appear.
4) Negative Match: You choose words you don't
want your ads to appear for when searched upon. For
example, typing in the word “-free” would stop your ads
from appearing if someone typed that word before
your key-phrase.
So who decides which ads will appear at the top? This is called "ad rank". Ads with the highest ad rank will appear at the top. Here's the formula, at least at this time as it's always open to change. Ad Rank=C.P.C. (cost per click) X Quality Score To understand this formula you'll need to know what factors go into "quality score".
Quality Score is determined by :
1) How relevant the keywords and ad copy
are to the search query.
2) "The historical Click-through rate of the
ad, and of the matched keyword on Google".
3) It also includes your account history,
which looks at the click through rate of
your keywords and ads.
4) Landing page load time.
And, according to Google "other relevant factors". One tip to increase your ad rank is to increase your cost per click, and improve your ad copy and keywords in order to increase your quality score.
Ad ranking is determined slightly differently for the search network compared to the content network. For the content network it looks like this:
Ad Rank= Content Bid X Quality Score
What is the difference between the Content Network and Search Network? Good question. I thought you'd never ask. This is another option you'll have to decide upon when setting up your account. If you choose "search sites", your ads are displayed on search results pages only. Google's search network consists of: AOL, Netscape, Earthlink, Compuserve, AT&T, Worldnet, Ask.com, Shopping.com, Froogle and of course Google itself.
If you choose for your ads to appear in the "content network", this includes community websites, online publications and other information based sites that choose to display Adwords ads. Partners in the content network include sites such as: Google's Gmail, About, Lycos, NYTimes.com, Infospace, Reed Business, HowStuffWorks, Business.com, Food Network, HGTV, MarthaStewart.com and many other content based websites.
Ads are targeted to the content of the individual pages. You'll also have some control over where your ads appear and don't appear with what's called "placement targeting". You can actually pick and choose from websites you'd like your ads to appear on, or not to appear on. For more on placement targeting see http://tinyurl.com/5zwfy9 You can opt in to both search and content networks, or just one.
At this point you're probably thinking this is a lot to learn. And you're right - it is, but there are plenty of online resources to help you such as: Adwords Help Center http://www.adwords.google.com/support/
Adwords blog
http://adwords.blogspot.com/
Google is a powerful Internet giant and makes for a mighty advertising partner. Make sure you harness some of that muscle, and you too can become an Internet force to be reckoned with.
