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This paper explores the process of acquiring a Google Grant and effectively using Google AdWords for advertising, specifically for non-profit organizations. Topics include an overview of the AdWords program, the use of other Google applications, and techniques for optimizing ad text and bids. The study is based on real-life examples and offers insights on how to create successful advertising campaigns.
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By Peter Anderson and Ben Brookins Presented to the Department of Economics, University of Oregon, in partial fulfillment of requirements for honors in Economics. Under the supervision of Prof. William T. Harbaugh June 200 8
Abstract: Our goal for this project is to provide a model by which non-profit organizations can use Google AdWords online advertising to increase visibility and, ultimately, donations. By examining current research on the subject and looking at select case studies, we have arrived at a practical and theoretical solution that requires little maintenance and can be applied to nearly any organization with ease. By following these guidelines, we believe a non-profit organization can increase its visibility – at nearly no additional cost – while achieving its ultimate goal: increasing donations.
Prof. William T. Harbaugh Date
This paper examines the acquisition of a Google Grant and the optimal use of Google AdWords Web advertising specifically for non-profit companies (though for- profit businesses are mentioned as well). First, we will offer some background information on the organizations we have worked with, as well as what the AdWords program is, how prospective users can get an account, and we will eventually explain how the program works and what changes can be made to an account that will effectively optimize and streamline it, including the use of other Google applications beneficial to running a successful advertising campaign. The primary source of our field research has come from Africare, a charitable organization that collects donations in order to benefit Africa in numerous ways: combating HIV/AIDS and funding Africa’s medical infrastructure; providing agricultural resources; developing water extraction and purification facilities; providing education and vocational training; and offering funding in times of emergency. It was awarded its AdWords grant in September 2006, and it has found success in increasing Web traffic since that time, but Africare currently has no means of tracking donations that come as a result of Web traffic via its Google AdWords account, as site visitor and donor data are not being recorded. The campaign is also in need of optimization, as some elements of their current campaign effectively work against Africare, rather than for it. Our goal is to help them fix these problems and set them in a position to collect more relevant data, so that regression analysis is possible and more specific conclusions about donors can be achieved – not to mention increasing site traffic and donations. Food for Lane County is a non-profit specific to Lane County, Oregon. As the name suggests, it is a food bank, and it accepts donations in the form of both food and
volunteer hours. It competes with both local and national food banks; its main competition comes from the United Way. Though they have had success increasing donation figures for the past few years independent of Web advertising, they have expressed interest in advertising more effectively. It is our shared belief that an online ad campaign through Google AdWords will not only increase local visibility and donation totals, it will allow for relevant demographic data collection, further enhancing FFLC’s knowledge of its local market and eventually permitting more targeted advertising methods. Food for Lane County is still in the early stages of this process, awaiting organizational approval to apply for an advertising grant. Before we go any further, it is important to understand what Google AdWords and a Google grant are. Google AdWords are sponsored advertisements that are displayed during a Google search. See below:
Google Analytics – A Javascript-based tracking script that allows Web administrators to track visitors to their site by a variety of criteria, including information on page views, time and duration of visit, number of pages seen, number of new visitors, how visitors got to the site, and so forth. It also collects demographic information on visitors by geographic area, language, operating system, Web browser, and other relevant factors. Within a given geographical area, visitors can be tracked by country, state, county, city, or other specified geographic region. We recommended adding an Analytics tracking script for the purpose of data collection, with the eventual hope of compiling demographic information on donors. Google Checkout – Google’s financial transactions software, Checkout processes credit card transactions in a secure manner, much like PayPal or other secure transaction programs. A Checkout button can be easily created as HTML code and added to a Web page; when clicked, the visitor is taken to the checkout phase of the transaction. We encouraged the use of Checkout in order to offer donors a safe, secure, and simple way to donate to a charity, as well as for the purpose of linking demographic information with donor information for a more complex data analysis. For a complete list of all Google Programs relevant to this paper please see Appendix A. Literature Review While most of the research here is highly applicable to any project in which marketing objectives are to be met, we will summarize the conclusions of previous research in the body of this paper. For a more in-depth examination of the following research, please refer to Appendices E and I.
The first step in figuring out how to run a successful AdWords campaign is to first understand what the AdWords program is in greater detail, as explained by the literature available from Google. AdWords functions like an auction: if two or more AdWords users want to purchase the same search phrase, whichever ones pays more for it will have their ad placed in the top spot. The bid, in this case, is a maximum cost-per- click bid: essentially, the user has to determine how much it is worth to have their ad displayed above other, similar ads, and then clicked on by a searcher. The cost-per-click bid (hereinafter referred to as CPC) is the maximum amount a user will pay Google for one click on their sponsored advertisement. There are four key components of every AdWords campaign, all of which must be understood and addressed in order to fully grasp the program: the search phrase or keyword, the CPC bid, the Quality Score and the click-through rate (hereinafter CTR). We have already discussed the CPC bid as it relates to keywords, so the next thing to understand is the click-through rate (CTR). Each search phrase a user bids for has its own CTR, which is calculated as the ratio of clicks on an ad against the total number of times the ad appears (which Google calls an “Impression”). For instance, an ad that has been shown 100 times and clicked on 20 times will have a CTR of 20%. It follows, then, that a high CTR is vastly preferable to a low one, because it means the ad is successfully bringing searchers to the user’s site. Having a high CTR is also important in determining a keyword’s Quality Score, which is an overall evaluation of the quality and success of a given keyword. Keywords that have a high CTR are more successful, meaning Google evaluates them as higher quality than ones that do not perform as well – as such, they will receive a high Quality
In Advertiser A’s case, their bid of 40 cents and their Quality Score of 1.8 give them an Ad Rank Score of .72. Advertiser B, despite having a much larger CPC bid of 65 cents, falls into the second position – this is a direct result of the Quality Score being significantly lower than Advertiser A. Conversely, Advertiser C has a higher Quality Score than Advertiser B, but has set its minimum bid too low to compete for a higher ranking. The actual CPC paid is the amount an Advertiser has to pay in order to maintain their current ad position. Let’s look at Advertiser A, whose actual CPC is 37 cents. If Advertiser A were to bid anything below 37 cents (say, for simplicity, 36 cents), the Ad Rank Score would fall to .36 * 1.8 = .648, dropping them below the Ad Rank Score of Advertiser B (currently .65) and lowering their ad position. Similarly, if Advertiser B were to lower their bid to anything below 38 cents, Advertiser C would take over the second position. Please note that Advertiser C, with no other competitors for ad space, pays the minimum amount possible (1 cent) for their position. Should another competitor come along, that cost would increase, but in this simple model with only three bidders, they pay only 1 cent. Users have a budgetary cap on both CPC expenses and daily expenditures, at which point their ads will stop being shown until midnight of the next day. For non- profits, the maximum CPC bid for any search phrase is $1, and their daily expenses cannot exceed $330; for standard accounts, the limits are $100 and $250, respectively. It should also be mentioned that, though a user may not “win” the auction, their ads will still fluctuate up and down in terms of ad position over the course of a day. This happens for a variety of reasons: constantly-updating Quality Score calculations,
budgetary limitations, specific requests for ads to be shown during certain times of the day, and so forth. There also exists a minimum CPC bid for search terms, relating directly to a search phrase’s Quality Score. Phrases with a Great Quality Score can be bid on cheaply, usually between 5-10 cents, because they perform well and will make money for Google thanks to their high CTR and search volume. Keywords with an OK Quality Score must have a minimum CPC bid of around 30-50 cents; there will be decent search volume and a reasonable CTR, so a moderate bid will be sufficient. Phrase with a Poor Quality Score, by extension, are the most expensive, usually requiring a minimum CPC bid anywhere from 80 cents to $5.00, depending on how low its search volume is. These ads are almost never clicked on despite numerous Impressions, and thus Google cannot justify letting them be purchased cheaply. We will also mention ad text in brief, even though it is more of a marketing component and slightly beyond the realm of this paper. Each Google AdWords ad itself is made up of five components, as seen in the image below:
searched for, are an effective tool in limiting ads unlikely to be clicked on, specifically ads in which the search phrase requests information but not necessarily action; B) All possible variations on keywords should be purchased, including plural forms, misspellings, synonyms and the like; C) Determining maximum CPC bids and daily budgetary limits for given phrases was done using the constraint: net profit / sale * conversion rate = maximum amount for price offer In which better-performing products are afforded a higher percentage of the advertising budget; and D) That ad text techniques, including repetition of the specific search phrases and a call to action in the first line of the ad text, perform better than less- specific ads. For example: These ads, pulled from Danciulescu’s recommended changes, highlight exactly her point: there is repetition of the search phrase in the ad, once in the headline and again in the ad text, and there is a specific call to action in the ad, suggesting the searcher should buy the product. These ads even highlight a promotional offer in the form of discount coupons and free shipping, for as she suggests, searchers respond well to specific incentives over options where such benefits are not guaranteed. Edelman and Schwartz (2007) explain that the optimal reserve price (CPC bid) for an ad (assuming budgetary limitations, which isn’t always the case) is a function of the value of a given ad position to the organization bidding on given search terms, as well as
exploring the effects of market depth (the number of bidders for a given search phrase) on overall cost and value. Note that their research did not specifically mention any organizations in particular, and dealt more in mathematical regressions than anecdotal case study data. In addition to understanding ways the program can be optimized, it is vital to understand the target audience and what they respond best to. There is significant literature on motivations for charitable giving and economists understand why people give to charity well. Although this is an interesting and important field, it is not as obviously applicable to soliciting donations as other literature. For a further discussion about the motivations for charitable giving, please see Appendix J. Overall, knowing the characteristics of charitable givers is important in that it can allow non-profits to better target their efforts in soliciting donations and volunteer work. Brooks (2003) found that a religion plays an important role in charitable giving; a secular person is 23% less likely to give monetary donations and 26% less likely to volunteer for a charity than a religious person. This means that non-profits may want to focus their recruiting efforts of religious organizations or emphasize aspects of their charity religious people may find appealing. Kitchen (1992) found that both wealth and the age of the head of household is positively correlated with charitable giving. Older, wealthier people tend to give more money to charity. This tells us what age group an organization may want to target with its advertisements: it is useful to keep older people in mind when designing the site and writing advertisements. Venable, Rose, Bush, & Gilbert (2005) studied important factors in marketing for non-profits. They found that four characteristics of brand personality
Results of Tooley’s Study (2008)
Similarly, research done by Haynes, Thornton & Jones (2004) has found that advertisements that appeal to an individual’s sense of guilt (i.e. negative imagery) is significantly more effective at attracting attention than those that appeal to an individual’s sense of warmth (i.e. positive imagery). This is of particular interest to both Africare and Food for Lane County, as both are charities that try to combat issues in which negative imagery is bountiful – malnutrition, AIDS research, rampant poverty, and so on. The Application Process for Non-Profit Organizations Now that we know what AdWords is, how it works, whom the ads are targeting and why that targeting has been shown to be effective, we turn to our own case studies as empirical examples of everyday organizations that can benefit from the knowledge presented here. This process begins with the application for a Google grant. Though this step is shorter and much less involved than the next step, creating an effective AdWords campaign, it is crucial for a non-profit to get right – Google Grants does not deny very many applicants, but those that it does deny are denied forever. (For a review of the details of the application process, see Appendix B.) As stated, this is the step where Food for Lane County currently sits: previously unaware of the Google AdWords program on the whole, but highly interested in increasing its local advertising. As such, it has been encouraged by our research to apply for an AdWords grant. Once again, this process is fairly straightforward; we will assume throughout the rest of the paper that an organization already has an AdWords campaign,
Here we have more detailed statistics. There are 12 specific ad groups, each of which contain several variations of search terms that relate to the name of the ad group. Each ad group has its own set of key statistics, including CTR, average CPC, total cost, and, unlike before, average ad rank. We now have a better idea of what Africare’s campaign looks like, and we understand all the relevant information, so we can examine what is happening with Africare’s campaign specifically and discuss which pieces of it fit with our model and which ones should be altered. Creating an effective Web ad campaign ultimately means working to ensure uniformity throughout the campaign. To recap, the important components:
Only when all of these components are considered can the goal of optimizing the campaign begin. As such, we will describe all four of these factors and explain how to create a uniform campaign, using our work with Africare as an example. Keywords Selecting the proper keywords is arguably the most subjective step of the four – and the most difficult to get right. Keyword selection varies depending on the type of organization, its focus, what points it wishes to emphasize or feels will generate the highest search volume, competition for the same phrases from multiple sources, and so forth. Like Feng, Pennock & Bhargava, we found is that organizations that emphasize specific search terms with lower search volume actually see increased traffic and lower costs than those that opt to buy common, high-traffic search terms. Selecting organization-specific terms, which face much lower demand than common terms and are more relevant to the site, will result in a lower CPC bid and improved Quality Score. Additionally, these specific terms almost always result in a higher CTR, furthering increasing Quality Score and lowering total CPC. Africare has, logically, purchased several search terms relating to the continent Africa. A snapshot of its “Africa” campaign can be seen below (sorted by CTR):
