Google Ads Too Expensive: How to Win in a Competitive and Costly PPC Environment?

Do you find Google Ads too expensive? Learn how you can stay in control of your costs.

As a marketer, keeping tabs on your PPC (Pay-per-click) costs is a priority, of course after lead generation, which according to the latest studies, is number one. Of interest is the fact that the average cost per lead was found to be around $200.

That sounds quite expensive. While the studies did not specify the platform they were referring to, they could point to something that you have probably thought about – that advertising on Google is expensive.

Maybe you have even been wondering whether it is worth the time, effort, and financial investment. Let us explore this next.

Why Should You Advertise on Google?

There are several benefits of advertising on Google:

a)  Relevance

Google Ads allow you to define your audiences and customize them as much as you would like. Did you know that you can even specify competitor websites as you create your custom audiences? You also get to exclude particular audiences or locations.

Google Ads also lets you choose the keywords that are most relevant to your brand and even suggests more. You can exclude keywords that you deem irrelevant to your campaign, too. For example, if your brand is a luxury brand, then keywords like ‘cheap’ and ‘affordable’ will only waste your campaign budget.

b)  Campaign Optimization

Better still, once your campaign starts getting traffic, you begin to get invaluable insights that you can use to further optimize it. For example, you can see the exact YouTube channels where your ad showed. This helps you see whether the channel is relevant to your brand and whether you are reaching your ideal customer.

From your Google Ads account, you can click on the specific channel link and you will be redirected to the specific YouTube channel.

If you find channels that do not help your campaigns, you need to refine your targeting.

c)  Cost Management

The Google Ads Keyword Planner is nifty when it comes to managing your advertising costs. You can see suggested bids based on what competitors in your location(s) are paying for keywords. The tool also helps you estimate the kind of results you might get with your budget and CPC (cost-per-click). This allows you to establish whether your budget is sufficient.

What Makes Google Ads Expensive?

When it comes to Google, a one-size-fits-all approach won’t cut it, several factors may make Google Ads too expensive. Let’s explore the essential ones:

a)  Your Competition

Your competition can influence your ad costs. Highly competitive keywords, where a lot of advertisers are bidding for the same keyword, tend to have a higher CPC.

Using the Google Ads Keyword Tool, you get to see what your competition is paying for. Even when a keyword is not categorized as ‘highly competitive’, if your competitors are bidding high for it, you will need to match up. Otherwise, you risk ranking lower in your bid, resulting in your ad not reaching enough people.

b)  Whether You Want to Rank on the First Page of Google

Google Ads has a First Page Bid Estimate Tool, which can help you see how much you will need to pay if you want your ad to rank on Google’s first result page. The CPC here is highly influenced by your keywords’ quality score and again, what your competition is paying for the keywords.

c)  Industry

In a recent study, there was a significant difference in CPC across various industries. For example, in the Legal industry, it was around $6.7 in Home Improvement, $3 in Technology, $3.8 in Marketing, $1.5 in the travel field, and $2.37 in Real Estate.

The same study also found the most expensive keyword in each industry, Insurance is $54, Loans is $44.2, Mortgage is $47, Gas/Electricity is $54.

d)  Campaign Type

While this is not often discussed in marketing circles, the campaign goal that you choose also influences your advertising costs. For example, if you choose your goal as ‘product and brand consideration’, your CPC could be as low as $0.02 per click, while a ‘sales’ goal could cost you even $5.02 per click.

How to Win in a Competitive and Costly PPC Environment

Now that we have looked at what can make Google Ads too expensive, let’s look at ways to control your ad budget.

a)  Properly Use Location-based Targeting

Location-based targeting seems to be a no-brainer. Think about it. You need to share your location when scheduling an Uber ride. Or using Google Maps. Think with Google reports have repeatedly shown the extensive usage and growth of the ‘near me’ keyword in search queries – a clear indication of intent. And intent is all we aim for, right?

Location-based targeting works especially if you have a physical store, your product can be found in physical stores in specific areas, or are in a location that is renowned for specific activities, for example, fishing and outdoor activities.

While this is undoubtedly a feature you should be taking advantage of, did you know that it may not always be a good idea?

One instance where you should not dare use location-based targeting is if your mobile site is not optimized. This is because at least a third of ‘near me’ searches come from mobile. If your site is not mobile-optimized, you will just be wasting your ad budget. Other option is that you should remove mobile device from your list while targeting your campaign, this will save your budget.

How To Optimize Your Campaigns Based on Location

We are going to go through how to set up your campaigns while optimizing them based on location. Before we start, it is advisable to set up a new campaign to use location-based targeting, rather than add it to an already existing campaign. This allows you to craft your campaign copy around the location you choose.

• To set up a new campaign, log in to your Google Ads account. Click on the Google Ads logo to see all your campaigns.
• On the top left, you should see a blue button with the words ‘New Campaign’ preceded by a plus sign. Click on it.
• In our illustration, we will set up a sales campaign. The campaign type will be a search campaign.
• Select your goal as ‘website visits’.
• Enter your website URL and click ‘continue’.
• We will show the ad on both the Search and Display Networks (the boxes will be automatically checked). We will explore this in detail later.
• Just below the Campaign Type area, there is a ‘show more settings’ dropdown. This is where you define your campaign settings, for example, campaign start and end date. We will skip this part for now.
• The next section, ‘targeting and audiences’ is our main focus.
• There are 3 options here. Choose ‘enter another location’.
• There are two things to note: the target locations, and the locations that you want to exclude.
• You can enter the names of neighborhoods, counties, districts, or cities. Choose the option that best matches the location that you want to target.
• Note that if your campaign is in the hotel/hospitality category, the only available location targeting options are by country or territory.
• You may also want to exclude some locations, for example, if a business does not ship to particular cities, counties, or regions within the targeted locations.
• You can exclude locations one at a time, or in bulk.
• To exclude one location at a time, enter the name of the location that you want to exclude, and choose the best match. Choose the ‘exclude’ option that appears when you highlight the location.
• Alternatively, you can click ‘advanced search’ and enter the particular location that you want to exclude. Choose the best match, and choose the ‘exclude’ option that appears when you highlight the location.
• To exclude multiple locations at a go, click the ‘advanced search’ option previously mentioned, then check ‘add locations in bulk’.
• In the box, you can paste up to 1000 locations that you want to exclude.
• It is advisable to add the locations per country at a time.
• Add only one location per line.
• Google provides a list of targetable locations. It details the name which you can call a location, country code, status (whether the location is valid, or whether there are plans to remove it in the future), and target type (for example, airport, department, or postal code).
• There is also an option to ‘restrict locations within a country’.
• After entering the locations in bulk, click ‘search’.
• You can review all the locations that matched your search. Make the necessary changes and click ‘exclude all’.
• You can now see all the excluded sections.
• Save your changes.
• Once you clicked ‘advanced search’, you were redirected to a page with ‘location’ and ‘radius’ options. Let’s briefly look at the latter.
• If you click the radius option, you can create a radius around a definite point, for example, coordinates. This is helpful if a business is located in a particular building and you want to specifically send foot traffic there.
• This option also makes your work easier. You can enter a specific location, for instance, a city like Chicago, and add a radius of 20 miles, instead of having to be overly specific about the counties, towns, and counties around Chicago.
• You may want to combine coordinates and the 20 miles radius option for the best results.

b)  Don’t Run the Same Campaign on Both the Search and Display Networks

Do you remember when we were setting up the campaign in the preceding section and said that the campaign should run on both the Search and Display Networks? We also mentioned that the boxes are automatically checked.

Well, let’s begin by stating that that is a bad idea. Google ensures that both options are checked because they want you to spend more advertising dollars.

To understand why the above combo is erroneous, we need to understand how each of the two campaign types works, and when it is appropriate to use each.

Search Campaigns

These come in handy to help rank on Google search results, especially if you are not able to do so organically, and you are in an industry with stiff competition.

Search Campaigns are ideal for customers who are already looking for a specific product or service. They show based on the search terms that users key in. For example, ‘Valentine’s Day Flowers’. If you had bid for this keyword, then your ad should show as part of the paid results on Google.

If the user finds your ad relevant, then they will be compelled to click on it and be redirected to your site. They will hopefully place an order.

In terms of intent, Search Campaigns appeal to a user whose intent is to buy. They are a great source to use for lead generation.

These campaigns are ideal for specific services or products, for example, plumbing or legal services, or shoes for specific occasions, for instance, an upcoming wedding, that have a sense of immediacy to them.

One amazing thing about Search Campaigns is that they can fit even the smallest marketing budget.

Display Campaigns

These campaigns are shown on different websites, apps, and Gmail, rather than as part of Google’s search results. Display Campaigns are ideal for brand awareness, where the user is not actively looking to purchase a particular product.

They have text, banner, or rich media formats (video or audio, and any other features that encourage users to engage with a piece of content).

You can choose specific sites on which to show your ads (managed placements) or groups of websites, which are based on particular audience characteristics.

An example of a display ad is when you look up ‘Valentine’s Day Flowers’ and then you realize that the ads have become ubiquitous. This is because the brands want you to keep their products top of mind.

Display Campaigns are ideal for products with visual appeal, as in our flower example.

Why the Combo Could Be Catastrophic

So, as you can see, running the same campaign on both the Search and Display networks may not work for your brand. While Search Campaigns appeal to buyers with a buying intent, Display Campaigns are more useful for brand awareness.

Is it possible to have similar messaging that achieves brand awareness while simultaneously serving user intent? Well, highly unlikely.

You could argue that you have a choice of 3 ads per campaign. How then will you instruct Google to show one and not the other on the two networks?

Worse still, analyzing campaign data becomes harder when you are running both campaign types. You might find that CTRs are lower for display ads (remember that users may not be at a point of making a purchase yet).

Combining both networks also makes it challenging to optimize your campaigns. For example, if the display ads have a low CTR which affects the entire campaign, how would you fix that?

The best way forward is to run your Search and Display campaigns separately.

This means that we need to go back to our campaign above and make the necessary changes – uncheck the Display Network box and then craft our campaign to achieve buying intent.

c)  Do Not Send Your Campaign Traffic To Your Home Page

Sending traffic to your home page is a sure-fire way to make Google Ads too expensive. This is because your home page is not specifically crafted to the target audience that you specify in your campaign.

The home page is supposed to serve different audiences with different intents. In our Valentine’s flowers example, one user may land on your home page with an intent of information – to know the best Valentine flowers to buy for their significant other, while another user who already knows the kind of flowers to buy wants to make a purchase.

You need to have different campaigns to target these two types of users, and each should have its landing page. For the user with a buying intent, your landing page should lead them directly to the product page where they get to add to cart. Shopping ads would be ideal in this case.

How To Include Cart Data in Your Campaign Reporting

Like we have mentioned, a Shopping Campaign is ideal for users with a buying intent. Do you remember our Sales campaign where we were using location-based targeting?

To set up a Shopping Campaign would be similar. You still get to choose the ‘sales’ goal. The campaign type however, this time will be ‘shopping’.

You then need to link an associated Merchant Center account and a country of sale (where the product is sold). Ensure that you have admin access in the Merchant Center. Note that you can only link one Merchant Center account to your campaign. To do this:

• Click the ‘tools and settings icon’.
• Under ‘settings’, choose ‘linked accounts’.
• On the new window that you will be redirected to, choose ‘Google Ads’.
• You should see a section called ‘Your Google Ads Account’, and a smaller section called ‘create shopping campaign’.
• You should see your Google Ads customer ID, and your link status (it should be ‘not linked’).
• Under ‘Actions’, click ‘link’.
• You then need to go back to Google Ads to approve the request.
• Refresh your page.
• You should see an exclamation mark on the notifications bell.
• Click on it and view.
• A new page opens where you get to approve the linkage.
• When you go back to setting up the Shopping Ads campaign, your Merchant Center account will be automatically connected.
• Choose the country where the products are sold.
• You then get to choose a sub-campaign type: a Smart Shopping campaign or a Standard Shopping Campaign.
• Let’s work with a Standard Shopping campaign as we want to ensure we are only working with the Search Network.
• Click ‘continue’.
• You can then go ahead and fill in the rest of the details. Ensure that you only check the Search Network box.
• You can also check the ‘Include Google search partners’ box where your ad will show on the search results of sites that have partnered with Google to show ads. Your CPV – Cost Per Conversion could be higher or lower than the set max CPC.

Let’s now go back to how you can add the conversions generated from your shopping cart data when running a shopping campaign to your reporting.

To do this, you need to set up conversion tracking.

How To Set up Conversion Tracking

• Click the ‘tools and settings’ icon.
• Choose ‘conversions’ from the dropdown.
• Click the blue plus button on the top left.
• For our campaign, choose the conversion action as ‘website conversions’.
• You will be redirected to a page where you will need to create a conversion action.
• Select the category as ‘add to cart’.
• Choose a conversion name.
• Give your conversions a value. You can use the same value for different conversions, or a different one for different conversions.
• The latter is appropriate if your shopping ads contain different products.
• The former is appropriate if you are only selling one product.
• Choose the number of conversions that you need to count for each click.
• Go with the ‘every’ option as we are looking to track every purchase that is added to cart.
• Choose the click-through conversion window.
• Choose between 7 and 90 days.
• Choose your view-through conversion window. This is when a user may convert later after seeing your ad, even though they did not interact with it the first time they saw it.
• You need to select how long you want to count view-through conversions. Choose between 1 and 30 days.
• Check the ‘include in conversions’ box to see the data in the ‘conversions’ column in your campaign performance.
• Next, choose the attribution This is the credit that a click takes for contributing to your conversion action, in this case, adding to cart. It makes more sense to go for ‘last-click attribution’, as the customer is more likely to have interacted with a section of your website before adding to cart.
• Click ‘create and continue’.
• The next thing that you need to do is set up a global site tag, which we explore next.

How To Set up a Global Site Tag

The global site tag helps you send your shopping cart data to Google Analytics and Google Ads Conversion Tracking.

To add it to your website:

• You need to select the most appropriate way to add it to your website.
• There are 3 choices – adding it directly to your website’s code, emailing the tag to your webmaster, or installing it using the Google Tag Manager.
• The important thing to note here is that the global site tag needs to be added to every page on your site.
• You also need to add an event snippet to track where the customer reached after a conversion completion. You can also add it to a page on which you are tracking conversions or clicks.
• Click ‘next’.
• You should see some additional next steps.
• For example, you also need to add an ‘onclick’ tag that is specific to the item that you want to track. It could be a button, image, or link.
• You can then go back to the ‘tools and settings’ icon and click ‘conversions’ to see the status of the newly created conversions. It will take a while to have them verified.
• You can also use a Google Chrome extension like Tag Assistant to check whether the tags are working as yet.

How To Report on Gross Profit

In addition to including shopping cart data in your reporting, you can also track the gross profit that you got from your shopping campaigns.

To do this, you need to add an attribute called ‘cost_of_goods_sold’ in your Merchant Center product feed.

In the previous section, we have looked at how you can track conversions in your Google Ads shopping campaigns. We cannot overemphasize the importance of tracking. There is no way to know where your advertising dollars are being wasted if you do not track.

A Perspective on Google Ads Being Too Expensive

The truth is that most of us marketers jump to the conclusion that Google Ads are expensive based on only one metric – CPC. By all means, we do not want to dismiss the fact that you should keep a hawk-eye on your CPC. Some CPCs (like we saw in some industries) are simply exorbitant.

However, if you track your campaign performance, the question you begin to ask yourself is whether the high costs are worth it.

Let’s say that the CPC in our shopping campaign was $50, and that each purchase had similar value.

We then tracked our conversions and found that items worth $1,000 were added to our shopping cart. If we divide the total value of the items added to cart by the CPC, $1,000 divided by $50, we get $20

Each click therefore resulted in a $20 sale.

However, on the other hand, it helps to always remember that you need to analyze your particular situation, as there are no global approaches to help you take control of your costs.

In the above example, where the CPC is $50, it will also depend on what product you are selling. If your flowers go for $30, then a CPC of $50 would not make any sense. However, if your product costs $500, then $50 is by no means expensive.

How To Find the Sweet Spot in Your Google Ads Campaigns

We cannot leave you without showing you a way to find the ideal ad budget for your campaigns. You need two basic tools: The Google Keyword Planner and Google Sheets (this is a good idea as you can access it on a mobile device even when you do not have your computer, allowing you to make changes even on the fly).

What you need to do here is enter the keyword that you have in mind into your Keyword Planner and get the CPC. If the keyword has a CPC of $2.5 and the forecast shows that you can get a CTR of 1.6%, and a conversion rate of 2%.

A 2% conversion rate means that you will get 1 conversion for every 50 clicks (2% x 50 = 1).

A CTR of 1.6% means that you get 1.6 clicks for every 100 impressions. In order to receive 50 clicks you will need 3,125 impressions (see math below):

50 / 1.6 * 100 = 3,125

The cost of 1 conversion will be $2.5 CPC * 50 clicks = $125

The Google Keyword Planner is predicting your cost of conversion will be $125 per conversion. If you are selling a product that costs $1,000, then you have hit a home run.

If you’re selling a product for less than $125, then you will lose money and you will have a negative ROI.

Wrap Up

In this article, we have explored factors that contribute to making Google Ads too expensive, and what you can do to ensure that you stay in control of your costs. The emphasis on tracking your campaigns not only helps you determine whether your marketing campaigns are paying off but also helps you refine your costs.

Now you know how to win in a competitive Google Ads environment. The best thing that you can do is implement what you have learned.