It was more difficult to control Google Adwords costs in the past. People used to advertise on Google Adwords as the platform was known since it was published in 2000.

The company changed the name of the platform and rebranded it into Google Ads in 2018. Google Ads is based on pay-per-click (PPC) advertising. This means that when you create advertising campaign, you also decide how much does an ad cost on Google.

It can happen that Google Ads costs get out of hands. The following post explains how to avoid this situation.

Google Ads Costs Too High

Many small and medium-sized businesses who use Google Ads may argue that it becomes too expensive to utilize it. Behind this argument can be found factors that make these businesses lose money more than they wish and expect.  However, there are certain ways how an entrepreneur can avoid Google Ads costs becoming too high and this way wasting too much money in them. The following ways can improve your money management on this platform. These are the determining factors how much does an ad cost on Google to you.

1. Learn To Use The Platform

The biggest reason why businesses think Google Ads costs are too high and they lose money, is the fact that they don’t know how to use it properly.  It takes time to learn and usually this thing can be accomplished by using the platform. Then there are different kind of other ways to learn like free and paid digital publications, webinars and special online training where you can learn how to use Google Ads.

2. Utilize Limiting Match Types

Using broad match keywords make your ad visible to very broad audience. In this case, your ad will be shown to people who don’t necessary belong to your audience. For this reason, you get useless clicks from this irrelevant audience who is not interested in your product or service offer. So, it’s not amazing your campaign is the money pit. In order to avoid this to happen, you must create a list of negative keywords or keyword phrases that prevent to display your ad , if someone enters them into Google.

3. Decide A Budget And Bidding Strategy

It’s a good idea to really think what will be your spend in each campaign and what will be your daily budget. Google Ads provides two options for bidding; automatic and manual.

3.1. Automatic Bidding 

This is a bidding strategy which is designed to maximize results of your advertising campaign in terms of set goals. Google Ads automatically sets bid amounts, in other words, bid prices for an ad click or impression. This is based on analysis of different data Google has about users and their other characteristics.

As a matter of fact, Google’s all automatic bid strategies are so called portfolio bid strategies. Google Ads provides a definition for this term: “An automated, goal-driven bid strategy that groups together multiple campaigns, ad groups, and keywords. Portfolio bid strategies automatically set bids to help you reach your performance goals. They include the following Smart Bidding Strategies:

  • Target CPA
  • Target ROAS
  • Maximize Conversions
  • Maximize Conversion Value
  • Enhanced CPC

So Smart Bidding Strategies form own category in the automatic bidding. In addition, there are 7 other types of automatic bidding strategies:

  • Maximize clicks
  • Target search page location
  • Target outranking share
  • Target cost-per-acquisition (CPA)
  • Enhanced cost-per-click (ECPC)
  • Target return on ad spend (ROAS)
  • Maximize conversions

3.2. Manual Bidding

Referring to Google Ads Help “with manual Cost-Per-Click (CPC) bidding, you can set a maximum price on the cost of someone clicking on your ads. You can get good value with this bidding method because you pay only when a viewer is interested enough to click your ad and learn more.”

One way to make sure that you get more relevant clicks is to bid on phrase and exact keywords at higher bids. By this method you can achieve better click-through-rate (CTR). In addition, it’s a good idea to constantly follow up Search Query report which reveals what search terms people are seeking when you have advertising campaign with Google Ads.

4. Search Network with Display Select

Search Network with Display Select is the exact option you can choose at a campaign level. It means your ad will be shown both in search network and display network. This setting consumes your daily budget quickly. Therefore it’s a good idea to decide which network to deploy when starting your advertising campaign.

5. Monitor Google Ads Costs

Today pay-per-click advertising is quite much automated and there are different algorithms and new technologies like machine learning in use. This doesn’t mean you can be careless and let automation take care of your display advertising in the manner of “set and forget it”.

The can be variety of reasons why Google Ads costs and so campaign spending can be excessive. It can be that your keywords trigger irrelevant clicks, manual or automatic bidding settings can be incorrect etc. The most important thing is to be active and carry out daily monitoring of key performance indicators (KPIs) and spending.

Google Ads Costs

Google Ads Traffic Does Not Convert

Google Ads campaign can generate traffic to a landing page, but it can be that ad clicks don’t convert. There can be many reasons for poor conversion as the following ones show.

1. Account Structure Is Bad

As we know, Google Ads has been arranged into three parts: account, campaigns and ad groups. These ad groups consist of ads and keywords. It can be that an advertiser is targeting broad match, irrelevant and bad quality score keywords. Advertiser doesn’t use negative keywords and exclude those irrelevant terms. In addition, it can be that ad groups are full of unrelated search terms.

2. Dynamic Keyword Insertion Used Wrongly

There is an option in Google Ads called dynamic keyword insertion. This feature makes it possible for you to dynamically add a search term in Google into your ad. This improves the relevance of your ad and increases chances of click. However, you have to make sure that this feature doesn’t add every possible keyword into your ad.

3. Ads Are Not Relevant

It can happen that ads are not relevant. In this case keywords don’t match with ads that in turn don’t match with landing page. For example, the ads can direct visitors to general home page where there are no specific information available about a product or service presented in the list of keywords.

4. Landing Page Is Inferior

One sign of failure is when your get clicks in your Google Ads campaign but these don’t convert into lead or sales. In this scenario we can say there is an issue with the landing page. Then it’s a good idea to redesing it and perhaps perform a split test i.e. A/B test. This way you can find the best performing web design.

5. No Remarketing

Remarketing has been a good way to carry out display advertising. This has meant dropping a third-party tracking cookie into your computer through a browser. This way it has been possible to follow users who has got the tracking cookie. Unfortunately, this time is soon over.

Referring to Clint Witchalls at the Conversation “Google has announced plans to stop using tracking cookies on its Chrome browser by 2022, replacing them with a group profiling system in a move the company says will plot “a course towards a more privacy-friendly web”.”

Chrome dominates the browser market by 2/3. Currently, Mozilla Firefox and Apple Safari don’t support third-party cookies anymore. However, Google has announced to create replacement for this advertising method.

Understanding Ad Rank

Ad Rank is a formula Google uses to determine what position each ad will take. Google Ads Help defines Ad Rank as follows: “A value that’s used to determine your ad position …. and whether your ads will show at all. Ad Rank is calculated using your bid amount, your auction-time ad quality (including expected clickthrough rate, ad relevance, and landing page experience), the Ad Rank thresholds, the competitiveness of an auction, the context of the person’s search …. and the expected impact of extensions and other ad formats.”

As you can see, Ad Rank is determined by several different factors. When we arrange and group these factors in more clear way, it’s possible to get the following list of the variables in the formula:

  • Bid amount
  • Quality score: expected click-through-rate, ad relevance and landing page experience
  • Competition
  • Context of user’s search: location, device, search characteristics etc.
  • Ad extensions
  • Other ad formats

Google Ads auction determines an ad’s position in search engine result pages (SERPs). On this display advertising platform it’s not the highest bid which wins like the situation is at an ordinary, physical auction. The factors having the biggest impact on Ad Rank are bid amount and quality score. We can present this as a simplified equation:

Bid Amount x Quality Score = Ad Rank

So we can assume that mainly bid amount and quality score together determine ad rank and thus ad’s position in SERPs.

The Meaning of Quality Score

When taking the before-mentioned into account, we can realize that the Quality Score is very important factor. It determines Ad Rank with bid amount and hence position of an ad in SERPs. As we can see from the list above, the Quality Score consists of three factors:

  • Expected click-through-rate (CTR)
  • Ad relevance
  • Landing page experience

Referring to Frederick Vallaeys with Search Engine Journal: “Quality Score is Google’s measure of how relevant a keyword has been based on data from past ad auctions. As soon as Google has enough data, keywords in an advertiser’s account are assigned a QS number between 1 and 10, with 10 being the best.”

So when you like to improve the Quality Score, it can be done by improving the relevance of keywords, ads and landing pages. In addition to the Quality Score which is number value, Google Ads provides also relative score in words for these three factors: Below Average, Average and Above Average. You can view historical and daily values of these factors.

Expected click-through-rate (CTR) measures how probable it is for your ad to generate a click when search term is the precisely the same as your keyword. When the expected CTR is low, it indicates also low probability of click. In this case, it’s a good idea to concentrate on specific keywords that relevant to your business offer.

On the other hand, ad relevance measures how well or badly your ad’s content matches with keyword. When this measure is low, it reveals that there is something wrong with the ad groups. It can be that the ad group is to big and broad. Solution to this would be to make the ad groups smaller and narrower with the themes.

Landing page experience measures user’s behaviour when he or she clicks your ad and visits your landing page. When this factor is low, it indicates that visitors are not satisfied and they leave right away. In this scenario so called bounce rate is high. In this situation you have to make sure that the content at this landing page is closely and well-related to search term and the landing page in general delivers promise of your ad.

Why To Learn Google Ads?

The best way to learn to use Google Ads is to open an account and start using this display advertising platform. It’s “learning-by-doing” as the common saying goes. However, there can be many pitfalls on your way like in life in general. You have to be able to recognize those pitfalls and thus avoid them.

It’s a well-known fact that Google is rigorous with their advertising policies. Many people have been under suspicion of violating Google’s advertising policies. In addition, the company has suspended Google Ads accounts from myriad of people.

On the other hand and as described in the beginning of this blog post, Google Ads costs can run out of control and create the real money pit. This usually happens, when you have not familiarized yourself well with the platform and have no idea of how to avoid losing excessive amount of money.

In order to avoid such situations, it’s a good idea to embrace new knowledge. Today there are many ways to learn. Especially the Internet provides excellent channels for learning. There are free and paid digital publications, webinars and special online training where you can learn how to use Google Ads.

A good course I recommend is Google Ads Master Class. Google Ads Online Course is taught by Dr. Hemmel Amrania who is Google Ads Consultant. He provides well-structured approach to managing your Google Ads campaign.


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