Continual Optimization Strategies to Improve Quality and Lower CPCs
Properly controlling and budgeting costs is crucial when setting up and managing Google Ads campaigns. Google charges advertisers through pay-per-click (PPC) rates, meaning you only pay when someone clicks your ad. Your cost per click varies based on factors like keyword competitiveness.
How Google Ad Charges and Budgets Work
Google allows you to control Google Ad prices by setting daily or lifetime campaign budgets. With daily budgets, you can set a maximum daily spend, and Google will stop showing your ads once that amount is reached. This gives you daily control over what you spend. Lifetime budgets look at total spending for a set timeframe, which is useful for short campaigns.
For example, let’s say you will do a Christmas ad campaign. You can set your Google Ads lifetime budget to $20 a day. Google will stop your ads after reaching $600 total. How well you distribute these ads throughout the month greatly impacts your campaign’s success.
Here are some other things you should keep in mind:
- You control costs by setting daily or lifetime budgets in your campaigns
- Daily budgets let you set a maximum spend per day, giving you daily control over costs
- Lifetime budgets look at total spending over a timeframe, good for short campaigns
- Google will stop showing your ads once these budgets are reached
- This is an important safety that prevents you from accidentally overspending
- Useful for limiting your total ad spend based on what you can afford
- Match your budget to what makes sense for your business goals and resources
Setting proper budgets allows you to optimize Google Ads costs for your business goals and resources. Carefully consider what budget limits make sense.
What is the “True” Cost of Google Ads?
One of the most common questions when advertising on Google Ads is “How much do these ads really cost?” The Google Ads pricing model is based on pay-per-click (PPC) advertising. This means you are only charged when someone clicks on your ad. If 10,000 people viewed your ad, but nobody clicked, you would pay nothing. However, if 10,000 people did click your ad, you would pay the cost-per-click rate for each of those 10,000 clicks.
For example, if your cost-per-click rate were $10, those 10,000 clicks would cost $100,000.
Oftentimes, potential clients come to me worried that their clicks exceed their budget. But here’s the upside: You can control this by setting the maximum amount you will spend each day on Google Ads. When you reach your daily ad limit, your ads stop appearing for the rest of the day. This helps you avoid accumulating more clicks that might cause you to spend more than you intend. The trade-off, however, is that your ads will be hidden. Therefore, there’s both an art and a science to knowing which days to display your ads and the optimal times of the day to showcase them.
How to Get a Gauge of Your Cost Per Click (CPC)?
When understanding Cost-per-click (CPC) rates, the initial key point is the variation in CPCs based on the chosen keyword. For instance, consider the contrast in average CPCs: “roofing company” has a relatively low CPC of 4.02 cents, whereas “slip and fall lawyer” commands an incredibly high average CPC of four hundred dollars. This discrepancy in CPC costs underscores the influence of industry and competition dynamics.
Lifetime value: It’s important to factor in the lifetime value of your customers when evaluating advertising costs. For instance, a Roofer might make a $2,000 profit from a project, while a slip-and-fall lawyer could earn $20,000 from a single case. This comparison highlights the need to carefully balance risks against rewards when selecting keywords for your business.
A proficient Paid Ads agency can assist with keyword research, identifying the most strategic keywords to target based on cost-effectiveness.
For those embarking on the journey alone, Google Ads Keyword Planner offers a no-cost means of keyword research. Simply input your desired keyword, and it will present a curated list of recommendations to explore. Additionally, more advanced keyword research and competitive analysis can be conducted using paid tools. Our agency uses tools like SEMrush, Wordstream, and other analytics tools for certain clients, enabling us to handpick optimal keywords and estimate their CPCs.
Once armed with estimated CPCs, the next step involves determining an appropriate budget for your Google Ads campaign – a task that can be tackled independently or with the assistance of professionals.
- Google charges per click based on your keyword bids
- You set bids based on what keywords are worth to your business
- Average CPC varies greatly by keyword competitiveness
- High competition drives up the CPC, and low can be very affordable
- Research keywords to find affordable options for your business
- Use keyword research to find “hidden gems” with good value
- Researching and selecting keywords strategically based on competitiveness allows you to estimate the expected CPCs.
How Much Should You Budget for Google Ads?
Defining your Google Ads budget can be a tricky balance. On one side, spending too conservatively risks insufficient clicks for meaningful conversions. Sure, investing $100 might yield 10 clicks, but it’s unlikely to bring transformative results or even a single lead.
Conversely, overspending can lead to wasted funds, such as when $10,000 is squandered on ads targeting the wrong URL or underperforming keywords.
Our agency’s recommendation aligns precisely with this strategy: to establish your precise Google Ads budget allocate enough to generate your first 100 clicks.
The specific cost varies for each business, depending on your chosen keywords’ average cost per click. In most industries, spending over $1,000 per month in Google Ads is typically necessary for most industries
Following the first 100 clicks, evaluate campaign performance, optimize as needed, and allocate for your second 100 clicks. Repeat this process and analyze the results until you’ve amassed 300 clicks. With a cost per click of $5, this amounts to a $1,500 investment over three months; with $10 per click, it would be $3,000.
Around the three-month or 300-click mark, pause and assess whether this approach benefits your business.
We’re not expecting a flood of leads or sales from these initial clicks. Instead, seek signs of progress or any positive movement. A few conversions signal the right path for refining your campaign to garner more leads and sales. Achieving an even one percent conversion rate would yield three conversions from 300 clicks, indicating progress. And that number you want to use as your barometer.
Afterward, refine your campaigns to achieve a point of breaking even, and then strive for increased returns on your investment. Ultimately, our recommendation for determining your precise Google Ad budget planning boils down to generating enough traffic to observe the foundation of conversions. A minimum of 300 clicks is crucial for gauging meaningful impact; anything less might not provide sufficient traffic for accurate measurement.
- Budget enough to get at least 300 clicks over 3 months
- Use the first 300 clicks to optimize for conversions
- This traffic allows you to identify winning strategies
- With this approach, you can determine what spending levels are profitable for your business.
Lowering Your Google Advertising Costs
Here’s the deal: You can reduce your Google ad expenses by improving your ads’ quality score. Google confirms this – better ads mean lower costs and improved ad positions. Every ad you run gets a quality score, rated from one to ten. A higher score means more relevance, according to Google.
Your score depends on click-through rate, ad relevance, and landing page experience. We focus on these to help clients lower CPCs and increase ROI. If you manage your campaigns, keep an eye on your quality score to seize chances for better performance down the line.
Imagine you’re running an ad promoting lawnmowers. Your ad text talks about the best lawnmower deals and includes enticing offers. However, when users click on the ad, they’re taken to a landing page that displays dishwashers instead of lawnmowers. The landing page doesn’t match what your ad promised.
In this scenario, Google’s algorithms will detect the disconnect between your ad and the landing page. Google aims to deliver a positive user experience by ensuring that ads lead to relevant content. Since your ad is misleading and doesn’t provide the expected content, Google will consider it of low quality and relevance.
As a consequence, your quality score for this ad will drop. A lower quality score means Google will charge you more per click to display your ad. Google perceives your ad as less useful to users, so it wants to encourage you to show it by making it more expensive.
- Boost quality score to lower your costs
- Focus on click-through rate, ad relevance, landing pages
- Monitor quality score to find future optimization opportunities
- Regularly check the quality score and make improvements to see significant reductions in CPC.
How AI Will Change Our Google Ad Prices
The emergence of AI is likely to have a major impact on Google Ads pricing in the coming years, though the exact effects remain to be seen. As Google incorporates more AI into its advertising systems, some hypothesize that costs could decline in certain areas. For example, if AI allows ads to be more efficiently matched and optimized for relevance, searchers may click on fewer low-quality ads, potentially lowering average CPCs. However, experts caution that increased competition from AI-powered bid optimization could increase prices for valuable keywords and prime ad placements. Ultimately, the interplay between human advertisers and AI is still unfolding. While the future is uncertain, AI will undoubtedly remake parts of the Google Ad auction prices and ad bidding strategies. We cannot say definitively whether this will increase or decrease costs overall. Only time will tell exactly how artificial intelligence will reshape Google Ad prices, but our hunch is that significant changes are coming.
Today, we tackled two key queries:
- How much does Google Ads cost?
- What’s the right spending level?
- Will AI impact your future Ad Campaigns
Remember, Google typically charges based on the clicks you get. The precise cost hinges on the specific keywords you target. Conduct thorough keyword research to identify high-value, low-cost options.
As for how much to allocate for Google Ads, investing adequately to generate traffic and initiate conversions is essential. Think of traffic as the engine igniting your campaign, like starting a car. Aim for at least 300 clicks to power up and monitor performance every 100 clicks to ensure you’re on track.
If choosing between higher or lower spending, lean toward more spending for increased conversion opportunities.
Taking the First Step
As highlighted throughout this article, delving into Google Ad prices requires a blend of art and science – and getting it right isn’t always straightforward. If you’re embarking on this journey and need guidance from the start, don’t hesitate to contact us. Alternatively, if you’ve already taken the plunge, whether with another vendor or independently, and aren’t achieving the desired returns, we’re here to help. Contact us today, and let’s work together to turn your campaigns into successful ventures. Your success is our priority.