A lot of people who are just learning about the different ways they can promote their business online are asking this: is Google AdWords free to use? While Google is known as the top provider of free digital marketing tools (Google Search Console, Google Analytics, and others.), its ad platform involves some costs, while being totally free to use.
Don’t worry, we will explain everything.
Let’s learn about the basic information you need to have about Google AdWords before using it, and how much you can expect to pay for this service.
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What Is Google AdWords?
Google AdWords, now simply known as Google Ads, is a free platform provided by Google to help users create and manage their paid ad campaigns. While the platform itself and its features are totally free for use, you have to pay for the ads each time users click on your ad. This type of advertising is called pay-per-click advertising.
Google displays ads paid for by businesses in its SERPs (search engine results pages), as well as all over its Display Network, a collection of millions of websites and apps where you can see various types of ads. We will present them in detail later in the article.
What Exactly Do You Pay For?
With Google Ads, you don’t pay for the service when you create your campaign, and you don’t have to be subscribed to a paid plan to see your reports or to run your campaigns. It all comes down to the moment someone clicks on one of your ads.
The cost of each click depends on a lot of factors, so we will try to break it down for a better understanding. You will find out how the cost of a click is determined, how Google Ads work, and what you should focus on.
If you need help managing your Google Ads on a budget, it’s best to hire a professional advertising agency like Australian Internet Advertising that will maximise your return on investment.
How Is the Cost of a Click Calculated?
There are several factors that will influence how much a click would cost on Google Ads. You can check this amazing set of infographics from WordStream to see what the average cost-per-click (CPC) is for some of the main industries.
As you can see, the costs of clicks differ quite a lot depending on what network the ads are displayed on.
Google has two different networks where it displays paid ads:
- The Search Network
- The Display Network
The Google Search Network is made of Google’s search results pages, where ads can be displayed above the organic results (and marked with a small “Ad” on the left) or at the bottom of a result page.
The Google Display Network is made of thousands and thousands of websites where Google shows ads paid by businesses, websites, bloggers, or any users who advertise on Google. You have surely seen these ads before when visiting blogs, websites when using apps, or watching YouTube videos.
The cost of an ad is established according to a combination of parameters that can change at a different time, so it’s not something fixed. But you can get an idea from statistics, that put the average cost-per-click at $1-$2 for the Search Network and below $1 for the Display Network.
The average ad spend for small businesses would be somewhere between $4,000 and $10,000 a month, not considering the costs of professionals handling your ad campaigns (which is sometimes expressed as a percentage of the ad spend) or the tools you will use.
How Do Google Ads Work?
Google will show your ads based on targeted keywords or actions. When you create an ad, you are entering an auction for certain keywords. Depending on how much competition there is on those keywords, the price will fluctuate.
Other factors that will influence the cost of Google Ads include:
- The device you are targeting (ads on mobile devices cost more)
- The location
- Competition level
- The industry you are active in
- The customer lifecycle
So, how does this system work? When users input their search queries, Google looks to see if the searched terms contain a word or phrase that advertisers are currently bidding on. If that’s the case, then an auction begins and it all starts with the ranking.
The Ad Rank is a score calculated by Google to find out which ads should be shown first. The two variables that go into this ranking score are the Quality Score and your maximum bid.
The Quality Score is affected by a number of variables:
- The click-through rate of your ad
- The relevance of the keywords for your ad group
- The quality and relevance of the landing page
- How good your ad copy is
- How your ads performed in the past.
Based on your Quality Score and your maximum bid, the ad rank is calculated as a combination of the two:
Ad Rank = CPC Bid x Quality Score
After the ad ranks have been calculated, the results are the following: the ad with the highest rank is shown first, and the advertiser will pay the least when someone clicks their ad.
This principle is the main argument as to why it’s not so important to have a lot of money to spend on Google Ads but to know how to use the budget you have and bring conversions.
Sometimes, it makes sense to go ahead with an ad that has a seemingly high cost-per-click. For example, long-tailed keywords, which make up a small portion of the total search volumes, can cost more but will target the users more accurately and be more successful in bringing conversions.
How Can You Increase Your Quality Score?
One of the most important things you need to do to improve the performance of your ads is to focus on increasing your Quality Score. This can be achieved by improving your ad performance around these 5 main tasks:
- Keyword research: you need to do it thoroughly and look for those relevant, targeted keywords.
- Keyword planner: organise your keywords by ad groups and use them in a cohesive manner.
- Test Your Ad Copy: don’t launch a full campaign before doing some A/B testing of the ad copy, images, structure, etc.
- Optimise landing pages: Make sure your landing pages perfectly match the ad that takes the user to them.
- Add negative keywords: this way, you avoid using keywords that would drain your budget and not bring any conversions.
How Much Can You Expect Paying for Your Ads?
Spending money on Google Ads doesn’t have to be senseless and something that puts a hole in your budget. Paid ads on Google’s network are known to be one of the most efficient ways to get revenue from what you invest, with about $8 for each $1 spent.
One of the most common things you will read in Google Ads guides is to always monitor the CPC (cost per click). While this is an important variable for you, as an advertiser, if you look at it alone it doesn’t tell you the most important thing: how much you earn from those ads.
The most relevant calculation you need to make is how much you pay per acquisition. How many impressions and how many clicks does it take to gain a new acquisition, and how much value does that add to your revenue?
Depending on the product or service you sell, a new transaction, a new client can bring you thousands of dollars, or it can bring you $10. Relative to that, your costs can, indeed, be too big, and your Google Ads strategies need to be reviewed.
Need Help with Google AdWords?
Google Ads can be an important addition to your digital marketing mix. If done wisely and with a well-thought strategy behind it, it can really help your business grow.
If you feel that your Google Ads campaigns aren’t getting you the results you were hoping for, consider hiring experts to do it for you.
We at Australian Internet Advertising focus on getting our clients more revenue, growing their business, and achieve palpable results from the investments they make.
We work with medium and small businesses to create an advertising plan that grows with them and multiplies their revenue.
Contact us and let’s find together the best approach to Google Ads for your company. You will get a free consultation with one of our online experts who will present to you the major steps we can take to improve your advertising.