Google Adwords has become synonymous with online advertising till the point that Google has complete freedom to customize their business model to their advantage. The Google Adwords algorithm has been refined again and again, creating a competitive ad ranking environment. With this, only advertisers adhering to Google’s stringent standards would stand a chance at getting top rankings. And, it’s not always that the highest bid wins.

Amidst these challenges, Google Adwords still manages to retain its popularity amongst advertisers. This is largely due to the large footprint of Google Adsense users spreading across millions of blogs and websites. If you play your cards right with Adwords, this tool has the potential to help generate income for your internet business.

How to use Google Adwords to Sell Online?

1. New website launch

Google Adwords is an excellent platform for getting the word out on a new website. This is especially true if a website has a unique feature differentiating itself from its competitors. Blogs such as JohnChow.com is seen to often utilize Google Adwords for blog promotion. Also, Mindvalley Labs seem to advertise heavily for the keywords “Adwords”.

Amongst websites that would benefit from publicity generated from Adwords include forums, new social networking sites, marketplace websites or even photo sharing websites. These sites need to create a web presence and incite buzz amongst internet users, and thus Adwords would be a suitable channel to do this.

There are several challenges here though:

a. Heavy competition for keywords

Let’s say you just started a website on “making money online”. You want to capture the users who are looking to make money online. The problem is, there are hundreds of other Adwords advertisers who are willing to pay top dollar for this keyword. In addition, they manage to be better than you in attaining top quality score for their ads.

b. Limited advertising budget

Advertising with Google Adwords could cost you money. At times, the minimum cost per click could increase to $5 per click. Thus, while Google Adwords is easy to set-up and run, alternative advertising methods, such as link building and blog marketing, may be cheaper in the long run.

2. Affiliate marketing

One of the most popular ways to make money online is through affiliate marketing. The role of the affiliate is essentially to draw users to the site of the advertiser. All an affiliate needs to do is to create a Google Ad that leads to a product sales site upon a click. The downside is Google’s constant change to their rules.

For instance, Google’s recent change - http://adwords.blogspot.com/2008/02/update-to-display-url-policy.html - means that affiliates would need to show their affiliate link URL on their ads. (This was not necessary previously – affiliates could display a URL that was different from the actual URL that is loaded). Doing so could affect an ad’s ad ranking, as Google also relate keywords in the URL with optimized keywords in determining relevance.

3. Adwords Vs. Adsense

Another way to use Google Adwords is to use it to direct traffic to a resource site which aims to generate income from Adsense click. Of course, this would only work if there is a significant difference between the total Cost per Click value of an Adwords ad, and the income generated from Adsense clicks.

In addition, other than launching a site to capture Adsense clicks, you could also incorporate other income generating items on your website. These could include affiliate product reviews and affiliate links, banner ads, text link ads and possibly your own products.

Now, while all these internet income generation ideas above are applicable, running your Adwords campaign requires effort, knowledge and the right strategies for success. These will be dealt with in greater detail in my next post on Adwords Strategies.