One of my favourite things about AdWords is the cost system. The fact that nothing is fixed gives everyone the opportunity to advertise with AdWords, regardless of their business size or marketing budget. Good account management results in reduced costs and higher positions, meaning that the highest bidder won't necessarily come out on top each time.
What are Google advertising rates?
There is no fixed rate when advertising on Google, but instead various factors which will influence the cost. These variables include what type of product or service you wish to promote, how competitive the market is, how competitive you wish to be within the market, how often you wish to run your ads, where you would like to run these ads, etc. You have direct control over three of the most important cost variables being how well you understand the AdWords system, how effectively you have setup your account and also how well you manage it over time.
What are the actual Google AdWords costs?
Again, there are no fixed costs when running an AdWords campaign as you have control over what you want to spend. You set the maximum you wish to spend on a daily basis while there is no minimum spending requirement that you must surpass. As your daily budget begins to run out then your ads will start showing less and less until it is fully exhausted, at which point the ads will stop running altogether. AdWords also has a system in place called “overdelivery” where they will allow up to 20% more clicks in a day than your daily budget is set at. This is put in place to make up for any days when traffic was slow and your daily budget was not reached, your daily budget is taken into consideration over a monthly period though meaning that the total cost will never exceed Your Daily Budget x 30.4 Days in a Month over a billing period.
What are the bidding costs?
AdWords is an auction based marketing platform meaning that you bid on keywords to achieve ad placements on both the Search and Display Networks. You have control over these bids so there is again no set bidding cost, the maximum bid you set is the most you want to spend on a visitor clicking through to your website. Changing these bids will likely alter the amount of impressions and clicks you receive while also influencing your return on investment.
When determining what value to set these bids at I would strongly suggest using the Google AdWords Keyword Tool. This will help you to gauge the level of competition, potential search volume and most importantly the estimated bid price for particular keywords. It is important to remember that these figures are approximates but it will still give you a good idea on what sort of bid prices are required in order to compete in the marketplace. Next I would recommend trying out Google AdWords Traffic Estimator as this allows you to review estimated total clicks and costs based around a keyword and predicted bid value you enter.
How much budget shall I allocate for an AdWords campaign?
The answer to this question will be different for each advertiser as every business has their own marketing goals and limits. When giving a recommended daily budget to a client I will primarily evaluate the competitiveness of the industry and estimated costs using the tools mentioned above. After getting an average estimated cost per click price I then review the client’s current conversion rate for organic related traffic via Google Analytics, working out how many clicks on average it takes to generate a sale or lead. This obviously cannot reflect how AdWords will perform but is still an indicator to what is possible, realistically it is likely that the AdWords conversion rate will be better (providing the campaign is setup and managed correctly) due to the traffic being highly targeted.
With this information and rough estimation I then take the client’s goals into consideration; if they are looking to make 10 sales a day for example and it usually takes 100 visits to generate a sale via organic traffic, an average CPC of $0.10 would result in a total cost of $100 meaning I would suggest the client to allocate this as a daily budget for their campaign(s) in order to achieve the 10 sales. The calculations above are all speculation though and this method is to be used purely as a guide; in reality the CPC may be higher or lower, the conversion rate might fluctuate daily or traffic trends might change from time to time.
Other advertisers might simply want to build a brand online for example, making use of the Display Network is an excellent and cheaper way of achieving this. The CPC averages are generally significantly lower than the Search Network meaning that more clicks can be gained for the same budget. It is important that an advertiser really identifies what their marketing goals are when assigning a budget to their AdWords campaigns.
Tips on AdWords Costs
You have control over your costs - It is important to understand that there is no monthly or recurring fees associated with AdWords, you have full control over the budget you wish to spend.
Monitor your spend with ease and transparency - You have full access to your outgoings spent on AdWords, simply go to the Billing tab while logged into your account.
I have been managing AdWords accounts for over 8 years now at an international marketing agency level and also as a freelancer. I am very passionate about Google's PPC platform and pretty much anything else that is Google related. My theory in life is to learn something new every day and this community is definitely a good place to do so; I would recommend anyone reading this to stick around as it's an excellent source of information with great people contributing to it.
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