Google Adwords is the biggest and most advanced Pay-Per-Click (PPC) advertising system developed and maintained by Google. You might have already seen Google Adwords if you are a Google user, they are the small advertisements or ads you can see next to the search results on Google. They may also appear in Google's Partner sites like Ask Jeeves, AOL, Teoma, Earth link and others. You can even have your ads show up on Google webmail sevice, GMail, when users send emails that include content
relevant to the keywords you had bidded for.

Adwords is a terrific complement to any existing advertising campaign, but probably should not be used as the sole marketing channel for your website. This program allows you to control your advertising budget by giving you the ability to set the maximum price that you're willing to pay, per click, and also a maximum allowable daily advertising budget. You choose the keywords that you would like to target, bid on the maximum per click price you'd like to pay, and Google will send focused traffic to your website. According to Google, Adwords text advertisements boast a standard click-through rate four to five times higher than traditional banner ads.

Adwords Vs Overture

Overture is the main competitor to Google AdWords. Overture is strictly price driven, which requires a ton of editors to perform countless hours of maintenance. Google is a highly mathematical company, and protect the quality of their listings in two ways: they have editors, and more importantly they monitor click through rate.Overture does not always show the correct ads in the correct websites, so it lead to low Click Through Rates (CTR) too.

What is Click Through Rate in Google Adwords ?

As more and more people click on your ads when they see it in Google or any of its partner sites, your click through rate increases. Click through rate is a rough approximation of relevancy, in many ways this parallels the idea of grading the web on links. A relevant ad will have higher click through rates than a non relevant listing.

It is smart to avoid choosing keywords that are too vague or general. To generate highly qualified prospects you have to choose very specific keywords. This way, competition for the keyword will be lower, and it will cost less per click, and you won't be throwing money away on expensive, unqualified leads. For example, if you only sell Green Widgets, don't bid on the term "Widgets" it is too broad and you'll pay for clicks from people searching for "Red Widgets"

What is Cost Per Click in Google Adwords ?

Cost-Per-Click (CPC) as the name suggests, is the amount of money you will have to pay Google Adwords when somebody clicks on your ad. Your CPC is automatically lowered to one cent more than your closest competitor. Google Adwords does not show you, your competitors bid price to you unlike Overture.

Create a budget and stick to it. In marketing, there is a saying, "I waste half my advertising dollars, but, the problem is, I don't know which half". It's difficult to know how effective the Adwords program will be if you're also utilizing other marketing channels (as you should be). When checking out, give your customers the option to let you know how they found your website. If you find Adwords is paying off, then it may be smart to increase your budget. It also may not be very cost efficient to bid for the #1 spot for every keyword. The #2 position may be almost as effective, but cost only half as much.