What’s the first question any business owner asks when recommended Google Ads?

‘How much is it going to cost?’

It’s true that pay-per-click (PPC) advertising can get expensive in no time, especially if you don’t track the campaign’s progress. There’s a lot to consider when it comes to Google Ads and that’s exactly what we are going to discuss in this guide.

We will start by helping you understand what Google Ads is and how you can use it in 2020 to create a better online marketing strategy for your business. So, let’s get started.

Google Ads Statistics You Should Know

Let’s start with identifying some landmarks that Google Ads has hit till now. It’s important to have a look at these to understand where the opportunities are and if you can leverage them in 2020.

• Most well-executed PPC campaigns generate 200% ROI on an average.
• When users click on paid ads, the possibility to convert increases by 50%.
• Sites ranking top three enjoy 40% of high intent traffic.
• Cost of outsourcing PPC might vary by size, ad spend, model of agencies.
• Almost 97% of your potential online users use to search for local business.

There’s so much to know about Google Ads that these statistics are just not enough. The more you will understand how Google Ads work inside and out, the more you will feel confident about your final decision.

Before we go ahead and introduce you to Google Ads, let’s discuss this last statistic, one we really find intriguing.

Google’s 93% of the Search Engine Market Share feeds it with approximately 3.7 billion users (aka prospects).

This is very simple to understand. It only makes sense to put your money on Google if you can showcase your product to an audience of that size.

Now, let’s get acquainted with Google Ads.

How do Google Ads Work?

Since now you understand why Google Ads is important for your business, we can help you with its functioning.

The very first thing that all business owners and bidding advertisers need to understand is that Google Ads doesn’t always work in favour of the business that has the biggest bank.

Google Ads provides a level playing field to businesses with all sizes and budgets.  With the right system the more you put in the more you get out.

This is because all processing that happens with the Google Ads network is controlled by an ad auction system that takes ads from all businesses into consideration in real-time.

The ad auction system avoids domination from companies having high budgets and gives all ads equal attention to rank on the highest search volume result pages.

Image source by Wordstream

But, how does it do that?

Well, the Google Ads ad auction system gets triggered the moment a user enters something into the Google search bar. The system first checks if the entered keyword has been bidded on by the companies. If there are no bids placed on the keyword, Google will show organic results.

If the entered keyword has bids against it from advertisers, the auction system will get into action. The purpose of having an ad auction is to decide the placement of the ads.

So, how can you determine your ad rank?

Your ad rank is mostly dependent on the quality score of your ad campaign and also on your bid. There is hardly any solid information available about the quality score, but there are a few variables and factors that one should consider to lower their Cost Per Click (CPC).

To learn more about Google Ads Ad Ranking Formula – Image Source

By now, you know what you are bidding on and what it takes to figure out your cost. It’s time to learn how you can split your paid marketing budget. You will have to plan everything to make sure your ads are shown to enough users and that the campaign generates enough traction and engagement.

This is so you don’t end up wasting your hard-earned money and still make most of the opportunities Google Ads provides modern-day advertisers.

Your ad spend is spread across all your bids. This dispersion is dependent on the cost-per-click (CPC). You will have to set the maximum CPC in the settings tab of each Google Ads campaign you have created. Make sure all your campaigns have a unique budget since doing that will help you regulate the budgets of individual campaigns by tracking their performance.

Let’s assume that you place your max bid at £0.30. This will ensure that you pay no more than 30 pence whenever a click happens on your ad. However, you will still be charged less than that because variables like Quality Score, ad placements, CTR, and others will also come into play.

Three Simple Steps to Optimise Google Ads Budget

Optimising your Google Ads budget will help you keep a tab on your expenses and also keep you away from all the sinkholes that can really make running Google Ads a nightmare for you.

Let’s discuss three ways you can optimise your Google Ads budget. These ways or methods can be used to optimise budgets from the word go.

1. Dayparting

Dayparting is an ad strategy bidding on placements, where you try to target your ideal audience with the Google Search Network.

Here’s an example. Let’s say you’re curious about bidding up or down because of the performance of a certain day of the week.

On Monday you get 500 clicks, and on Wednesday you get 500 clicks. But on Monday you only get 20 conversions, and Wednesday you get 50.

You can now look at the time report to see when the user is more likely to convert, on what day and hour and you can see which times don’t convert the best.

Eliminating the return of ad spend (ROAS) anchors will help boost your returns and cut your costs.

2. Geo-targeting

Let’s say you have a restaurant that assures 30-minute delivery to all its users. What would happen, let’s assume, if a person orders from your website and makes you deliver to a place that is way off your delivery area? You will lose money. Therefore, running ads against people who do not live in your area of function is not a great idea. With the help of geo-targeting, you can run your ads and promote your services to people who you can really serve. Both geo-targeting and dayparting works on the logic of running ads where your high-value customers live and when they are most active.

3. Device Targeting

Device targeting will play a major role in optimising your ad budget since more and more people are using mobile devices to access the Internet. You might be a company that provides software download for a desktop-only app. It will make more sense if you run device targeting since it will allow you to generate maximum clicks from desktop users. Therefore, what devices your ads are shown or device targeting is also one way you can use to optimise your budget.

But, this is not all of it. You have still got a lot to learn. By now, you have got all the basics covered by knowing what Google Ads can do for you and how the ad auction system functions. Let’s try understanding more about this advertising platform.

What are Google Ads Most Expensive Keywords

When you try running your Google Ads campaign, you will come across certain keywords that might have radically high CPC. Well, there are different factors that are responsible for the cost that you will have to pay while running a PPC campaign. But, there can be instances where certain business owners might have to pay big bucks from the get-go.

This happens when the keywords being targeted belong to certain big industries. The CPC for keywords related to such industries is abnormally high.

Here’s how much it would cost advertisers, on average, who want to advertise on Google for these terms:

1. Business Services: $58.64
2. Bail Bonds: $58.48
3. Casino: $55.48
4. Lawyer: $54.86
5. Asset Management: $49.86
6. Insurance: $48.41
7. Cash Services & Payday Loans: $48.18
8. Cleanup & Restoration Services: $47.61
9. Degree: $47.36
10. Medical Coding Services: $46.84

The difference in Cost for Different Google Ads

Google Ads can be used to run different kinds of ads through the Google Search Network, Google Display Network, Google Shopping Campaigns, and YouTube which is a video advertising platform.

Now, different kinds of ads cost differently as well. This aspect of running Google Ads we will be discussing in this section which will help you understand how running different kinds of ads will cost you differently. This will give you a better idea of what type of campaigns you should be running.

Google Search Network (GSN) Costs

The search network is highly dependent on user-intent which is why the CPCs are generally high. This is because the likelihood of the user typing in the keyword getting converted is much higher on Google search than on any other ad network. Since the whole point of running ads on high-intent keywords is getting more and more conversion, GSN assumes that advertisers will be ready to pay more for the service. This results in a high average bid.

Google Display Network (GDN) Costs

The Google Display Network tends to cost lower than the GSN mainly because the user-intent is not so sharp here. Most of the users who are being hit with GDN ads are consuming their favourite content and the ads are in the peripherals of their ongoing online experience. The users aren’t looking for the products or services being promoted in the ads. Therefore, the likelihood of the users getting converted through GDN is low. This results in a lower CPC.

Google Shopping Campaigns Costs

Finally, we have the Google Shopping campaigns where giving a ballpark figure of ad costs might be difficult since there are many aspects that come into play. It is not as simple as GDN and GSN. Here, you will have to take the cost of production and shipping into consideration as these expenses will affect the overall cost of the campaign.

This brings us to one of the most important questions you might want to have an answer to.

How Much Should You Spend on Google Ads?

My usual recommendation for starting budgets in AdWords ranges from £1,750 to £20,000+ per month.

The final number depends on your industry, the cost-per-click that you’ll find in it and how likely you are to succeed. The better equipped you are to build and optimise Google Ads campaigns, the higher your starting budget should be.

But if you’re targeting high-volume keywords with a lot of monthly searches and competition, you could be paying a pretty penny for that traffic.

One of the biggest mistakes in launching a PPC campaign is failing to do the proper research before jumping in.

Based on your industry, you could be paying anywhere from £1 a click to over £8.

But even within each industry, there are huge variations in keyword costs and average costs per click.

If you’re just starting out with your business for the first time and have never used Google Ads before, you should go for a lower budget unless you hire help. If you on the other side have worked with Google AdWords before and seen success, then you can start off with a higher budget.

As you increase the money you spend on Google Ads you will receive more clicks, which in return will give you more data to work with. And if there is one thing that you’ll find valuable, then it’s having data.

Estimating Daily Budget

To calculate a rough estimation of your daily budget all you have to do is take your max bid and multiply it by your goal number of clicks. For example:

£3.00/click X 40 clicks = £120 daily spend

Extrapolate that across the week and the month and you have your monthly advertising budget to start working with.

What Should You Choose – Agency or In-house Team

“Should we hire an in-house team or an agency to manage our PPC campaigns?”

Every company considering paid digital marketing asks this question at some point.

Now, as an agency ourselves, you might think we’re going to knock in-house PPC. No way. Juggling the client relationship side of PPC management internally while maintaining a budget and strategically targeting prospects is a lot.

There are pros and cons to each of these solutions. But we’ve always found it’s best to look at the data.

In-House Campaign Management

The pros:

• In-house team members will understand the business knowledge and operations better an agency.
• There’s no turnaround time when it comes to communicating with your in-house team
• Obviously, it eliminates the cost of an agency (however, depending on the size of your team, you still have to pay their salaries, pension and other benefits)

The cons:

• Anyone technical can set up a PPC campaign, but is it targeting the right audience, for the best price and leading to conversions?
• Selecting the wrong keyword or targeting the wrong audience can lead to the budget being wasted – leading to expensive results!
• In-house PPC teams often lack the dedicated resources agencies can supply together with their advertising teams, including a full range of integrated tools.
• PPC agencies and their shuffling culture allow for new idea curation that promotes creativity in your campaigns that most marketers would agree in-house teams lack.
• Keeping your team small and in-house leaves little room for growth and granularity, as singular employees are forced to take on larger, more generalised roles to manage day-to-day campaigns.

Agency Campaign Management

The pros:

Using a PPC agency means you can choose to work with a team who are qualified in PPC, campaign management and reporting.

• Creating a successful PPC campaign requires an analytical mindset and strategic knowledge.
• An agency’s team focus is solely on PPC – with no distractions from other responsibilities.
• Outsourcing PPC activity gives you and your team more time to focus on the running of the business.
• Hiring an agency is often cheaper than increasing the headcount within your own business.
• Agencies have strong relationships with companies behind the advertising platforms; they are able to consult their Google Ads contacts for advice.

The cons:

• Handing over control to an agency can be daunting at first, but once you see positive results – you’ll realise they specialise in this type of work for a reason.
• Any agency will have to be brought up to speed about your company’s workflows, approval processes, and culture.
• How your agency manages your sensitive company data, like strategic plans, customer files, and other information will have to be defined and then managed.

Leverage a Team of Experts

The greatest benefit of hiring a digital marketing company is the diverse group of marketing professionals that sit together to solve the challenges related to promoting your brand, product or service in the competitive market. You’d have account managers, strategists, creative designers, writers, and SEO experts who together have an immense knowledge potential you could never have in an in-house digital marketing team.

Budget-Friendly Decision

Yes, outsourcing is budget-friendly and cost-effective. Research has shown that hiring marketing companies to develop digital marketing strategies not only provides a lower cost per sales lead but is also less expensive than creating an in-house digital marketing team of experts.

Benefit from Qualified Leads

The days of cold calling have gone. The digital age provides you with the benefit of tracking your target audience and hitting them with your marketing strategies when it will make the most impact. Thus, a digital marketing company will provide you with highly efficient marketing solutions that are exciting and relevant.

Be Aggressive with Business Operations

If you are a business owner, you already know how difficult it can be to be the spearhead on all fronts. Outsourcing all digital marketing undertakings can help you make time for other important business operations and grow your company.

Take Advantage of Neutral Perspectives

Not only will a digital marketing agency provide you with a better team of marketing experts, but it will also provide you with highly unbiased, neutral yet experienced advice for your marketing strategies. With an in-house digital marketing team, achieving this can be hard as there can be conflicts of interest and disagreements.

Benefit from Latest Marketing Tools

The world of digital marketing changes incessantly. Therefore, it is better to hire a digital marketing company that keeps its resources strictly up to date. With superior tools, software, and marketing strategies, the level of productivity and efficiency reached is incredible.

Get a Quantified Analytical Reporting

All digital marketing agencies today have devised state-of-the-art software that can track all latest developments in the campaigns and provide regular analytical reports consisting of the results of the ongoing marketing efforts. This provides a healthy communication and transparency between you and the digital agency.

Make Sure Google Ads Costs Your Competitors, Not You

If you are not running any Google Ads campaign then you are giving your competition a bigger market share and it will be impacting your business growth as your customers will be going to your competitors.

Make sure that you take the time to learn from your account set up and tests and optimise your campaigns in a way that is customised and tailored towards your audience and your goals.

You will also need to have a strong offer to convince the user to decide to do business with you over your competitor.

Stay ahead of the competition and optimise your budget from the ground up ahead of time. This way, Google Ads is costing them while you’re already converting their leads.

Over to You

We hope this piece of content brought great value to you and helped you understand PPC advertising in a more lucid way. Let us know in the comments if you have anything that you wish us to cover in the post.

We will keep updating this blog!