What makes Google Adwords a viable proposition is that one can target specific phrases used by one's target market and geo-target the ads to appear in specific countries or regions, where the searches originate from. The ads appear on the right hand side of search results in Google and one is charged only when a searcher clicks on the ad to go to the advertisers website.

It is a very exact type of advertising because Google makes statistics available of the number of clicks and click costs per phrase. If you input the conversion page (the page where visitor go after making a purchase) and the profit of each sale Google works out the return on investment and lets you know which are the most profitable phrases. This allows the advertiser to maximise the campaign by getting rid of low conversion phrases and keeping the high conversion ones.

The advertising works on a bidding system where companies bid for phrases used by their market when looking for their products or services online. Each time their ad is clicked on in Google, the fee determined by the bidding is paid and the searcher is directed to the advertisers website.

The downside is that it inevitably leads to bidding price wars where advertisers try to outbid each other in the hope of getting top results. Google tries to combat this by not allocating higher positions for higher budgets. Despite this, the price for common phrases increase over time and some have become cost-prohibitive for smaller competitors. Another problem is that new advertisers often choose the wrong phrases and bid for very competitive phrases thereby making the campaign run at a loss receiving little or no return for their financial investment.

The copy writing in the actual ad boxes need to be carefully crafted in order to attract potential customers but at the same time pre-qualify customers discouraging those who are not in a position to purchase. This has to be achieved in only three rows of copy.

With the correct research, however, shrewd web marketers can find high traffic phrases with low competitive bids making a Google Adwords campaign an extremely profitable way to advertise online. Bringing pre-qualified customers to their website increases the chances of purchases or enquiries.