Advertising is a costly business, just ask Don Draper. But when it comes to the new age of advertising, and delving into the world of Google Ads, how much does it really cost? And how do you know if you’re spending the right amount?

What are Google Ads?

Google Ads allow you to advertise and promote your products and services when users search relevant keywords in their search engines. If you can get your budget and strategy right, Google Ads has the potential to unlock new audiences, leads and sales. 

Have a nosey at Hootsuite’s beginner’s guide to Google Ads for some deeper background information and see why Google Ads are essential for your business.

How does it work?

Firstly, Google Ads is based on a bidding system, where you, as the advertiser, select a maximum bid amount you're willing to pay for a click on your ad. The higher your bid, the better your placement.

Bidding options

You have three options for bidding depending on your goals:

·        CPC (cost-per-click) is the amount you pay for each click on your ad. This option is the most popular!

·        CPM (Cost-per-thousand impressions) ) is a way to bid where you pay per one thousand views (impressions) on the Google Display Network.

·        CPE (Cost-per-engagement) is where advertisers only pay when users actively engage with ads.

When setting up your Google Ads, your maximum CPC bid is the most you're willing to pay for a click on your ad. By managing your bids, you can influence the amount of traffic your ads receive, as well as the Return on investment (ROI) they generate.

With higher bids, your campaign is likely to receive higher traffic, although you'll likely be spending more money. With lower bids, your campaign is likely to receive fewer clicks and conversions, but your invoice will be a little lighter at the end of the month.

Getting it right for your business

How much do I need in the budget?

The general rule of advertising is that your marketing budget should be about 10-20% of your revenue. So, if you take into account your other advertising channels and your annual marketing budget, you should be able to create a ballpark figure for your Google Ad spend.

How much do businesses spend on Google Ads?

Google suggests that if you’re a beginner and new to using the Google Ads platform, then try an average daily budget in the region of £5 to £40. For the first month, check your account daily to see how your campaigns have performed and what happens when you make any adjustments.

It's a moving target

Even though you set a daily budget for your Google Ads campaign, Google will optimise your campaign spend for days of the month when you’re more likely to get clicks and conversions. Optimisation such as when search traffic is higher or when they predict higher ROI for your ads.

This means that on some days you might not reach your average daily budget, and on others you might exceed it.

If your business is seasonal, or you have consistent peaks and troughs in traffic, then check out our article on Google Ad campaigns for a seasonal business for top tips on how to maximise your budget and respond to changing customer demands.

What if you’re spending too much? It’s time for AA – Ads Anonymous!

Google Ads spend is as long as a piece of string, because every month it may vary, depending on your demand, consumer activity, competition and cost per click rates. But, you should keep a close eye on your spend and ensure that you're getting enough bang for your buck! 

Here’s 6 signs and reasons why you might be spending too much on your Google Ads:

1.      You can’t track your conversions, or your ads are not generating any conversions

2.      An abnormally high Cost-Per-Conversion rate 

3.      You have a low Return On Ad Spend (ROAS) ratio! Money Spent : Money Generate

4.      You’ve got the wrong ‘Keyword Match Type’ so your keywords aren’t working

5.      You’re using a competitor’s brand name – so you’re potentially wasting clicks

6.      Your account is unorganised and your campaigns are unstructured

Need a steer on your next campaign?

If you think you could do a little more with your Google Ads account and haven’t yet tapped into the big wide world of campaigns, then Wild SEO Agency advice at all levels. From set up and budget, to strategy and management, we’ve got you covered! Just check out our services!