Hidden Costs of Google Adwords – A Look at Keyword Matching

Someone asked me recently, “Does Google Adwords work? Do people actually click on those ads?”. The answer is YES, YES, YES. This is how Google makes money — a LOT of money. And businesses keep buying and bidding on ads because THEY make money using Google Adwords – people DO click on the ads, and businesses DO get exposure, much faster than they would with organic searches or by using SEO methods.

As much money as there is to be made from Pay Per Click Advertising, there is also a lot of work involved with managing an Adwords campaign, including, first and foremost, ensuring your business is getting a good ROI.

From testing and tracking conversions, to performing a thorough keyword analysis, to spying on your competitors, it is imperative that businesses know what they are getting for the money. (And this goes for The ROI of Everything, not just Adwords.)

In order to manage an effective Adwords campaign and not waste money over time, you should be aware of “hidden” costs, or the default settings in your Adwords campaign. Google may or may not be evil, but the default settings in Adwords, by design, can cost you a lot of money, especially over time, if you do not manage your investment and monitor your campaigns regularly.

New advertisers can especially be wasting money, as many of them do not notice these default settings at first.

If you are thinking of beginning an Adwords campaign, or are currently managing one, there are several “hidden” costs you should be aware of. The PPC Blog recently put up a Google Tax Calculator, which allows you to estimate the money you may be wasting if you do not adjust these settings or address some of these issues. This is a really neat tool, and although I cannot vouch for its accuracy, it does an excellent job of pointing out the hidden “taxes” you should be aware of.

Over the next couple of weeks, this blog will address specific ways you can save money by configuring your Adwords account settings to what works for YOUR company, not Google’s bottom line. A general rule of thumb is, the more targeted your ad is – your ad copy, your keywords, your landing page, the less money you will need to bid in the long run.

Hidden Costs of Keyword Matching

Today, let’s hone in on Keyword Matching Options. Adwords allows for three types of keyword matching: Broad, Exact, and Phrase. (There are actually four, but we will discuss Negative keywords at a later date.)

Pay attention, because Keyword Matching Options can be very dangerous.

Broad Matching

Let’s say you are a music store and you sell guitars. If you use Broad matching, which is the Google default, for the keyword electric guitars, your ad could potentially appear when someone Googles electric ovens. I hope no one clicks on your ad, because they surely wouldn’t find what they were looking for!

In the Google search below, I only typed in electric. Notice that Musician’s Friend (2nd Ad down on the right) is targeting that keyword for their electric guitar ads. This is most likely a big waste of money for them.

adwords example

There are times you may need to use broad matching, but you should also be thinking of more innovative ways to use exact matching, phrase matching, and negative keywords.

“Phrase Matching”

Using Phrase Matching makes it possible to target your ads and get more relevant impressions and clicks. For example, if you were to use “acoustic guitars” as your search term, your keyword may appear for searches like buying an acoustic guitar or martin acoustic guitars, but it will only contain that phrase in some format, or a phrase with close synonyms, like guitar acoustics.

One thing you DO want to avoid is a phrase like how to play an acoustic guitar, because someone searching for that phrase most likely already has a guitar in hand!

Notice in the screenshot below, all of the companies that bid on “acoustic guitars” are gone. Only businesses that offer guitar lessons are bidding on the phrase “how to play an acoustic guitar”.

google adwords

[Exact Matching]

You can eliminate the problem of irrelevant searches altogether by using Exact Matching only, but this requires that you use EVERY combination of keywords possible. That’s why there are options :-)

With exact matching, only the exact phrase will appear. For example, your ad with the keyword [acoustic guitars] will only trigger when someone types in that exact phrase. Therefore, you would need to think of every possible phrase that someone might use if they were looking for an acoustic guitar, including misspellings, like acoutsic guitar.

Negative keywords are another method to use to fully target your Adwords campaign, which we’ll discuss next time.

What you should remember is that the thought that goes into developing an Adwords campaign may seem tedious and pointless when you’re first starting out, but when campaigns are set up almost randomly and by intuition only, the campaign not only wastes money, it may also not have any ROI whatsoever.

I would love to hear your thoughts or questions about using Adwords – what are you doing to increase your ROI?

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3 Responses to “Hidden Costs of Google Adwords – A Look at Keyword Matching”

  1. Pam Says:

    This is so helpful. I didn’t even know this was an option. Now, it seems my problem is that many of my keywords have low search volumes, but those are the terms that I want to show up for, the search categories that make sense for the firm. blargh, I don’t like Adwords.

  2. admin Says:

    Adding different combinations of keyword phrases will help boost the search volume. For example, more people may use the word ‘attorney’ as opposed to ‘lawyer’. Or ‘attornies’ or ‘lawyers’. And then using each of these variations with the other keywords, and their variations. PPC definitely requires a thorough keyword analysis. Also, don’t forget misspellings!

  3. Chicago SEO Says:

    Good article, I notice in one of my accounts, which contains several campaigns and ad groups, that when I used exact matching instead of phrase matching that the ROI is worse! How is this?

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