Advertising on Google: The High Performance Cookbook: Cracking pay-per-click on Google can increase your visitor numbers and profits. Here are over 120 practical recipes to help you set up, optimize and manage your Adwords campaign with step-by-step instructions.

Keep in mind the following basic terms and concepts discussed in this book:

As you create your campaigns and plan AdWords strategies, focus on relevance by:

Clickthrough-rate (CTR) is the number of clicks divided by the number of impressions.

CTR (expressed as %) = Clicks / Impressions

Each of your ads and keywords have their own CTRs, indicating how compelling users are finding your ads and keywords. CTR helps you gauge the success of your marketing efforts and it factors into Quality Score.

Quality Score is a measure of how relevant your keywords are to your ads and to your landing pages. It is calculated at the keyword level every time someone does a search for one of your keywords, and ranges from 1 (lowest) to 10 (highest). Quality Score affects your ad position as well as how much you'll pay for clicks. Advertisers with higher Quality Scores are rewarded with lower CPCs and better ad positions.

You likely already have a list of businesses that you consider your key competitors in a particular market. However, they may not all be advertising on AdWords. Armed with a list of websites you consider your competition, you can begin researching their online ad presence.

Start with a search on Google using terms that you consider your main keywords or ways that customers look for your products or services. In the following example, we searched Google for PPC ads to figure out which websites are coming up in both organic and paid listings.

Organic, or natural listings, are on the left below the search query, while the paid ads are to the right and potentially above the organic listings.

Take note of paid ads coming up for your key searches, including how many ads are appearing. Scroll to the next page of search results to see additional pages and websites that come up after the first page of Google's search results. The more ads there are, the greater the competition and the more saturated the market is for those keywords.

The paid ads that we see may not be the same businesses we identified as our competition prior to doing the search. Our competitors may not be advertising with AdWords or our search query may not be triggering their ads at the time of our research. You may also find new businesses that you were not previously aware of that you will be competing against.

It's also possible that your keywords are applicable to different industries and areas of focus. In any case, the ads that consistently come up for your most important keywords in your target locations will be your competition in the online ad auction, and you'll need to better understand their strategies to make your own campaigns successful.

Perform the Google search, as previously explained, multiple times a day and on different days. Each auction is in real time and we'll likely see different results every time we search on Google. Your competitors' ads may or may not show when we perform a search based on their campaign settings, including during what days and times of the day they have set their campaigns to show, or what locations they have chosen to target via their campaigns.

The following are a couple of popular PPC spy tools that will allow us to do basic domain and keyword research for free:

For a more thorough list of keywords and ads that the various domains are using, you will need to purchase a subscription. However, you can do some basic research through the free look ups using one of the previously listed tools.

Use tools such as KeywordSpy and SpyFu to research competition as follows:

Third-party keyword spy tools analyze a domain's behavior over time on various search engines, including what keywords and ads websites are appearing on. Spend data is estimated based on assumptions that take into account ad position and how often ads are appearing for the various keywords. Data may not be available for all countries.

It's important to note that PPC keyword spy tools do not actually have access to other advertisers' accounts, and as such they are not 100 percent accurate. You can use them as a starting point in understanding your competition, but ultimately you should do your own keyword testing to determine what works best with your goals and budgets.

Decide which tool you would like to use. You can start with one of the free basic PPC keyword spy tools, such as KeywordSpy (www.keywordspy.com), for basic budget and average CPC look-ups.

The Google AdWords keyword tool uses historic data and provides estimates only, not exact numbers. Once you have an AdWords account and are logged in, you'll see additional information in the Google AdWords keyword tool, including average CPCs and local search trends, which provide a sense of seasonality and traffic volumes throughout the year. While logged into your AdWords account, you can import the keywords you are researching in the keyword tool directly into your campaigns.

Keep in mind that results will vary for different websites and that budgets should be consistent with your marketing goals. High spend advertisers typically have more comprehensive ad campaigns and are likely seeing a positive return on investment (ROI) from AdWords. However, low spend does not necessarily mean that AdWords is not profitable. A business could simply have budget constraints unrelated to AdWords' performance. Also, just because a competitor is investing a lot into AdWords does not mean that you will not be able to compete without a large budget. I recommend starting with conservative spend as you figure out what works for you and test the various options that AdWords has to offer.

Before you start spending money on AdWords, you will want to determine what you'd like your visitors to do once they come to your website. It's important to understand your end goal so you can properly track and measure results of your ad campaigns.

Think about what you would like your visitors to do once they come to your website. The following are some common conversion goals advertisers have:

The goal of online ads is to get as many visitors as possible to take the actions you previously identified. In essence, you'll try to maximize clicks that result in conversions and optimize the ad to increase your conversion rate.

Conversion rate is the number of conversions (sales, leads, and so on) divided by the number of clicks received during a set time period. For example, if you received 5 online leads (conversions) out of 100 clicks from AdWords, your conversion rate would be 5 percent.

Conversion rate = Conversions / Clicks x 100

Conversion rates vary based on a variety of factors, including a website's look and feel and how easy or difficult it is for visitors to get through the conversion process. You can get an idea of how your website converts and how many visitors are completing your desired actions in your Google Analytics account, or through other web analytics programs you may be using.

Simplicity is key, and you should aim to minimize distractions and website features that would complicate or hinder the conversion process. For example, "Buy Now" buttons should be prominent and easy to spot, contact options displayed prominently on the website, and lead and registration forms as simple as possible.

I have heard industry experts throw around 2 percent as an AdWords average conversion rate across different industries. Typically, websites with a higher level of commitment required on a user's part (such as e-commerce) will have lower conversion rates than websites with lower levels of commitment required (such as lead generation). The Fireclick Index, http://index.fireclick.com/, can help provide some additional guidance on online conversion rates by industry.

The simpler conversion goals such as lead generation or e-mail collection will usually convert closer to 3 percent but can go as high as 5 to 15 percent. For lead generation, conversion rates can be all over the place since the marketing offers, the value of the product, and costs vary so widely.

First, understand average CPCs for your target keywords by following the steps outlined in the Analyzing budgets and bids to determine market saturation recipe.

One of the most important metrics you'll want to set for yourself is how much you are willing to pay for each conversion and then optimize AdWords campaigns with that goal in mind.

The cost-per-conversion is often referred to in the PPC world as your CPA.

Cost-per-action (CPA) = Total Cost / Conversions

There is no such thing as high or low CPA that we can generalize across all advertisers. CPA is relative and different business models will have different CPA thresholds. For example, a lawyer could pay $400 for an AdWords lead but that lead could result in a case that brings the firm millions of dollars, in which scenario a CPA of $400 would be a bargain.

Your returns will vary based on a variety of factors, including your website, how compelling your products and services are, pricing, and special offers to name just a few. Your conversion rates will also vary based on how you stack up in all of these considerations against similar businesses online.

I've had clients who said that one of their conversions could pay for a month of their advertising costs due to the nature of their business, and I've had clients who were only willing to pay a few dollars for each conversion, as the average value of each converted user was much lower. How much you should pay for each conversion will be unique to your business model, goals, and objectives.