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Google AdWords is the online advertising program that often shows 3-line text ads next to Google search results. And it's a great way to generate targeted traffic to your site.

One of the questions I often get when I'm talking to entrepreneurs is, "how much should I spend on AdWords?" The answer is it depends on the size of your business. Here's a more helpful answer. Spend an amount that feels comfortable to you and is enough for you to feel an impact. You can get your feet wet by trying $100 per month or even less. If your business is a little bit bigger you could try $50 per day. You can always change your budget at any time inside of Google AdWords. Don't be afraid to experiment.

No matter what you decide to spend, make sure you're measuring your results or you're at least getting a feel for the impact your ads are having on your business. Google provides some key measures inside of the AdWords interface like impressions, clicks and click-through rate.

When people search on Google and your ad appears, they click on your ad only if they're interested in what you're offering. Note that these people have decided to visit your site instead of visiting many others immediately available to them. Clicks measure how many potential customers Google sends to your website, but it's up to you to measure how many of these people are actually becoming customers.

Google Analytics can help you track peoples' behavior on your website but I'll spend some time talking about analytics in a future article. To get started, just make sure you ask your visitors for their business when they're on your website with a call to action.

Your call to action could be inviting the visitor to call your store, asking them to fill out a form to get more information, or asking them to leave you their email address in order to get your newsletter. Once you get a sense for how people are responding to your ads you'll be much more confident about setting a budget that will really help you grow your business.

Selecting keywords can feel daunting before you dig in and start, but anyone can do it by using some common sense and a few tips:

Select your keywords with your budget in mind.

If you're a small business and spend a small amount each day, try to find less competitive keywords with a lower average cost per click (CPC). You'll get more clicks. These keywords tend to be more specific, to be less obvious, and to have lower search volumes which brings me to the next tip.

Start with specific keywords then work your way outwards.

The keywords most relevant to your business, or a specific product you sell, will perform best for you. For example if you were a florist in Toronto, your first few keywords might be: tulips toronto, roses toronto, orchids toronto, flowers toronto. Always double check to ensure each keyword gets enough monthly searches to generate a meaningful amount of traffic for you. I also recommend learning a little bit about keyword matching options which manage how your keywords will be triggered.

You will often be at a competitive advantage over larger companies bidding on your most relevant keywords. Google uses a construct called quality score which rewards advertisers for selecting relevant keywords by decreasing the bidding price required for an ad to be displayed on the first page of our search results. With a high quality score you can bid less than many competitors and still win a better position.

Stay away from high volume generic keywords.

Generic keywords are more likely to attract less qualified customers. They are also highly competitive and coveted by larger corporations making them more expensive. These high volume generic keywords can also exhaust your budget before your ad has a chance to show up for a qualified customer who might be searching for something that you're suited to sell.

Add context to your keywords.

Think about what the user is looking for when they search for a keyword. If the answer is "it could be many things", it's probably not a good keyword. Try adding context by adding a second or third term to keywords you're thinking about. For example "buy flowers" is better than "flowers".

Don't choose too many keywords.

It's easy to get excited and choose too many keyword terms. Make sure your budget is being spent on the most relevant ones. Like generic keywords, too many keywords can drown your best ones. Choose a handful of keywords (15 - 30) and see how much you've spent at the end of the day. If you haven't reached your full daily budget add a few more and check again tomorrow.

I hope that you find this article helpful when you sign-up for Google AdWords. Set a comfortable budget that makes sense for your business. Start with the most relevant keywords and work your way outwards. Keep adding keywords until you consistently reach your maximum daily budget. Once you know your ads are having an impact, start experimenting with more keywords and a higher daily budget. That's it.

If you would like to continue learning about Google AdWords, I recommend downloading a tutorial here or visiting our AdWords Help Center.

- Brett Willms, Country Marketing Manager, Google Canada

This is a non-paid placement.