How much does it cost to advertise with Google AdWords?
As an agency, there is no question that we are asked more often than the question of the Google AdWords costs associated with campaigns.
In addition to the areas of search engine optimization or online marketing in general, this question often comes up in connection with Google AdWords or Bing Ads.
In this blog post, we would like to devote ourselves to the cost component, clear up rumors about the cost structures around Google AdWords, and bring light into the darkness. Here we go!
AdWords Costs: The User Types
Something fundamental first: We differentiate between two user types when looking at Google AdWords ads. On the one hand, there are the users who speak vehemently of costs, and then there are those who describe AdWords expenditures as AdWords investments. Our goal is that after reading the blog post, you will belong to the second user group and understand how the AdWords construct contributes to making your company even more successful.
AdWords costs become AdWords investments if you optimize your Google AdWords account for conversions (defined company goals) in the long term.
For example, if you are a service company, it can help you to have conversion tracking set up in your AdWords account and, for example, to measure the sending of the contact form. With this information, the AdWords budget can be allocated according to the high-performing campaigns and ad groups, and keywords that have a higher conversion rate (completion rate) can be advertised more prominently.
AdWords costs & objectives
With the aim of optimizing the AdWords campaigns for conversions, the control can be used to calculate the maximum amount the company may spend on a contact request.
AdWords costs in practice
A small practical example:
The consulting company “Ebert & Partner” has calculated a customer lifetime value (Customer Lifetime Value (CLV)) of €12,000 for the average new customer.
For the company, every new customer brings in a pre-tax profit of €12,000 over the term of the service.
Now the company wants to continue to grow and win new customers. The management now has the requirement to acquire 10 new customers with €10,000.
Mr. Klüngel from the marketing department knows that on average, every fourth contact request converts to a customer via the website.
This information is enough to define a KPI (Key Performance Indicators) setting for the Google AdWords campaigns:
A new customer may cost an average of €1000.
The lead close rate is 25%.
→ A lead may cost €250 (€1000 x 25%).
The fixed value for the CPL (cost per lead) is €250 in this case.
Google Analytics can now be used to read that every 50th website visitor fills out the contact form completely and sends it off. For two inquiries, the company “Ebert & Partner” needs 100 website visitors.
This means that each website visitor may cost a maximum of €5 on average. Which would be the maximum click price in our case. Unfortunately, reality is different in terms of the dimensions:
We have keywords for which the click price is well over €5, but also well under €5 in some cases. The price per click is based on the competition according to the bidding process. The conversion rates (traffic → form) are not always the same, so there can be different values here as well.
Influence Google AdWords costs in a targeted manner
As a result of this example, advertisers have the following options to influence AdWords costs and investments:
1.) Set goals and determine KPIs
As already described in the example, targeting is crucial with AdWords. Only those who know how much a new customer may cost them can also scale the traffic via AdWords.
2.) Landing pages
Google AdWords campaigns should never be viewed in isolation. The conversions occur on the landing pages . For this reason, the campaign landing pages should contain all the essential information for the customer, build trust, and communicate the benefits to the potential customer.
3.) Call to action
Tell the user on the page what to do specifically. Force him to be happy. In your case → contacting, calling, or the sale in the online shop!
4.) AdWords campaign setting
A targeted use of the advertising formats in AdWords contributes to the fact that an optimal start can be made right from the start. A hierarchical campaign structure supported by GDN (Google Display Network) ads or DSA (Dynamic Search Ads) ensures a good campaign start and optimal use of the AdWords budget.
5.) Google AdWords Optimization
You should create new AdWords ads at regular intervals , optimize ad groups for conversions, adjust the click prices accordingly, and make time and location-dependent optimizations. This ongoing process contributes to the “learning” of the account, and after a few months you will know which keywords work very well and which less well.
Conclusion: This is where the AdWords costs die
If you have understood this principle, then the classic AdWords costs have died for you, and you are ready to talk about investments like our customers. But it should also be said at this point that you shouldn’t just back one horse for successful online marketing: use the possibilities of the channels to digitally spread the investments and also the risk of dependencies across different platforms in the overall strategy. We would like to help you.