How Does Google Ads Work? (Surprising Findings)
While most of the headlines have shifted to new and sexier platforms like Instagram, Google continues to post strong revenue numbers. Currently, they are still at more than 2x the revenue of Facebook ($28.95 billion vs $13.73 billion in Q3 of 2018).
And of all those dollars, a small part is spent by online stores that are making a killing with Google Ads.
But that’s a minority. Making sales with Google Ads is not all rainbows and unicorns. If you’re just getting started on the platform, Google doesn’t stack the odds in your favor.
In fact, it will do exactly the opposite.
In this article, I’ll share a few things that Google never seems to address, but that has a huge impact on your actual performance.
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Fact 1: Google Ads Is Not A Fit for Every Store
While it is super easy to get started with Google Ads, it’s not so easy to run those ads profitably.
If you don’t have the right foundations in place, generating sales with Google Ads could be close to impossible.
So when tells me that Google Ads doesn’t work for them, the cause is usually one of these three things:
- Average order value: if your average order value is too low, you don’t have any room to pay for expensive clicks. It’s impossible to be profitable selling a $6 product if each click costs $0.5
- Margins: This is linked with the average order value. If your gross margins are too small, or you have great margins but a low AOV, there is nothing left to spend on advertising.
- Conversion rate: since you are paying similar CPCs to your competitors, your conversion rate also needs to be in the same ballpark. If not, these competitors can easily outspend you.
These aren’t ironclad rules. But if your business suffers from one or more of the above, you will have a hard time on Google Ads.
Pause your campaigns and work on improving the foundations of your business before moving forward.
Fact 2: Google Ads is Hyper Competitive
Google Ads has been around for over 18 years and during this time the cost to advertise has gone up dramatically.
People around since those early days tell tales of $0.01 clicks. Today you should consider yourself lucky if you only pay 10x that amount.
Throughout the years, businesses using Google Ads have gotten smarter, learned what works and what doesn’t and adjusted their approach. This gives them a huge upside over stores new to the platform.
So if you want to compete profitably with them, you need to bring your A-game.
Very often there is little room to mess around and try things on your own.
So what can you do if you want to start Google Ads today? Here are my best tips:
- Take advantage of automation
- Start small
- Get smarter
- Get expert help
If you’re selling hundreds of products, don’t start to advertise with all of them at once. Pick a set of products or a category where you’ve got better margins to give you some extra room to play.
A smaller amount of products will also reduce the overall cost. Because as long as you aren’t 100% sure what you’re doing, it’s better to keep your costs under control.
Then when the orders start to come in and the numbers make sense, slowly expand the products you’re advertising.
Learning something new always takes time.
Luckily you’re not the first one.
The best way to learn is to do. So if you’re running your first campaigns on a small subset of products, read up about how to improve those results.
Take advantage of automation
Learning the nuts and bolts of Google Ads takes a lot of time. But luckily you don’t have to learn everything from day 1.
Google has a type of advertising called Google Shopping, where algorithms handle most of the heavy lifting.
You need to create a product feed from your store and Google Shopping will match your products to relevant search queries
One store owner I recently talked to said this about setting up his Shopping campaigns: “I can’t say I feel good about this as it seemed entirely too easy.”
But he had in fact done everything right. It just goes to show how easy these campaigns can be.
Get expert help
You can find agencies that have been doing Google Ads for many years.
They can’t predict the future, but if they have enough experience, they will have probably worked in your industry or with your products before.
That means you can really shortcut your progress.
Getting a basic feel for how Google Ads works and what typical results look like will put you in a better position to hire the right person for the job.
If you don’t have any experience with the job you’re trying to outsource, your BS detector might not be well-tuned. This could result in a lot of wasted time and money.
Do Google Ads Really Work?
The key to making Google Ads work for you is to understand the ins and outs of paid search, bidding strategies, keyword research, account structure etc.
Map out what you’re able to spend on each campaign, set your daily budget accordingly and keep track of the spend
Do your keyword research and bid on the phrase and exact keywords at higher bids to get more relevant clicks
While creating ads make sure they are relevant and enticing enough for the viewer to click
Optimize your landing pages by running A/B tests to try out variations of a page
Try remarketing to reinforce your brand
If you’re still wondering if Google AdWords is worth the money, it’s best to start small, adjust based on results, and double down if your campaigns are generating affordable and profitable sales.
How Does Google AdWords Charge?
The amount that Google AdWords charges advertisers depends on what they are advertising.
Since Google AdWords is a pay-per-click advertising program, your ads are displayed for free and you’re charged only when someone clicks on your ad on Google search results page. Also, the AdWords system is a live auction, therefore, the click prices are determined by the amount of competition, and how much they’re willing to pay for a click.
When done correctly, Google AdWords can drive high-quality traffic to the website at costs that are much more competitive as compared to other forms of advertising.
However, when you don’t know how to expertly manage the process, costs can rack up fast while you potentially drive low-quality traffic. The key to running a successful AdWords campaign is to understand the factors that play into how much each click costs you.
What Does A Google Ads Specialist Do?
Working with a Google Ads specialist can help you realise the full potential of your campaigns. The specialist will help you pinpoint areas of improvements and deliver a solution to improve ROI.
Here are some things that a Google Ads Specialist does:
Creates A Strategy & Goals
Launches New Campaigns
Sends Performance Reports