This post has been updated - May 2016.
Recommended reading prior to this blog post:
The importance of identifying the right keyword phrases for your website and how you can do it yourself.
When you did the keyword analysis as detailed in the link above, you would have ended up with a whole bunch of keyword phrases which are part of keyword segment groups. For each of these segments you will create an Adgroup. For each Adgroup, you will create an advert that Google will display when a user searches for any of the keywords within that keyword segment. If a user clicks on your ad, you will pay Google an amount that you specify.
The structure of Google Adwords is made up by a campaign (which could be area specific like NZ or Australia). Under each campaign, you have an Adgroup (which is the keyword segment) and you will create an ad for each Adgroup, which will use the keyword phrases under that particular segment.
Google calculates your position in the paid search results based on two main things: Cost per click (CPC) and Quality Score (QS). If there are no competitors for your keywords, you will pay the minimum cost of 5c per click and be at the top of the page. When you do have competition, you'll need to outbid them in order to gain placement. It's not always the highest bidder that wins however, and that is where QS comes in. A lot of how Google determines QS is kept secret (for obvious reasons), but we do know it takes into account factors such as landing page, ad relevance, click through rate, web design, historical statistics etc. Basically, Google will serve the highest quality ads to customers that are going to be most interested in the offering, even if it means they will make less money per click.
If there is one thing that you should always keep in mind when setting up a Google Adwords campaign it's relevancy. It is very important that you make your ad and landing page highly relevant to your keywords. This is why we go through so much trouble to segment our keywords. With our 'Give a duck' example from this post, we determined a segment 'bath toy' which contains many phrases centered around the theme: 'bath toys', such as 'baby bath', 'bath for baby', 'bath toy', 'water toys', 'bath for kids', etc. So with this in mind we would create an ad using these keywords and we would also make sure that these search phrases were incorporated into our landing page so it all ties in together and makes sense for the user.
Before you create a campaign you'll need to sign up to Google Adwords account. Simply follow the directions supplied by Google.
You can create campaigns to target customers who browse the Internet:
If you need to, you can set up different campaigns for targeting different geographic locations. For example, we might decide to sell rubber ducks to New Zealand and also Australia. We would create a separate campaign for each country and label them 'Rubber duck NZ' and 'Rubber duck Aus'. We can also create a campaigns specific to regions within a country like Auckland or Wellington. A photographer based in Wellington, for example, will likely target Wellington only. Keep in mind that it can be difficult to keep track of multiple campaigns, so make sure it is something you absolutely require.
It is very important that you split test your ad. This means just changing one or two aspects of a Ad group to test out what's working better. It will allow you to test which offer is perceived as being more attractive and which ad click actually converts into a sale. Keep in mind an effective split test needs a large audience, so you may want to wait on this until you're getting a lot of interest in your ads.
Note that Google will start monitor your split tests and if one them is really under performing, it will cease to run that ad so as to make sure that your click rate is high.
We like to recommend that you use the Postpay billing option to ensure that your ads are running smoothly. Often a prepaid balance will run out and your ads will dry-up, meaning once your prepaid balance is out, you will have no click throughs. This means that you will start to lose traffic and more importantly you will lose important test data. It makes it difficult to test and tune your ads and your landing pages if you have big holes in your reports.
Postpay billing isn't a scary option either because you will have set your budget beforehand. There is no way Google will let your spend go over your budget. If you decide that you don't want to spend anymore money on Adwords, you can go in and cancel anytime you like.
Your ads will not go live straight away because Google will need to review the ads to make sure that they pass their criteria. This will usually take around a day or so before your ad can go live.