Google Ads is a pay per click (PPC) platform, so you only pay for performance,…
One of the important things you will need to consider when looking to advertise online, is what your Google advertising cost budget should be. That’s especially true if you plan on advertising on Google and its partner websites and apps.
As effective as Google Ads is, it can only be truly effective for your business if you have a sufficient budget. Many businesses, and small ones in particular, don’t plan their campaigns effectively by doing some research and therefore assign the wrong campaign budgets.
When this is done correctly, you’ll quickly see which ads, keywords, campaigns, ad groups etc are working for you – and which ones aren’t.
I’ve outlined here some points that you should consider as you work on your Google advertising cost strategy. Hopefully this should help you understand better how to set a budget and update it to maximise sales or leads for your business.
The budget feature in Google Ads helps you set a daily limit on how much you want to spend. On some days it will exceed your limit, especially when there has a high volume of searches, but you won’t be charged more than your daily budget multiplied by the average number of days in a month (30.4 days).
- Search campaign – For Search ads you can carry out keyword research to identify the keywords and search queries your ads should appear for. This is also very helpful in setting a budget that will determine your Google advertising cost. The Keyword Planner tool is available in your Google Ads account under ‘Tools’ and it’s a free tool that you can use to carry out the research.
- Shopping campaign – With Shopping ads, your products appear in the search results when search queries match with product attributes. So this is not based on keyword targeting like Search ads as described above, but on the attributes you provide in your product feed. These attributes include product titles, descriptions, price, SKU, part numbers and so on.
- Display campaign – One of the benefits of Display ad campaigns is that the average cost per click is usually much lower than Search. Your ads in the Google Display Network appear across a wide range of Google partners which include some Google properties like Gmail, YouTube and also third party websites, apps and video sites. So you can set a lower budget than you would and that includes Display Remarketing campaigns too which appear in the same placements. You will find your average Google advertising cost much lower as you reach out to people that have been on your website and also increase awareness for your brand and business.
- Remarketing campaign – Remarketing as mentioned above helps to bring past visitors back to your website with the goal to get them to convert into customers. You can run Remarketing ads for Search, Display and Video on YouTube. Again, the Google advertising cost is quite affordable because there is on average less competition and therefore a lower cost per click. These visitors are not actively searching for your products or services when they see your ad. They are browsing a website or app and the ad helps them remember your business.
- YouTube video campaign – A Video campaign allows you to advertise on YouTube and its video partners. Using the Google Ads tools for video campaigns, you can run a number of ads on YouTube like in-stream and Discovery ads. This helps you raise awareness for your brands and you can promote your videos, website, products or services and channels. Like Display campaigns, these campaigns often have lower average CPCs and you can start with a budget as low as $5 or £5 per day and then scale it up as performance improves.
Cost Per Click
The average cost per click for each visitor you get determines how many visitors you will get for your budget. You can limit the cost per click by setting a bid limit or allow the Google Ads machine learning system to set the bids. Or you can run a manual CPC bidding strategy and control the bids at the keyword level to determine how much you will pay for each click.
It’s important to note that you will not pay the actual bid amount you set, but an amount that allows you to clear the Ad Rank thresholds relative to the competitor immediately below you. This is often less than your bid – and sometimes significantly less. So for example if your bid is £1 and the next competitor has an 80p bid, you will pay 81p at auction time. This is known as your actual CPC and is determined by a number of factors like bids, Ad Rank, Quality Score and so on.
However, just bear in mind that your actual CPC will at times exceed your maximum CPC bid if for example you’ve enabled Enhanced CPC or if you’ve set a bid adjustment.
Knowing this helps you to set and adjust your budgets as you manage your campaigns and limit your Google advertising cost.
Your business plan and goal should determine how much Google advertising cost you will spend. When you set a target for how many customers you need to acquire each month for example, the keyword research tool will help to inform how many you are likely to get and what the conversion rate is likely to be for that.
You can then set a budget on the volume of traffic that you need and the average cost per click for that traffic. Google Ads has the Keyword Planner that you can use to carry out research and also to run a forecast for the keywords you have selected.
Type of Business
The type of business you want to promote will also determine your Google advertising cost too. Some industries are more competitive than others and some have very little competition on Google. Wherever you fall within that spectrum will help you decide what your advertising budget will be.
If it’s a competitive sector, for example insurance and loan industries were the cost per click can be easily over £20 per click then a higher budget will be required.
The size of your company also has a bearing on your Google advertising cost. Large companies with millions in annual turnover generally have larger budgets compared to smaller ones. However, it depends on the actual digital strategy of the company.
For some advertisers, Google is one of many channels they use and will therefore allocate a small percentage of their advertising budget towards it. For others, Google is the primary channel and it means everything to their online strategy.
However, whatever budget you start with, it will be important to regularly review it and increase it as performance improves. As the targeting of your ads improves and you start getting a better cost per acquisition (CPA) and greater return on ad spend (ROAS) you will want to scale the account and continue to grow your business.
Want to know more about setting a Google advertising cost budget that will help you reach your goals? Contact me today to discuss.