Google Ads is an important part of any marketing plan and the short answer is, yes, it’s worth it! This is where you are reaching the consumers who are at the consideration and purchase stage of the buyer cycle. The right ad at just the right time can close the deal for you. And the ability to set ads, and their variations, up beforehand means sales are possible without you actively doing anything in that moment. But, how do you figure out what portion of budget should go to Google Ads?
The Bidding System
Firstly, you need to understand how Google Ads payment system works. They operate on an auction system where you can bid on a cost-per-click (CPC), or a cost-per-thousand impressions (CPM) basis. CPC pricing means you are only paying for your ad when a user clicks on it. CPM pricing is used for Display Ads which you might use if you’re more concerned with branding than with driving traffic. You place your bid and the winner of the auction pays the minimum amount needed to outrank their competitor. It’s important to note that the winning advertiser hasn’t won on just their bid, Google takes their Quality Score into account also. Improving your click-through-rate with highly relevant ads, and a high quality landing page, will boost your Quality Score. With a high quality score you could get away with bidding less than your competitor and still win the auction.
How To Budget
Although you set a budget for Google Ads, you should view this spend more as an investment. You’ve the ability to track conversions and you can stop parts of your campaign that aren’t giving the return you want.
You can set a daily budget or a campaign budget and you can pause your ads at any time. How much you should spend can be worked out based on how much you want to make from that spend. If your business sells online, you can track your conversions and see how much revenue your ads have generated. Over time, you’ll have enough data to work out how much you need to spend for your desired ROI.
If you’re brand new to Google Ads and have no historical data, it can be hard to work out what you should budget. Start small and increase as you learn from the results.
Ok, at this stage you’re probably thinking, that’s all great but it hasn’t answered the question of how much to actually spend.. The bad news is I can’t give you a figure. It varies with each industry. If your business operates in a highly competitive industry, you will most likely have to spend more to get your ads seen. Insurance and Law are examples where the CPC can be ridiculously high. But the income generated from conversions in these industries make the spend worthwhile. On the other side, if you operate in a low-competition market, you’ll likely see a lower CPC. And can get away with spending less on your campaigns. If your profit margin per new customer is low, it’s not going to be worth it to have a high-cost campaign. For reference, the average CPC in search advertising in Ireland was €1.38 as of July, 2021.
Get The Figures
Use the Google Ads Keyword Planner to see likely CPCs relevant to you. Be clever in choosing your keywords, bid more on long-tail keywords that are more likely to convert. Once you have your list of keywords, you can estimate what an ad campaign may cost for you. When determining your budget it’s important to be clear what your goal is. If it’s to acquire 30 new customers per month, you need to take the figures you’ve gotten from Keyword Planner. Use these figures, along with your own conversion rates, and work out the spend needed to achieve your original goal.
Is It Worth It?
Now you have an idea of what your budget should be, is Google Ads going to be worth the investment? Absolutely, but only if it’s done correctly. Going back to the cost, there’s no point in setting up an Ads campaign if you’re not willing to be a bit flexible with the budget. If you see that you’re losing out to your competitors because you’re not willing to increase bids, there’s not much point in running an ad at that time. The great thing about Google Ads is that you can have certain weeks or months where you spend more of your overall budget. And then at other times choose to reign it in to balance it out.
Get The Most Out Of Your Budget
Measure, analyse, optimize…that’s how you’re going to get the most out of your spend in Google Ads. It’s no good throwing together an ad and letting it run continuously without checking behind the scenes and making needed adjustments. Sometimes your ad can be found and clicked on from irrelevant searches. It’s not a potential customer and that click just cost you. We need to be regularly checking our ads to make sure we’re not wasting spend on non-performing keywords. Or on ad copy that doesn’t match up to the landing page and results in a user leaving your site within seconds. We need to make sure your spend is focused on areas providing the best return.
In Conclusion..
Using historical data can help you figure out the right budget for the best results. If you don’t have that data, there will be a bit of learning time but you’ll eventually see what spend you need to meet your objectives. Start small and increase as you learn.
Once you’ve decided on your budget, use best practices to make sure every cent you’re spending is performing well. Get rid of, or stop, areas of your campaign that are reducing the effectiveness of your overall ad campaign.
Or, better still, get in touch and I will set up, measure, analyse and optimize your Google Ads campaign for you.