If you are new to the world of digital marketing for your business then you may have heard of Adwords but not truly understood what it is and what it means.

Why should you understand Google Adwords Beginnings?

This week, I wanted to give a brief history of how we came to have Adwords in our modern lives. How it was born to truly revolutionise the way that modern advertising works. I think this is important, as without that brief history you can’t really begin to understand the inner working of Adwords and realise what it’s core and heart is, minus all the additional stuff that has been added to it. If you can understand it’s beginnings, you can start to understand how to utilise it correctly.

For those who don’t know, Google Adwords is Google’s main source of revenue. It’s the reason why Google are one of, if not the, most powerful company in the entire world.

Genesis of Adwords

When Google, the search engine, was founded. It had no advertising. Much to the annoyance of the biggest search engines of the time such as “Ask Jeeves”, “Excite” and “AlltheWeb” who relied on advertising as their source of revenue.

 

Google, for four long years, had to come up with a different method of creating revenue. One that would not bombard their users with pop-ups, banners and adverts. They wanted adverts that would be simple and not attack the user’s visual experience, however, most importantly they wanted adverts that would be relevant, so they chose just to use text adverts.

 

AdWords was born, text ads in search engine results pages, separated from the organic results and delivered purely on the user’s search phrase. However, it was still not quite the Adwords as we know today. Originally it made its money using a CPM (Cost Per Mille) model, this would cost the advertiser a certain price on every 1000 times the advert was shown, however, this didn’t make much money.

At this point, Google actually had sales people calling business asking if they wanted to use Adwords as a form of advertising. The thought of this shocks me even now.

The Revolution of PPC Advertising

They decided to borrow an idea from another search engine called GoTo.com, PPC (Pay-Per-Click), was a model whereby Ads could be purchased by auction, but the advertiser would only pay if the ad was clicked on. To get more exposure for your advert the higher your bid would have to be.

 

However, this simplistic model was flawed too. A company could place very high bids for all their keywords but have an advert that was completely irrelevant. Thus, no one clicks on the advert and no one makes any money. How could Google ensure that the adverts being shown were relevant to terms being searched?

The Click-Through-Rate Factor

It was the mathematician, Sergey Brin, the mathematician of the two founders of Google who managed to come up with a solution to the issue with the introduction of Click-Through-Rates (CTR). If an advert had a lower bid than it’s competition but had a high CTR, more users were clicking on the advert, then it would gain more exposure for being a more relevant ad. This is very much the same model as we have today.

Adwords Today

Since then, Adwords has developed to advertise on the Display Network (actually allowing banner and graphic ads, on other people’s websites). Adverts can now be added to YouTube videos, much to the annoyance of YouTubers. Mobile Apps can be advertised too through other apps and the Play store.

It’s grown exponentially however at its very heart, it’s the same idea of providing relevant and valuable adverts to users. This is the reason, Adwords and Google have been so successful.

For you, as a business that would like to advertise on Adwords, knowing that relevance and value are so important, is key to making the most out of your Adwords campaign.

Over the next few weeks I’ll be writing a series of blog post about Google Adwords, so you can learn more about the model and start to consider implementing it for your own digital marketing strategy.