Google Ads: What Factors Impact My Ad Spend?

December 6, 2019

AdvertisingDigital MarketingPPC

As the internet is becoming more integrated into our lives, it is increasingly important to adapt and refine our digital marketing strategies. More and more consumers are spending time on the internet to conduct their shopping and make purchases. Therefore, business owners need to deliver their marketing campaigns right where their audiences spend time the most – on Google, the biggest marketing platform on the internet.

Despite the many tools available on the internet, Google Ads remains one of the most effective online marketing tools. Its strengths lie with its incredible flexibility, trackable metrics and scalable campaigns. However, the most appealing feature of Google Ads is perhaps its accessibility to all levels of business owners.

Virtually businesses of any size or industry can benefit from implementing Google Ads in their digital marketing campaign. As with any marketing campaign, the question becomes how much budget should be allocated for Google Ads? And what factors will impact the Ad Spend?

To be frank, there really is no clear-cut answer to that question. There are many moving parts and variables that can affect the performance of your Google Ads Campaigns – and consequently, the budget of your ad spend.

We will be breaking down what those variables are in this article, and how they can impact your ad spend – and hopefully provide you with a deeper understanding of how Google Ads works.


Before we start, how does Google Ads actually work?

Without getting too deep in the technical details, understand that Google Ads essentially works like an auction system. Advertisers bid on specific keywords that will be included in Google’s search query.

you can win a higher ad position against your competition at a lower price with highly relevant keywords and ads.

When a user enters a keyword that matches the one submitted by the advertisers, the auction system will then execute an algorithm that will determine which ad will be displayed, as well as its placement amongst all other ads.

This placement is determined in depth by the Ad Rank formula that involves two factors, namely Maximum Bid and Quality Score of the ads.

Maximum Bid

As the name suggests, this is the maximum amount that each advertiser is willing to bid on a specific keyword or set of keywords.

Quality Score

The Quality Score is a measurement of how Google rates your ads. The score is based on a number of different indicators such as its relevance of the keywords and overall quality of the ad copy itself. Factors that can influence your Quality Score include things like the quality of your landing page, relevance of your text and keywords, click-through-rate (CTR) and your history with Google Ads.

Once Google has determined the Quality Score and Ad Rank of your ads, it will then determine how much you will be paying when someone clicks on your ads, hence the name Pay-Per-Click (PPC).

Factors that can influence your Google Ads spend

Now that you have an idea of how the PPC system works, it’s time to address the elephant in the room –  how much you should allocate the budget for your Google Ads campaign?

To answer this question, you need to know the variables that impact the price of your keyword.

Knowing your keywords

An integral component of Google Ads is keyword selection. Identifying the right keywords to compete in your business and industry will determine the success of your marketing campaign – and more importantly, maximize the budget that you’ve set or determined for the campaign.

If this is your first time, make sure to keep track of the relevancy in your keywords and how well they perform. You’ll gradually know overtime which keywords work for you, and which ones do not. You can then refine your keywords selection to improve your campaign.

To aid you in curating the right keywords, you can start by reviewing your website and seeking out which keywords your visitors are looking for when browsing content on your site. You can also use Google Analytics or other web analytics software to identify inbound keywords that visitors use to find your website. Additionally, Google also provides tools to help you identify potential keywords to target and gives you recommendations on how well it performs globally, as well as the frequency of searches from a certain keyword.

Once you’ve finally identified the keywords that are relevant for your business, you’ll be able to deliver your Google Ads precisely to your target audience. This is why Google Ads is an effective platform to deliver your message because you are essentially catching your audience exactly at the moment they are searching for those keywords you selected.

Curating the right keywords is very significant but very challenging - many businesses still do it wrong.

However, the curation process for those keywords is often easier said than done – often requiring extensive research and in-depth knowledge of the ecosystem in your industry. They are also subject to change depending on your competitors, the type of product or service you provide, and much more.

This is one of the reasons why businesses often delegate the task to agencies that have dedicated resources and teams in place to perform the campaign more efficiently. A reputable agency will assess your business’ needs and formulate a strategy to reach the goals that you’ve set for your business.

Looking to create effective Google Ad campaigns for your business? Consult with us at Island Media Management to create ads that will bring the traffic and leads that you’re looking for. 

Defining your goals and targeting

As with any marketing campaign, an important factor in determining your budget is defining your business goals. Like we prefaced above, perhaps one of the most powerful features of Google Ads is it’s in-depth targeting capabilities. This allows any business owner to create audience targeting that are tailored to their business goals and needs – regardless of their scale.

For example, targeting based on audience demographics allows your ads to target a specific set of audience that has been filtered by a set of parameters ranging from age range, gender, parental status, or household income. And with that, you are narrowing down your targeting to only display your ads that match your specified demographic – those that don’t match your parameters will be excluded.

Geographic targeting is another feature that you can implement in your ads to specify their display parameters only to certain geographic regions. Additionally, you can also have your ads set to display to people who show interest in your geographic region even if they aren’t physically there, by including geographic keywords in their search.

Device targeting works by specifying your ads’ display parameters based on the type of device – this includes devices like desktop pc, tablets or mobile smartphones. In fact, you can even narrow it down further down to the specific type of operating system that you want to display the ads on, such as Android only or Apple iOS devices only.

Ad copy

The copywriting of the ads themselves is another important element that can impact the performance, and hence the budget of your PPC campaign.

You can refine the targeting as much as you want, but if you can’t grab their interest when the time comes it would defeat the whole purpose of having those ads in the first place.

The ad copy should instill motivation to your audience to convince them to click through your ad. To aid with that, you can employ several strategies such as including a call-to-action phrase, including relevant keywords, make use of psychological hooks and adding value proposition to your audience.

Landing Page

Serving as the final destination for your ads, the landing page is a component that cannot be overlooked. It’s easy to set the landing page to your business homepage or product page – and it is a decent way if you simply want brand awareness. However, if you truly want to maximize the performance of your ads, you’ll want to create a dedicated landing page that will work in your favor and precisely place your audience where you want them to be.

Whether or not your Google Ads yield any conversions or actions all depends on the quality of the landing page of your business. When a visitor lands on your landing page, you want to make sure to present them with your message as clearly as possible.

Additionally, you may also want to adjust their click-path to prevent them from ending up somewhere that is not intended. Additionally, a dedicated landing page will be faster to load as well, making it less likely for your audience to bounce due to long loading times if it were to load all the other page elements on your full site.

How much to spend on Google Ads?

Now that we have a broader understanding of a Google Ads campaign, we can return to the original question of determining the amount needed for your ad spend. And the answer to that question truly depends on your business goals and targets. The industry that you’ll be competing in also plays a big role in your budgeting. Certain industries such as insurance, medical, or law can significantly high cost-per-click ratio due to the nature of their industry, as well as competition.

As we’ve listed above, there are many moving elements that can affect the price and budget for your ad spend. Google Ads is an excellent, scalable platform for you to expand the reach of your business, while at the same time gathering data on your audience. With so many moving parts, it is uncommon for businesses to entrust their Google Ads campaigns and other digital marketing efforts to agencies who know how to maximize the potential of Google’s powerful PPC tools to yield maximum results for your business goals.

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