This is the question that is asked time after time in forums across the world. Unfortunately it is a case of ‘when all else fails, read the user manual’. An old adage sure, but it is true.
It is amazing how many people throw words into a list, write an advert, and set it running. This almost always results in money being eaten faster than a donkey eats strawberries.
So to answer the question, you need to follow the basic steps. I intend drip feeding the various elements that are involved, and will be guided by user comments.
The easiest way to bleed money is by poor matching of your phrases. I have assumed that you have carried out proper keyword research, because keyword research is the King AND Queen of internet marketing. Get That wrong and you are back chasing rainbows.
Are you phrase and exact matching?
If you are targeting wedding photographers Edinburgh, an are putting those words in as your search phrases, then you could well show for any search that includes ANY of those 3 words. Someone searching for wedding photographers Llandeilo for example, could trigger your ads.
AH! You say, but people from mid Wales will know I am in Edinburgh, so will not click on my ad! TRUE! Apart from the fact that every impression you get that does not convert into a click through weakens your ad value in the eyes of Google, so you will be likely to appear further down the page. In AdWords, it is NOT ‘he who bids most goes top’. That was overture, and even they are trialling algorithmic ad placements 
OK down to the meat.
You have 3 options in Google
a. broad matching e.g. wedding photographers Edinburgh
b. Phrase matching e.g. “wedding photographers Edinburgh”
c. Exact matching e.g. [wedding photographers Edinburgh]
I have explained A. So on to b. Phrase matching
you phrase match by wrapping the phrase in quotation marks either side like so “wedding photographers Edinburgh”. This is phrase matching and will result in your ad only showing when the search term includes the phrase as a phrase match
e.g.
cheap wedding photographers Edinburgh will result in your ad showing.
cheap wedding photographers in Edinburgh will not trigger your ad, as the phrase is broken by the bolded word.
c. Exact matching is achieved so, [wedding photographers Edinburgh] this setting will only allow your ad to show when the search term is EXACTLY the term you are targeting IE. wedding photographers Edinburgh ANYTHING ELSE will not trigger it.
The key to success in AdWords is constant refinement. you should constantly be monitoring traffic from your broad and phrase matches, and adding them to exact and phrase (if they are not already there). This will allow you to bid lower on exact matches, and this will achieve 2 things.
First it will ensure your add is going to appear when the exact phrase is used, this will result in a far higher Click Through rate (CTR), which will give you a far betting Google quality Score.
Secondly it will mean your traffic is far more likely to convert (assuming you have the other required elements in place).
Thirdly, because of the above, you will be paying less per click, to appear in a higher position.
e.g
You are bidding a maximum of £0.21 per click,
the guy above you is paying £0.40.
His CTR is 1:10, yours is 2:10 .
Google will show your ad ABOVE his ad as for every 10 impressions, your ad generates £0.42, while his generates £0.40 So you will be paying around half as much as him for a better position.
The key to success in Google is relevance, NEVER forget that, in everything you do with Google in mind, ask yourself that simple question “how relevant is this?”
Excellent post.
You’re quite right in saying that keyword research is THE most important aspect of a ppc marketing campaign.
And when you hit it right, you actually don’t *need* thousands of keywords, contrary to what some experts suggest.
A dozen keywords usually bring in about 90ish% of a campaigns profits. (obviously, the key is knowing which dozen to go after!)
Also when people moan about the cost of pay per click, it’s usually because their website isn’t converting the traffic to sales (which is a subject in itself!).
Anyway, again, great post. You’ve got another RSS subscriber!
George.
Hi George,
Glad you liked. As you say, many people blame PPC, but the fact is they are shooting the messenger, rather than looking at the message being sent!
OWG
I get asked about PPC by my clients and i always tell them “its a great way to spend money but not necessarily a great way to make money”. The attraction of Google Ads is quick profit but as anyone in business knows, there’s no such thing as quick profit.
Good post as always!
Thanks Russell,
Yep, you certainly can run away with money on adwords, and the main problem with people who try it out first is them not learning the rules.
Thats a very good post – I haven’t seen your blog before, but will bookmark it now 🙂
Majority of my clients I find hate the mention of adwords / PPC because they have done exactly what you said above themselves
“throw words into a list, write an advert, and set it running”
They think it costs a fortune, with no real return. I even had one client who was spending £1000 a month and not even using phrase or exact matching! Nightmare…
Hi – nice post, but I need to check I’ve understood something right….
The last couple of paragraphs seem to me to be saying that Google ranks ads on the basis, effectively, on how much money they make from it – a combination of how much you pay and your click through rate. That’s useful as I didn’t know that.
However, while I can find my own CTR (somewhere), how do I know what my competition’s is? Unless I know that, knowing the other stuff you’ve opened my eyes to won’t help me, will it?
S
Hi Simon,
Google rank ads on relevancy, the side affect of this is that a more relevant ad will be shown more and will end up making Google more money.
There is no need to worry about your competitors CTR, knowing it isn’t essential to the success of your campaign. Why do you feel it is important to know your competiors CTR?
What a great post, I never knew that donkeys like strawberrys!
At the beginning of a campaign I’ve used broad match with negative keywords and then run a search query performance report to weed out anything. It’s most economical to run phrase or exact match, although it takes longer to set up initially but you have far more control.
I agree with the comment about conversions, these should be resolved first, fix the holes in the bucket and then bring in more traffic.
Yes, easy to spend a fortune on PPC unless it’s managed correctly.
Thanks for a great post.
Hi Mark,
it is a little know fact that donkeys like strawberries. It is a lesser known fact that donkeys prefer Spanish strawberries served by a Spaniard over English ones served by an Englishman.
Must be something to do with geo-location of the server. 🙂