Here’s how it works: if you’re a business, your location-specific phone number will display next to your Adwords ad as a clickable (touchable?) link for people who are searching on smart phones. Once they tap the number their phone will call your business and Google will charge you for an ad click.

If you’re a local business advertising on Adwords you should definitely take advantage of this. Not only does it provide the shortest path for a searcher to contact you/become a lead, but by displaying your local number you will instantly grabs searchers’ attention with your area code letting them know you’re located next door.

Have you tested this out yet? What kind of results have you seen? Let me know in the comments!

Related posts:

1. TC50 Winner ‘RedBeacon’ Points to Local Search Evolving… Are You Prepared?

Click here to download Adwords Editor

I was just prompted to grab the update as soon as I opened Adwords Editor, so just launch the application to get up to date.

Changes for this version:

• Ad scheduling and advanced location targeting (radius targeting, excluded locales and city combinations)
• Ability to update multiple campaigns at once
• Adds support for YouTube promoted video ads (anyone having success with these?)
• Checkboxes to update different campaigns and/or specific ad groups across multiple campaigns at once

If you’re managing 1 or 100 Adwords campaigns and still haven’t picked up the Editor yet, use this as your excuse to get it. It makes managing large campaigns and thousands of keywords a LOT easier.

Google release notes: Adwords Editor 7.6.1

Thanks to The Huffington Post’s awesome amount of traffic, 5 minutes is enough to get statistically relevant data on which headline their readers respond to the most.

You can instantly see the power of this. Headlines are notoriously the number one factor that decides if someone reads an article or not.

I’m not surprised that The Huffington Post is the first major news site to split test their headlines like this (that we know of). The kings of old media journalism are still largely stuck in their old ways of doing things, slow to spot and adapt to new opportunities in the marketplace.

The Huffington Post started online. It never had an offline distribution model because in 2005, they understood they didn’t need one. They are so great at “online” because they never had an “offline” history they have to evolve from.

No long-lasting traditions that are slow to be re-examined. No “time-tested” ways of doing things that have to be grown out of.

This gives The Huffington Post a great advantage — the advantage of nimbleness, of being able to spot opportunities and take advantage of them rapidly without having to get the approval of the old guards.

Let’s see how fast the other guys follow suit.

Related posts:

1. Hey, Adwords Advertiser: Google Thinks You Suck At Split Testing Ads
2. Is Google Split Testing a New ‘Search’ Button?

This may shock you, but a large part of winning the pay-per-click marketing game has to do with how much you pay per click.

There are two schools of thought when it comes to setting pay-per-click bids: position-based and economics-based. This will be a quick summary of both models and an argument for why I believe you must follow one of the schools over the other if you want to truly maximize the performance of your Google Adwords and other PPC campaigns.

A common-sense approach

Let’s forget about pay-per-click marketing for a second and take a quick look at how we make decisions concerning prices in all other aspects of our life.

If I told you I was buying a used car for $4,500, then asked you if you thought it was a good deal, you would probably say something like, “What’s the Blue Book?” You would need to know what it’s actually worth before knowing if the price is right… right?

Similarly, if you’re looking to buy an investment propery and your realtor calls you and says “Hey, I’ve got this great house on the market for only $425,000,” would you be able to confidently buy it over the phone right then? Of course not. You would first need to estimate the actual value of the property as accurately as you could before you knew if the price made sense.

Now, pretend for a second you know nothing about pay-per-click marketing, Google Adwords, quality scores etc. and just answer this question: How much should you bid for any given click?

The correct response that a successful marketer should give is: “It depends… what’s the click worth?”

Makes sense, right?

Here’s the dirty little secret: a large majority of marketers do not ask that question. It’s not because they are lazy pay-per-click managers (although that’s definitely the case for some); but because they subscribe to the “position-based” school of bid management.

What is “position-based” bidding?

“Position” refers to the position that your ad appears relative to other ads on the search results page.

The general rule: the higher your ad is on the page, the more your ad will get clicked. It will have a higher click through rate and bring more traffic to your website, resulting in more leads/sales for your business.

With Google Adwords (Yahoo & MSN have similar systems), your ad’s position is determined by the following equation: CPC bid x Quality Score.

Quality score is Google’s somewhat-secret sauce that is a number 1-10 given to your ad based on it’s CTR and relevancy to the keyword and to your landing page. Getting a high quality score is an important topic, and one that an entire e-book could be written on (and a few have been). For now we’re talking about bid management, so the factor we’re interested in is the CPC bid.

Position-based bidders believe that there is a “sweet spot” position on the page for every keyword in their campaigns, and they will adjust their bids accordingly in an effort to keep their ads showing in that position consistently.

You’ll often hear position-based bidders say things like…

• “Positions 4 through 6 are the most profitable spots to be on the page. You’ll still get solid traffic without paying the premium for the 1 through 3 spots.”
• “Positions 1 through 3 drive a lot more conversions than lower positions, so we’re going to keep bidding high to keep our ads up there.”
• “If you’re ad isn’t showing on the first page then you need to raise your bids to make sure you’re getting traffic.”

Are these guys right? Do some positions lead to better conversions? Is one position truly better or worse than another?

Everything wrong with position-based bidding

Almost as if they were the ones managing your Adwords account, position-based bidding lets your competitors decide how much you bid.  When your competitors’ bids go up, yours have to go up to keep your ads in the same position.

This is a problem for two big reasons:

1. Your competitors have different economic models than you. Just because a lead may be worth $10 to one of your competitors doesn’t mean it’s worth $10 for you. If you have a better sales funnel than they do, that lead could be worth $15, 20, even $50 for your business…
2. There’s a good chance your competitors simply don’t know what the hell they’re doing, especially when it comes to pay-per-click bid management of all things. This makes bidding based on position often a true case of the “blind leading the blind.”

Additionally, let’s dispel a myth — different positions on the page do not have different conversion rates. Sure, you may get more conversions in position 1 vs. position 5, but that’s only because you get more clicks the higher you are on the page. The actual percentage of those clicks that convert into customers does not change. (Here’s a report on the subject released by Google in Aug. ‘09: Conversion Rates Don’t Vary Much with Ad Position)

A return to common sense: economics-based bidding

Bidding based on economics simply means determining your bids by asking the age-old question, “What’s it worth?”

Applied to PPC, that means looking at every keyword and asking, “How much is a click for this keyword worth to my business?”

Notice that this is a fundamentally different question than asking, “How much are my competitors paying for this click?” or “Where will I show up on the page for this keyword?”

None of these things matter when it comes to deciding how to set your CPC bids. Once you know click’s value to your business, figure out the price you’re willing to pay for that value and that’s your bid. It’s that simple.

A quick example

If you’re bidding on “widget,” and your data shows 15% of people who click on your ad after searching for “widget” end up buying your $50 product, and you’re willing to spend 10% of sales on advertising, then your numbers for keyword “widget” look like:

• Conversion rate: 15%
• Sale value: $50
• A/S (Advertising/Sales ratio): 10%

To get the value of the click, we multiply your product’s sale value by the keyword’s conversion rate.

Click value = Conv. Rate * Sale Value

In our example, the value of a click for keyword “widget” = $50 x 15%, or $7.50.

To determine how much you should bid per click, multiply the click’s value by your A/S ratio.

Your bid = Click Value * A/S

In our example, your max CPC bid for “widget” = $7.50 x 10%, or .75 cents.

Position is irrelevant

Once you have set your bids using the economic model, you don’t need to worry about position. If your ad’s in position 1, great!

What if your ad drops off the page to position 12? Oh well. That means the current economics of your business (sale price, profit margin) combined with effectiveness of your sales funnel (conversion rate) aren’t enough for your ad to profitably display on the first page.

Does this mean you should raise your bid? Nope.

Does it mean you’ll be off the first page forever? Not by a long shot.

Maybe a handful of your competitors for that keyword are operating at a loss (especially if they’re using the position-based method). Once their money runs out and/or they finally realize it’s unprofitable for them too, they’ll drop their bid. If enough competitors do this, then all of a sudden your bid is high enough to be appearing in position 8 or 9.

What’s important is not your position, but that you have a bid that makes economic sense for your unique business and sales funnel.

Use the economic-based method to set your bids and you can be sure that wherever your ad shows up is exactly where it’s supposed to.

Related posts:

1. How Adwords’ “Dynamic Keyword Insertion / DKI” Works

The new tagline is “It’s You!”—ads feature the Yahoo graphical “Y” and exclamation point in them—as created by WPP Group’s Ogilvy & Mather. The campaign will seek to tie together some new features Yahoo has been adding lately meant to update its image, as more and more users get their content from social nets than portals.

Meanwhile, their pay-per-click search marketing platform leaves a lot to be desired.

• They still don’t have an offline editor, much to the chagrin of search marketers everywhere.
• Yahoo’s Account Optimization “feature” – where they kindly go into advertisers’ accounts uninvited and add keywords and write ads for their campaigns – got them a ton of backlash from the search engine marketing community. The best part? Advertisers have to opt-out, not opt-in to the program.
• Their interface simply looks like crap.

Yahoo’s priorities are in the wrong place. If you were high up at Yahoo, would you focus on imitating as many elements as you could from Adwords — the PPC platform that made Google 97% of its revenue last year (and 99% the year before that) — or would you just say screw it… let’s drop a hundred mil on some billboards.

Yahoo, there’s a reason you’re falling behind… “It’s You!”

UPDATE 9/22:  I think it’s hilarious that during the same week Yahoo announces this $100 million ad campaign, Netflix announces they have awarded their $1 million prize for the contest they announced three years ago that allowed any programmer in the world to take a shot at improving their movie recommendation engine predicting what Netflix customers would like to rent next.

It was a huge success and was 1/100th the cost of Yahoo’s branding push.

This year’s conference just ended, and the grand prize winner is RedBeacon, a company that is like a Yelp for local businesses.

People can use the site to search for local businesses in their area and are then presented with a list of featured businesses along with user reviews.

The company was founded by ex-Google engineers and product managers.

So today, some of the technology’s best minds got together and bet on a theory that most have come to view as inevitable: the way people find local businesses online is going to continue to change a lot in the coming years.

The internet has done a miraculous job of connecting the world, but we are still figuring out how to connect people to their plumbers next door. As solutions like AdWords (and perhaps RedBeacon) emerge, it’s hard to say which model will come out on top, but you can be sure that forward-thinking business owners will be there to reap the huge rewards that come with showing up early to the party.

Most small businesses owners haven’t yet figured out how to really harness the power of Google AdWords to drive traffic to their website and customers to their door. The businesses that have gotten themselves a steady stream of AdWords traffic have found that being a small fish in a big pond can be very profitable if their competitors haven’t had the courage or know-how to test the water.

Have you experimented with any new avenues for your online marketing recently? Have you stepped into the AdWords arena, or have you been waiting on the sidelines while your competitors figure out how to utilize this platform to make more money than they ever could before?

I don’t know what’s going to be the local business finder of the future, but what I can tell you is that there is a business owner down the street from you who is making very real money on AdWords as you’re reading this.

Whether that means opening an Adwords account today yourself, going back to one that’s been collecting dust, or finding a knowledgeable AdWords professional to outsource your campaign to, there’s no better time to start becoming comfortable with the change that is sure to continue sweeping local business search.

Just ask RedBeacon.

Related posts:

1. Google Introduces Pay-Per-Call to Adwords Mobile Ads

You may have heard about this Adwords trick, also known as “DKI” if you’re a really cool industry insider. Here’s how it works: you insert {keyword} in your headline, and then Google changes your headline on the fly to exactly match the keywords that people search for.

For instance, let’s say you’re selling gingerbread cookies. You put {keyword} in your headline, target the keyword “gingerbread” and let it fly. Someone searches for “gingerbread houses.” Guess what your ad’s headline is? Gingerbread Houses.

What if their search term is longer than 25 characters? What if they searched for “the most awesome gingerbread houses ever”? Unfortunately that’s too long to be your headline. Here’s what you do: instead of just running with {keyword}, you set your headline as {keyword:Best Gingerbread}. Now, if your ad is triggered by a search phrase longer than 25 characters, you have told Google to display your headline as “Best Gingerbread.” Cool, right?

Sort of. DKI is popular because it’s a no-brainer way to make sure that your headline contains your searchers’ keywords. That being said, don’t get married to it…

Dynamic keyword insertion encourages poor market research. I recommend finding the top 10 high traffic keywords that are relevant to your business and getting those “stories” down pat. By getting the story down, I mean writing entire ads (not just headlines) that focus on each specific keyword, then creating landing pages to match each one.

You can’t do this with DKI, because who knows what your headline is going to be?

You’d be better off with an ad all about gingerbread houses that leads to a landing page with some awesome pictures like this:

What is your opinion about dynamic keyword insertion? Has it worked for you in your campaigns? Let me know in the comments.

Related posts:

1. 9 Tips For Writing Irresistibly Click-able AdWords Headlines

Screenshot:

Related posts:

1. Hey, Adwords Advertiser: Google Thinks You Suck At Split Testing Ads
2. How The Huffington Post Utilizes The Awesome Power of Split Testing