If your business is looking into online marketing, you’ll likely come across a system called AdWords. This Google platform is an excellent way to increase your business reach online and drive more traffic to your website. But it can also cost you a fortune, if you don’t know how to use it correctly.

How to Avoid AdWords Mistakes That Cost You Money

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This guide will help you understand 1) what AdWords is and 2) why your business will benefit from it. You’ll learn 3) how to avoid major adwords mistakes and use it without spending a fortune.


If you are a small business and in charge of your own marketing, chances are you’ve heard of AdWords. Google’s online advertising platform is a popular service and if you’ve never heard of it or used it, it’s about time that you take a look.

AdWords is essentially an online advertising platform, which allows you to display ads for your business using Google platforms. The system enables its users to advertise and gain visibility on Google’s search engine, together with various other Google websites and services. In addition, it will increase your visibility on partnering search engines and websites.

AdWords is based on a pay-per-click (PPC) advertising model. That’s as easy as it sounds: Every time someone clicks on your ad, Google will charge you a fee. Therefore, you don’t have to pay for advertising that doesn’t result in clicks. Instead, you pay only for advertising that has reached the customer. On the contrary, if you for example advertise in a newspaper, you will have to pay for the ad space, even if nobody visits your website or calls your number. Bummer!

For various reasons, AdWords has changed the way businesses advertise online. It has become one of the key tools businesses can use to can gain more exposure online and increase their reach.


If you’re still not sure whether or not AdWords could help your business, consider the following points and you may become more interested:

  • Increase your business reach – the main reason why businesses use AdWords is to reach out to potential customers online. AdWords allows you to display advertisement all over the internet which significantly increases your business visibility.
  • Measure advertisement performanceStarting a marketing campaign, you don’t simply post your advertisement randomly in the internet. You have to measure the effectiveness of your advertisement, or you will end up paying money for nothing. Using AdWords’ simple PPC model, you will easily see how many people click your ads and continue to browse on your website to make a purchase.
  • Find out more about your customer – AdWords can help you to learn more about your customers, because you will understand what kind of ads they find appealing. Once you know which ads they pay more attention to, you can use the data to improve the content on your site and tailor it to your customers’ needs.
  • Venture out to other platforms – AdWords displays your ads on different Google platforms. Therefore, you can further increase your business reach.
  • Control your advertising costs – AdWords will only charge for the clicks, which means you only pay for the exposure you actually receive. That can be cheap, but it can also be expensive. However, the platform allows customisation, so you can run your campaign with a maximum cost per day.

Moz’ research suggests that 75% of search results contain AdWords ad placements. That means your business can’t afford to lean back and watch competitors gain a competitive advantage using the platform. As the saying goes: Sometimes the only way to beat your competitors is to join them.


Whilst AdWords comes with a variety of benefits, unfortunately a number of businesses don’t always make the most out of it. Although the system can help you to cut down on advertising costs, it can leave you broke if you don’t know what you are doing.

If you’re struggling to get your AdWords campaign started or if you feel your expenses are out of control, then you should consider the following tips. If you are just starting out with AdWords, these are the mistakes you should avoid, otherwise you might pay more than you should.

Mistake 1: Using inefficient keywords

First, you must learn how to use keywords. When it comes to online advertising and SEO, keywords play a crucial role. Unfortunately, the proper use of keywords seems to be a bit of a mystery. Consider the following tips, to improve your keyword use with AdWords.

Take advantage of your USP

The keywords you use in your campaign should always reflect your company’s unique selling proposition (USP). Remember, there’ll be hundreds of other companies competing for advertising space, so you need to highlight your strengths.

Figure out what differentiates your business from your competition. You should ask questions such as:

  • Why is my product or service superior to that of my competitors?
  • What added value can my business offer to customers?

Your answers to these questions will help you to run a more effective AdWords campaign. Ensure the keywords you use reflect the USP and your business strengths.

Use negative keywords

AdWords states negative keywords “are a type of keyword that prevents your ad from being triggered by a certain word or phrase.” Using negative keywords might not sound like a good idea – these are the words that prevent your ad from showing up – but using them will save you money.

As a result of using negative keywords, your ad will not be shown to people who are looking for something else, that is not a valuable match for your product or service. In essence, it stops the ‘wrong’ people clicking on your ads and costing you money.

Let’s say you are running an ad for guitar tutorials. You might use a keyword “guitar tutorials online”. Since your lessons come with a fee, you don’t want people who are looking for free tutorials to click on your ads. Therefore, you can run “free” as a negative keyword. This means your ad won’t show for any search using the word “free.”

Don’t use too many keywords

When businesses are starting out with AdWords, they tend to go crazy, listing tons of keywords relating to their business. However, the golden rule is “less is more.”

You can’t add all the keywords to your ad campaign and you need to exclude certain information. Simple ads often convey the most effective message and you should not try to cover all the bases at once.

Group keywords correctly

Finally, you need to make sure to group your keywords in the correct way. A costly mistake first-timers make is to use the default grouping option: broad match. In fact, you have other ways to group your keywords and these are often a better use of your money. The keyword match options include:

  • Broad match – your ad will appear when people search for any of your given keywords.
    For example, if you run an ad for “best ugg boots”, your ad can show for searches as wide as “ugg boots best”, “best ugg boots to buy” and “ugg boots for kids.”
  • Phrase match – your ad appears only when people search for the keywords in the exact order.
    For instance, if you run an ad for the “best ugg boots”, the ad will only show up when people type in “best ugg boots.” They can include other related keywords, but the keywords you used need to be in the exact order.
  • Exact match – your ad will appear when people search for exactly the keywords you used.
    Therefore, for your “best ugg boots” ad, the ad will only pop up when people search for “best ugg boots” – nothing more, nothing less.

Now, grouping all of your keywords with the default broad match means your ad will attract all kind of people. Since they could be looking for something totally different, they may not even want to buy anything, you might end up paying for clicks that are absolutely worthless.
This doesn’t mean broad match is never useful, it just means that by default it can hurt your ads more than help them.

Mistake 2: Paying for services that you don’t need

The first rule of business finance is to understand where your money comes from and where it goes to. The same rule applies to AdWords and the following tips will help you understand when and what to pay for.

Measure profit margins and conversion rates

First, you need to understand and measure your profit margins and conversion rates. You can calculate the appropriate profit margin for the ad campaign with the following formula:


[(Revenue Per Click x Margin) x Clicks] – (Cost Per Clicks x clicks)

Total Cost


Note that you can easily set up a conversion for inquiries and sales from the “Tools and Analysis” section at the AdWords platform.

Don’t pay for ad time that you don’t need

AdWords campaigns are set to run on a 24/7 basis by default. However, having your ads available all around the clock might not be worth the additional cost.

To understand the perfect time for your ads, you need to understand your customers. If you are targeting businesses, then running ads over the weekend might not be fruitful. On the other hand, if you are looking for customers for your Monday morning sessions, there’s not much chance of conversions Monday afternoon or Tuesdays.

You can keep track of your ads performance from the “dimensions” section in the user interface. Check out when you receive the most conversions and consider limiting the visibility of your ad.

Bid for the brand

Instead of simply bidding for popular keywords, you should aim to bid for your brand name keywords as well. Brand bidding can improve your search engine rankings and provide more organic search results.

Brand bids are typically cheaper than popular keyword bids. But at the same time, they can boost your conversion rate. A customer searching for your brand is already interested in what you have to offer. If instead of finding your business, they come across a competitor, you might lose out on an ‘easy’ sale.

Don’t forget your quality scores

Google attaches a quality score to each ad. This score, ranging from 1 to 10, essentially tells whether the platform views your ads as high-quality or low-quality. The score is based on a number of factors. You can find a more detailed explanation in this WordStream post.

Basically, what you need to understand is the higher the quality the less you’ll be spending per click. The reason is that Google is placing low-quality ads much lower in the search results.

Calculate your Lifetime Value (LTV)

Finally, determine how much you want to spend on AdWords to acquire a single customer. Therefore, you have to calculate the Customer Lifetime Value. The calculation determines how much each customer spends on your products or services. Hence, you will know how much you should spend on ads per customer.

For example, if your customer lifetime value is $50, you don’t want to spend $60 to attract the customer. You can read more about calculating the rate at Conversion XL.

Turn off content network

Finally, the platform also uses content network advertising by default. This is a form of contextual advertising, which aims to place your ad on larger sites. But for a number of businesses, visibility on these platforms doesn’t result in conversion clicks, but rather in low-quality clicks. In the end, you might receive clicks, but not clicks that lead to conversion, which means you end up paying more for your advertising. Therefore, you don’t want to spend your money on it. Turn it off.

Mistake 3: The content doesn’t match with the ads

AdWords is great when you have a real value proposition that you think will benefit your customer. On the other hand, it’s not a great tool if you only want to boost your company’s online presence. Simply put, don’t spend money on AdWords if you have nothing worth advertising. Consider the following tips:

Focus on quality content

Create quality ads with meaningful content. Hence, the keywords of your ad, together with taglines and images, should always be directly related to the product or service that your business offers.

You should avoid misleading ads – never advertise for “free guitar lessons” if you are only offering saxophone lessons for a fee!
In addition, since you are competing against other ads, keep the USP in mind and make your ad stand out in the crowd. Copying what others are doing won’t help you catch customers’ attention.

Drive customers to the proper landing page

Your ad will include a link to a location on your website, the so-called landing page, which is essentially the location where the person arrives when he/she clicks the ad or link. A typical mistake is to simply use your company’s homepage as the landing page. Remember, the customer clicks on the link in order to make a purchase or to learn more about the product, not to find himself trying to figure out where to go. Make it easy, lead the way.

Let’s say you are running an ad for “large family sofas.” You need to ensure the link takes the customer to a page where he can purchase large family sofas or learn more about these sofas. If the ad instead takes the customer to a furniture store homepage, they will simply close the window. Don’t waste your customer’s time, he won’t appreciate it.

Mistake 4: Expecting too much from AdWords

AdWords comes with a variety of benefits, so you shouldn’t expect it to quadruple your sales overnight. AdWords is just one of many advertisement channels and your business won’t be the only one using it.

While AdWords is a relatively cheap way to advertise your business, it isn’t free. If you have a limited budget, you need to make sure you don’t make costly mistakes, and you need to understand the limits of your campaign. You will be competing against other companies, often for the same keywords, and large corporations will naturally have more to spend on their campaigns.

AdWords won’t start creating results overnight. In fact, it can take some time to build up your AdWords profile until you start to receive the results you need. If you don’t have patience, you’re better off putting your advertising money somewhere else.

Finally, use AdWords as an additional marketing tool. If you base your marketing campaign solely on AdWords, you may not receive the results and exposure you want. Ensure AdWords is just part of your larger marketing effort.

Mistake 5: Not testing and measuring your AdWords use

Finally, you should remember to measure your performance with AdWords to ensure that your operations are cost effective. AdWords has made it easy to measure the success of your ads and you can use this information in order to calculate your return of investment (ROI).

The key statistics you should be aware of include:

  • Quality score. As mentioned earlier, the quality score determines the ad’s rank and your costs.
  • Click through rate. The metric showcases how often people click on the ad. A high CTR (1% or higher) means the ad is relevant and people often click on it. A low CTR (anything below 1%) shows your ad isn’t attracting enough people to be worth it.
  • Conversion rate. This metric shows the number of times people click on your ad and follow up with concrete action, for example a sale or a sign-up. Your goal is a high conversion rate to ensure people aren’t simply clicking the ad for nothing.

Use different keywords, ad positions and even times to test which ads lead to better results in the above categories. If a keyword is not working, i.e. resulting in conversions or clicks, you don’t want to continue wasting money on it.

It is often a good idea to run two similar ad campaigns with different keywords, but for the same product. This helps you to determine which ad attracts more traffic to your site.

Is AdWords the right thing for you? Review the relevant points and if you are interested, give it a try.

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