Google Ads isn’t like other advertising channels. Old school billboards and radio ads are built to reach as many people as possible, regardless of the advertiser’s industry. This usually means that billboards and radio ads reach a really large number of people. The question isn’t how many people have seen your advertisement, though. The act of just getting a pair of eyes in front of your ad doesn’t necessarily generate revenue. That person has to go through a process that turns them into an actual paying customer, usually called a Customer Journey. How does a Customer Journey relate to Google Ads? Because it can help you make that Journey shorter, simpler, and most importantly, more profitable.
Google Ads is built as an auction marketplace, the commodity of which is site visitors (aka potential customers). One of the ways that Google helps determine who those site visitors are is through keywords. For example, if your product is “high quality sunglasses”, Google will find the people who have recently searched for either “high quality sunglasses” or a related search term – like “RayBans”. Once Google has figured out WHO those potential customers are, they show them your ad, showcasing your “high quality sunglasses” offering.
As a business owner, you can use audience targeting to your advantage. The structure of Google Ads is such that when you bid on those clicks (site visitors), you’re only bidding for your ad to be shown to your target audience. This means that your ad for “high quality sunglasses” may not be shown to everyone in the world. It will be shown to people who are most likely to purchase “high quality sunglasses” now or in the near future.
What about the Customer Journey from earlier?
The real beauty of the Google Ad process is that it meets your customers where they are. If you posted a billboard or broadcast a radio ad, that ad has to be memorable. Memorable enough that your potential customer is willing to go on a hunt for your business. Where do you think they’ll be hunting for you? That is, if you stood out enough to make an impression at all? Most likely, Google. Instead of making that potential customer remember your ad and search for your business later, your name is right there in front of them, all they have to do is click. BAM, Streamlined Customer Journey.
Spending on your Ads
This is a tough one because the right answer varies so much across industries and businesses. In order to identify how much to spend on Google Ads you have to determine how much you, and your competitors, think a new potential customer is worth (cost per click or CPC). There is no official minimum to start bidding within Google Ads, but that doesn’t mean you should automatically start low with $2-5 per day.
Some people try to take a more conservative approach and just dip their toes in. The problem with a smaller investment is that it’s less likely to produce notable results. For example, one can’t expect a tiny classified ad to perform as effectively as a full page spread in the newspaper. The logic that the small, inexpensive ad has to produce results in order to buy the bigger, more expensive, and more efficient ad is flawed at its core. The more expensive something is, the higher the return on investment. Sometimes, you just have to dive in headfirst!
Standard Starting Point
Here at The Inbound Edge, we typically recommend a starting budget of about $1,000 – $3,000 per month. We also work mostly with small, locally owned businesses in the Austin, Texas area. Google Ad spend can vary depending on the industry, the cost per click (or CPC) and stage of business you’re in. If you’re doing everything on your own, it might make sense to start small, learn, and build as you go. If you’re hiring a marketing agency or experienced SEM specialist, expect that cost to increase.
As you increase the money you spend on Google Ads, you will receive more clicks. In return, Google will give you more data — which, as you will soon learn, is extremely valuable. To be frank, Google only REALLY cares about you if you’re spending money. This may sound harsh, but that’s the reality. Overall, effective search engine or pay-per-click marketing (SEM/PPC) paired with solid website SEO is a winning combo.
Investment vs. Expense
Marketing, in general, is usually seen as an expense. Expenses are items that we often seek to decrease (except Girl Scout cookie budgets, gimme those Thin Mints). On the flip side, investments are considered a worthwhile temporary expense that leads to greater revenue down the line.
We encourage our clients to reframe their view of Google Ads by looking at it as one big investment over a quarter or a minor investment over the course of a year. The best way to turn Google Ads from an expense to an investment is by using tracking. Tracking essentially makes the difference between whether or not you’re able to learn from and improve your Google Ad strategy. Knowing the positive impact that this temporary expense makes on your sales figures will help you understand it’s long term value.
At the end of the day, you should spend as much on Google Ads as makes sense for you and your business. If you aren’t getting a positive return you shouldn’t spend money. If you have a positive return, you should spend as much as your cash flow and business can handle.
Written by: Brooke Choate
Edited by: Randi Zimmermann