Getting Started with Google AdWords – A Step-by-Step Guide

A lot of small businesses start using Google AdWords in the hope that it will help them increase sales with small investment. This isn’t true.

Yes, AdWords can help you increase sales but only with the right investment. To get the return on investment you’re hoping for, you will need to set up your account properly and invest the right amount of money.

This guide will give you an overview of what Google AdWords can do for your business and how to make the most of it, along with some tips to make sure you’re set up properly.

AdWords is a vast subject that cannot be covered in just one guide so it’s worthwhile using the Google help centre whenever you’re not sure how to implement any of these tips.

What can AdWords do for your business?

AdWords is a powerful tool that can help your business generate sales or leads, if managed properly.

Compared to traditional advertising, AdWords gives you more control over how much you spend, who sees your ads and, most importantly, how much return you get for your investment. It uses a Pay per Click system which means that you’ll only pay if someone clicks on your ads.

When setting up an AdWords campaign, you can choose the following:

  • The daily budget you’d like to spend and how much you’d like to bid for each keyword.
  • When your ads show during the day (i.e. you can stop your ads from showing during the night if you know your customers aren’t online at that time).
  • The gender and age of the people who will see your ads.
  • The location of the people who will see your ads.
  • The device on which people will see your ads.

The strength of AdWords is that you can accurately measure the performance of your campaigns.

For each campaign, ad group, ad and keyword, you know exactly how many impressions, clicks and conversions you received. This can help you make informed decisions on where to spend your budget.

How to set up Google AdWords

Setting up your AdWords account properly is very important, as it will allow you to manage and optimise it more easily. Here’s a step by step guide on how to get your small business started with Google Adwords;

Step 1: Create your account

  • Set up your currency and time zone: choose wisely as this cannot be changed once the account has been created.
  • Set up your credit card details.

Step 2: Link your account to Google Analytics and add conversions in AdWords

This step is extremely important, as this is how you will be able to measure ROI.

Step 3: Create campaigns

Before starting to create your campaigns and ad groups, take some time to design the structure you want to use. As businesses are unique, their account structure will be different. The most common choice is to base your campaigns on your products and services.

Your budget and targeting criteria are set up at the campaign level, so keep that in mind when structuring your account.

Plus, make sure you separate branded campaigns from more generic campaigns. This is because your branded campaigns are usually more profitable, so you’ll want a separate budget for them.

If you want to bid on competitors, again, use separate campaigns. In this case, it will probably be more expensive because your website is not optimised for your competitor’s brand, so you’ll want to keep a separate budget to avoid spending too much.

Step 4: Add your keywords into ad groups

Each campaign is subdivided into ad groups where you can write different ads for a set of keywords. Make sure you don’t have too many different keywords per ad group as it will be difficult to write quality ads for each keyword.

The idea is to group your keywords by theme to advertise a set of ads that are relevant to people searching for these keywords.

You can choose different match types for your keywords depending on how much control you want over when your ads appear.

I usually recommend sticking to phrase and exact match because it gives you more control over which terms your ads are showing for. Broad match can be very expensive if you don’t keep an eye on your account as your ads might show for terms that are less relevant to your business.

Don’t forget to add negative keywords on your account as it will prevent your ads from showing for irrelevant searches. For example, if you sell glasses, you might want to add wine and champagne, as negative keywords to avoid showing for wine and champagne glasses.

To keep your account easy to manage, you can organise your negative keywords into lists and apply them to specific campaigns.

Step 5: Write quality ads

Here are Google’s recommendations for writing ads:

  • Write at least three ads per ad group focusing on different Unique Selling Points (USPs). This allows Google’s AI to show the most relevant ad to someone searching for your keyword based on their search history and interests.
  • Include your keywords in the headlines to improve your quality score. Google will attribute a score for your keywords based on your expected click through rate, ad relevance and landing page relevance. If you don’t mention your keywords in your ads and landing pages, Google will think they’re not relevant and won’t want to show your ads. This quality score will help define how much you pay for a click so the higher the score, the less you’ll pay.
  • Check Google’s policy to prevent your ads from being disapproved. For example, you can’t use exclamation marks, special characters or full capitalisation in your text ads.
  • Make use of the character number. Your space is limited, so make the most of it, as it will give you more real estate on the search results and more space to explain why people should buy from you.
  • Use at least three types of ad extensions to show alongside your ads. You can add extensions such as your phone number, links to other relevant pages, additional text to showcase your USPs, your business address, and more. Again, this increases your real estate and gives more information about your business to help people make a decision.

How to analyse performance

The AdWords reports display a lot of metrics and it can sometimes be overwhelming. Before starting to analyse your performance, think about your goal. What are you looking to achieve with AdWords? Are you looking to increase sales? Receive more enquiries and leads? Increase your website traffic?

Once you know what you’re looking for, customise the columns in your report to add your own Key Performance Indicators.

Here are some common KPIs that I use to analyse an account:

  • Clicks, impressions and Click Through Rate (CTR) to see if my ads are compelling.
  • Cost, avg. cost per click to see if my spending is under control.
  • Position to check that I’m biding enough to reach a top position in the search results.
  • Conversions, cost per conversion, conv. value and conv. value / cost to check that I’m targeting the right people who are actually interested in my business.
  • Share and lost impression share to make sure I’m spending enough money and appearing in all relevant searches.

To get definitions on what these terms mean and other digital marketing jargon explained you can visit this Glossary of Digital Marketing terms.

Common issues with AdWords campaigns

When analysing your performance, you might encounter common issues affecting the results of Google Adwords campaigns:

Low impressions

Make sure your budget is not limited. If you have enough budget, check that your keywords don’t have a search volume that is too low. If they do, you might want to search for other keywords.

If they don’t, check your campaign settings: are you targeting the right country and language? If you’re targeting the UK and French, your ads might not show very often.


Check your average position, if it’s over 2, people might not see your ads as they appear too low on the page. Increase your bids or improve your quality score.

High cost on specific keywords

Check the search terms report for the ad group and add irrelevant terms into your negative keyword list.

Low quality score

In the keywords report, hover over the status next to a keyword to see a breakdown of your score. If the CTR is under average, check your bids to make sure you appear high enough.

If the ad relevance is below average, make sure to include the keyword in the ad copy. If the landing page relevance is under average, optimise the page for the keywords in your ad group.

Low search impression share

Look at your lost IS (budget) and (rank). If you’re losing impression share because of budget, you’ll have to increase your budget. If it’s because of rank, improve your quality score.

Low conversions

If you’re getting more traffic from your ads but no conversions, check your targeting. Are you bringing the right visitors to your site?

If you’re getting relevant traffic but still no conversions, you probably need to improve your landing page.

Make sure you’re covering one subject to avoid confusing visitors with multiple themes; be clear and concise but provide relevant information to help your visitors; push your visitors towards one action (i.e. fill in a form, purchase a product) but don’t give them too many options as it will confuse them.

How to make AdWords profitable?

Depending on your business and industry, bids have a different cost. A bid in retail can be as low as £0.50 a click when a bid in insurance can be as high as £50 a click.

Your definition of a profitable campaign will depend on the value of your products or services as well as your lifetime customer value.

Here’s a bit of maths to determine how much you can spend to stay profitable:

Lifetime Customer Profit

  • Start with your Lifetime Customer Value (LCV) to understand how much each new customer is worth to your business.
  • Lifetime Customer Profit (LCP) = Lifetime Customer Value (LCV) x gross profit %

Cost per Customer Acquisition

  • Cost per Acquisition (CPA) = ad spend / number of new customers

Ad Spend

Lead generation business:

  • Required ad spend = (100 / conversion to contact rate) x Cost per Click (CPC)
  • Conversion to contact rate is how many form completions you need to get one lead
  • 100 / conversion to contact rate is how many clicks you need to get one lead

Retail business:

  • Required ad spend = (100 / conversion to purchase) x Cost per Click (CPC)

Make sure your Lifetime Customer Profit is higher than your Cost per Acquisition (CPA).

Maximum bid

  • Maximum Cost per Click (CPC) = Lifetime Customer Profit (LCP) x conversion to lead rate x conversion to sale rate
  • Conversion to lead rate is how many clicks turn into a lead
  • Conversion to sale rate is how many leads turn into a customer

Hopefully, these tips will help you make the most of AdWords and reach your business goals.

Remember, AdWords is not something that you set up and forget. You will need to keep optimising your account, find new keywords and opportunities and fight back against competitors.

Google has put together a great series of guides in their help centre so do not hesitate to check them when you’re not sure about something.

About the author

This guide has been written exclusively for ByteStart by Tim Butler, founder of Innovation Visual, a digital marketing consultancy specialising in developing your online presence and digital communications. Using the latest techniques in SEO, PPC and online content creation, Innovation Visual works to increase conversion rates, basket values, and return frequency. Tim is a regular contributor to ByteStart, and you can find more of his insight in;

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