Are Google Ads worth it?

Google Ads (previously known as Google AdWords) is an online advertising platform that involves the placement of short ads on Google search pages or regular web pages. Also known as Search Engine Marketing (SEM), it is a simple, fast effective way for businesses to advertise. 

Put simply, Google Ads is an auction-based system that works like this:

  • Businesses decide which keyword(s) they wish to target in Google search results.
  • Determine the cost of each individual keyword. The more competitive the selected keyword, the more it will cost to bid on.
  • Calculate whether your campaign can cover the cost of the keywords you selected. Covering costs is a consideration of whether your bid will generate enough clicks from your ad to website. Volume is needed.
  • Implement an optimised campaign which is a combination of your messaging, campaign set up, messaging and bidding strategy in relation to your landing page for success.

    While the overall concept is simple, there are a couple of important complicating factors. Because Google wants to direct users to relevant, quality content, the top page rank doesn’t automatically go to the highest bidder. The value of the bid is important, but the top rank is decided by a combination bid and overall quality score.

    For example, consider the case of three companies (A, B, and C) bidding on the same keyword. A bids $1, B bids $1.50 and C bids $2. Without extra knowledge which would include the overall quality of the campaign, choice of keywords and landing page, we don’t know which ad will display, which ad will display in which position and which ad may or may not display at all.   

    Company A could effectively win the auction and pay 50% less for the same advertising space as Company C would, If A satisfies those extra requirements.

    There is sound logic behind this system. Google establishes their platform as a reputable provider of quality information through the understanding that top search results will deliver you content which will satisfy your search query, regardless if that is an ad or an organic search result.

    The real benefit is this quality driven system drives competition. A small company with a small budget can compete with multinationals in their given category. 

How much do Google Ads cost?

For some context, Amazon spends US$50 million a year on Google ads however smaller business still effectively compete in the same market with a budget of as little as $10-20 a day. It’s just at a significantly reduced scope, with a highly targeted focus.   

The average clicks across a Google Ads campaign is said to a cost between $1-$2 per click. Fortunately, most clicks can cost substantially less if your business dedicates time to raise quality scores and research long-tailed keywords and narrow the focus to the proper user intent. For example; +buy +product will perform much better than simply advertising on product or +product. You narrowed the intent and will realise better results. 

Google Ads costs can be reduced by discovering gaps in your market. Research is key. Spend time to thoroughly researching your market. Understand your niche, the intent of your clients and bid on those keywords. Industry can influence your average CPC but the cost is determined by you.  

The business which spends time optimising their landing page prior to the campaign launch, ensuring they bid on the right keywords, raise their quality scores and implement the right bidding strategies will pay less. Don’t fall into the trap of bidding on ineffective keywords due to high search volume. If your page can’t satisfy the needs to the searcher, your company is simply wasting valuable ad spend. 


How much can I spend on Google Ads?

To answer this question, you need to ask yourself:

  • What is my net profit per unit sold?
  • On average, what percentage of leads acquired via Google Ads result in sales? (e.g. If, on average, you make 10 sales from every 100 leads, your conversion rate is 10%).

    Next, considering the above two values, you need to calculate how much you can afford to pay to ‘buy’ a lead.

    For example – if your product or service sells for $1,000 per unit, on average a lead costs you $50, and you convert 10% of these leads into sales – a marketing budget of $1,000 would provide you with approximately 20 leads, two of which convert into sales.

    However, in the same scenario, if lead prices rose to $100 the business would break even (assuming the $1,000 was pure profit; while a lead which costs more than $100 would result in a loss.

The benefits of Google Ads

As with all advertising, the question as to whether Google Ads is worth it or not comes down to whether it makes businesses money or not. The simple fact that so many businesses initiate and then continue Google Ads campaigns is proof that it is worth it. You can be sure that Amazon earns significantly more than it spends from its SEM campaigns. For businesses that have considered its cost and concluded that using it makes financial sense for them, Google Ads delivers several benefits:

No contract

The first thing to note about Google Ads is that it doesn’t require you to sign a contract. You simply decide your strategy, provide your account details, and off you go. From there, all you really need to do is just wait and see the results.

Your own ad copy

This simplicity extends to the fact that you can use your own copy in a Google Ads campaign. When users click on your ad, they will be directed straight to your landing page, i.e. exactly where you want them to be.

Flexible bidding strategies

There is a range of strategies to choose from, including target CPA, target ROAS, maximise clicks, maximise conversions, target search page location, target outranking share, enhanced CPC, manual CPC. Each is suited to different kinds of campaigns and advertising goals.

Immediate results

Once you have decided on the keywords you want to target, and your campaign is in place, it can literally take minutes before you start receiving traffic. If things go well, and you are happy with the results, you simply reap the benefits. Alternatively, if you think the results could be better, you can modify your campaign to improve it.

Flexible & responsive

At any time, you can increase or decrease your CPC bid, try new keywords, or pause your campaign to consider your strategy. Or, if you decide Google Ads is not for you, you can stop your campaign completely (again, whenever you wish).

Effective campaign design

Optimising a Google Ads campaign is very much about research (to accurately target the right keywords and, therefore, potential new customers), strategy (e.g. a willingness to keep an eye on competitors’ activity and, if necessary, outbid them) and simple trial and error.

Conversion tracking

A clear benefit of Google Ads, as compared to say print advertising, conversion tracking means you can track the effectiveness of your advertising. It allows you to measure leads, sales, downloads, email sign-ups, and so forth.

UX friendly design

Google Ads has a UX (User Experience) Design. In other words, its design facilitates users’ access to and interaction with the product. Almost anyone who understands how to find their way around Google can use it.

Suitable for budgets of all sizes – Accepting the obvious fact that small businesses will never achieve anything like the advertising outlay of a company like Amazon, Google Ads is designed to cater for every business regardless of size. 

Demographic targeting

Unlike traditional advertising formats, Google Ads offers audience targeting functionality. The first of these, demographic targeting allows advertisers to reach particular potential customers within a particular age range, gender, parental status, or household income.

Geo Targeting

Google Ads allows advertisers to target specific geographical areas. Depending on your business and your industry, this can be a great help. For example, an industrial hire company located in a Sydney suburb would get no benefit from interstate page views. Using this feature, the business can accurately target that suburb or a radius of, say, 5 km from its base.

Device targeting

The ubiquity of the internet and rapid expansion of platforms and devices (Desktop, Laptop, Tablet, Mobile) means people connect with different devices at different times, and when they are doing different things.

Google Ads allows advertisers to target their advertising spend at specific devices. A local clothes retailer, armed with the knowledge that people who are out shopping do all their searches on their mobiles, may decide to devote all or most of its spend to mobile searches. Searches made on desktops would simply be not as valuable.

Day parting

On top of that, that same clothes retailer could also benefit from Google Ads’ Day parting feature. Deciding that traffic during the middle of the day is more attractive than, say, traffic between 7pm – midnight, the business is able to devote its entire campaign to the hours 10am – 4pm. 

Or, using a combination of all of the above, it could target mobile devices located within a radius of 6 km before 6pm each day, and desktop searches within the same radius after 6pm. As time passes, with a view to gaining the best exposure, the business can play around with these settings until it gets them just right.

Analytics

Advertisers who want to work out how their campaigns are performing can do this by using Google Ads extensive analytics. Including Page Impressions, Click-Through Rate, Cost, Converted Clicks, Conversion rate Cost per Conversion, Average Page Position, Top Ad Groups by CTR, Conversion Rate by Ad and more, these figures all that’s needed to measure the success or otherwise of an SEM campaign. 
They allow everyone in your business, from the marketing department, to the accounts department, to the CEO to see the results and decide on future strategy.

Unlike traditional print advertising campaigns, the results of a Google Ads campaigns are there for all to see. And unlike SEO strategies, Google Ads campaigns are simple to initiate, deliver immediate results and can be easily modified and improved as time passes. Far from being prohibitively expensive, they represent great value for money. 


Are Google Ads worth the money?

Google Ads are unique in their flexibility, reach and scope. With a wealth of knowledge available online, a person with no marketing experience can effectively use one of the most powerful marketing tools on the planet. In short, given the cost and benefits Google Ads is one of the best advertising platforms to utilise for your business. 

IMA is an expert in SEM. Our team of dedicated professionals has what it takes to create a winning Google Ads campaign for your business. Contact us today to find out more.
 

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