How Much Does Google Advertising Cost?

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We’re often asked by potential clients as to what does it cost to advertise on Google. The short answer is, that you can spend as much or as little as you want

But the real point here, is whether this is the right question to ask in the first place? 

Cost is dependent on many factors – your industry, your competition, where geographically you are advertising, the quality of your ads, the quality of your website to name a few.

The real question you should be asking, Is “what is my required Return on Investment for this type of marketing?”

Your first port of call is to do some research on the keywords you want to be found for. Tools you can use for this are Uber Suggest, Keyword.io, or if you’ve previously run a Google Ads campaign, you can use the Google Keyword Planner.

Write a list of words a potential customer would type into Google to find you, then add these to one of the keyword tools. You’ll receive an approximate Cost Per Click (CPC) for each keyword. The cost will vary on many factors, but the initial ones that Google suggest are for you to be found at the top of the search results, and costs for being found lower down the page.

So, here’s how the process should work:

  • Average Cost Per Click across all keywords – £1.00.
  • Assume a conversion rate of 2% (so 2 sales for every 100 clicks, although this will vary depending on industry type)
  • 100 clicks to achieve 2 sales (£100 media spend)
  • Average profit per sale = £200
  • £400 profit – £100 media spend = £300 net profit.

So now, we’ve moved the goalposts from a question of cost, to a question of ROI. If you’re now earning £300 net profit for every £100 of spend, it simply becomes a question of how much money would you like to make? In many instances with our clients, if the cost per sale can be maintained at that level, then the marketing budget suddenly opens out significantly. You want £1500 net profit per month? So you’d need to spend £500 to achieve this. You want £3000 net profit? And so on.

There is however, one caveat! There are only X amount of people searching for your product or service in the geographical location you are targeting. For example, if you are a service-based business targeting a 20-mile radius, there will be a saturation point of people looking for your services. If you’re selling products online, you may want to reach people further afield, and therefore you’ll need more budget to reach a larger audience.

There’s another very important factor to consider before scaling your budget and this is something that many businesses don’t consider.

If you are converting 2% of clicks into sales, shouldn’t you be looking to find ways of increasing your conversion rate before paying more to Google?

Let’s say we change your landing page (the website page to which the Google Ads are sending web traffic) in order to test different factors – positioning of images or text, changing the colour of a button, changing the narrative etc.  – because a landing page is ultimately a popularity contest. Once you have enough people viewing this page – let’s say you have 2000 visitors to this page to make it statistically significant – you can then review what people are doing (using your Google Analytics account), and whether they are engaged enough to contact you, or buy from you.

Once you’ve done some testing and you’re happy with the new conversion rate, this is the point at which to start growing your budget, because it will now have significantly greater impact on your net profits.

Let’s revisit the previous example:

  • Average Cost Per Click across all keywords – £1.00.
  • 4% conversion rate
  • 100 clicks to achieve 4 sales (£100 media spend)
  • Average profit per sale = £200
  • £800 profit – £100 media spend = £700 net profit.

This is why you can’t look at Google Ads in isolation – the by-product of paying for website visitors, is data. And it’s this data which is going to drive your business forward.

Your ad could be seen 100 times, and achieve 100 clicks you can’t get better than this. But if your website then doesn’t generate any sales, it’s the website that needs urgent attention.

To find out how we can help with your Google Advertising, speak to our Google Ads Specialists on 01902 319730 or request a free paid search audit here.


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