Nothing succeeds like success, especially with AdWords

A recent post on the Official Google Blog provided an interesting look into how ads are stacked up on the right side of your Google searches (and on the content network):

In the general case, where ad qualities differ, the price an advertiser pays for a click will depend on its Quality Score relative to the quality of the ad below it in the auction. Roughly speaking, an ad that has twice the quality of another ad will tend to get about twice as many clicks, and will only have to pay half as much per click as the competing ad.

This is an important departure from what some consider the conventional wisdom with regard to search engine marketing: that the way to get a lot of views and clicks is to bid high for each word and work hard to convert on the flipside. Rather, this suggests that since ads with a higher quality score will win more often and cost less per click, it’s more important that you provide a high quality ad on a few of the most relevant keywords than to cast a wide net to keywords that are only tangentially related and lower your overall quality scores.

I’ll go into some tips on how to boost your quality score, and, by extension, the effectiveness of your SEM program, below the fold…

Let’s start by looking at what goes into an ad’s quality score. Among the factors listed in Google’s FAQ are:

• The quality of your landing page – Google wants users to have a good experience clicking on ads, so it’s in their best interest to crawl landing pages and make sure users don’t feel tricked. They provide some best practice guidelines to increase this component of your score (that should be considered even in non-SEM landing pages)
• Your account history – in addition to an ad’s quality score, there’s an account wide quality score to consider. If you’ve built up trust with Google in the past, they’re more likely to look favorably on new ads and allow you to start with low minimum bid
• The keyword’s historical clickthrough rate – this ensures that you won’t be penalized for keywords that, in general, receive few clickthroughs.
• The historical CTR of the display URLs you’re using – if you rewrite an ad but use the same URL you’ve already used, it’s going to have some of that history (good or bad) behind it. So it’s worth pulling bad ads early to avoid tainting later uses of that URL
• The relevance of keyword and ad to the search query – as with everything else, this is to ensure that Google gets high-performing ads and a good user experience. If users see irrelevant ads, they’re less likely to click, which loses money for Google and makes the search engine ads in general less important to users – unlike banner ads, they’re generally seen as a service, not an imposition
• Additionally, in June, page load time will be added to quality score, so make sure you keep your pages light – this will likely decrease the number of flash and image map pages we see. (h/t Search Engine Roundtable)

So how do you see your quality score? This AdWords help center page gives the details – last year, Google decided to release this information to the public. You can only see the specific items contributing to the score of active campaigns, but for paused campaigns you can still get a general picture and an idea of where the minimum bid has moved to.

So with all this information on what goes into your quality score, how does this affect your SEM strategy?

For non-profits with Google Grants, the temptation will be there to spend your “monopoly money” to beat the other ads with a higher bid and bludgeon your way to the top of the adstrip. After all, you’re paying a fraction of the actual cost of the ad, so you can out-bid for-profit organizations who are paying full price for the same ad.

But focusing on winning through a higher bid will not only lead to burning through your $10k per month cap faster, it will lead to paying more for each ad than you need to. While you can pay enough to make your ads appear on keywords that aren’t really related to your core area, they’ll likely either be ignored or will be bounce quickly enough that Google will slowly raise your minimum bid to the point you can no longer afford it (remember that grants includes a $1 max bid limit).

Instead, consider starting with a small core of ads that you can use to build up your account quality score, then move outward to words that deal with niche areas that have little competition. Google doesn’t penalize you for advertising on unpopular search terms, so even though your ads may generate few total clicks, they’ll have a stronger clickthrough rate than advertising on popular keywords where you might have a weaker connection to the subject.

Lastly, you’re going to want as many landing pages as you can reliably manage, because the closer you can get each landing page to the keyword, the more likely you are to convert. Even better is the ability to dynamically populate your landing page with the contents of your entrance ad to ensure that users will find something relevant to what they’re looking for.

Above all, though, you want to make sure you’re getting a good ROI in general for a mature campaign. While you should expect your cost per name and cost per donor to be high in the first few months, as you’re tuning, you should eventually aim for a similar acquisition cost to other methods, like list swaps and advocacy. Of course, the coefficient here is how well Google-acquired names perform – if they bring in more money or take more actions than names obtained from other sources, you should be okay with it costing more to bring them in.For those organizations whose CRMs allow more granular sourcing, this can even be the case on a per-AdWord basis – some terms might bringing higher dollar donors than others, so it’s worth paying more for them.

With the way Google has set up their rules for advertising, it’s become cheaper to fly-fish your ad prospects than to just cast a wide net and see what you reel in. And once you get a strong set of adwords with a high quality score, you’ll likely see a virtuous cycle of increasing ad position, lower prices, and more clickthroughs.