Why Use Google Ads?

Paid Search Marketing refers to the adverts which appear next to the natural search results in search engines like Google and Bing. Typically, the adverts are charged on a pay-per-click basis, meaning that the advertiser only pays when a user clicks on an advert and goes to the advertiser’s site, not just when the advert shows.

Paid Search programs, such as Google Ads, have the potential to provide highly targeted, measurable and cost-effective traffic to your website. By advertising alongside the search results for queries relevant to your business, you target potential customers researching or buying a product. Whilst Google Ads are primarily about driving website traffic, they can also increase in-store visits or receive more phone calls.

Whilst Microsoft’s Bing search engine also has an advertising programme, in this chapter, we will be focusing on the Google Ads programme as that has the lion’s share of the market. Here are some key stats:

  • Advertisers make £8 in revenue for every £1 they spend on Google Ads (Source: Google)
  • Google Ads have a click-through rate of 8%
  • Google Ads convert 50% better than organic search results (Source: Wordlead)
  • 65% of Ads clicked contain buyer intent keywords, e.g., buy, shop, purchase, get, cheap, for sale (Source: Wordlead)

Google Ads enables advertisers to reach customers worldwide when they are searching for products and services. Before Paid Search, national advertising was out of the reach of most small businesses. However, Paid Search has levelled the playing field, allowing small businesses to advertise on the same platform as larger businesses. Benefits include:

Cost

There is no minimum spend on Paid Search networks, and you only pay when users click on your ads.

Fast and Easy to Use

Unlike Search Engine Optimisation, Paid Search can generate sales and traffic within hours. Simple campaigns can be set up in a matter of minutes.

Self-service

Google Ads is a self-service platform and is simple enough for most advertisers to manage their campaigns internally, without the need for external agencies.

Flexible

Adverts can be changed at any time to focus your message and optimise performance.

Worldwide Reach

Google has a worldwide reach, and advertisers can create adverts targeting multiple locations and languages from the same account.

Targeted

Paid Search adverts are contextual to each search, targeting users as they research products or are looking to buy. Advertisers can also target by (amongst other things) location, device, demographics and time of day.

Range of Formats and Wide Distribution

Google Ads has a diverse range of ad formats, including search ads, shopping ads and retargeting to suit every business type. Alongside Google search, they can also serve your ad across the broader Internet via their wider network, which includes:

  • Search network. This includes the Google search results page, Google properties like Google Maps and Google Shopping and partner search sites that show text ads.
  • Display network. This focuses on platforms and advertising methods that are not text-based. Display network sites include platforms like YouTube, Gmail and thousands of partner sites.

Unavoidable

As seen in the example above, Paid Search often takes up most of the page ‘above the fold’ (i.e., the screen’s content without scrolling). Sometimes Paid Search is the only way to get noticed as the natural search results are pushed down the page.

Targeting, Structuring and Organising Google Ads Campaigns

Targeting

Google Ads enables advertisers to create highly targeted ads by adjusting for many aspects of user behaviour. An advertiser can optimise campaigns by changing bids based on performance and excluding unprofitable segments. Options include:

  • Networks. Ads always display on Google search, but the advertiser can also select Google search partners and Google display network.
  • Locations. Select the geographical location where the ads will be served at the country level (UK, France or US) or target local areas down to individual postcodes. Advertisers can also make ‘bid adjustments’ to adjust the bids on regions based on relative performance (e.g., +10% for London, -10% for Edinburgh)
  • Language. Choose the language preference of your target customers. For example, you could choose to target French speakers in Switzerland.
  • Audience. Audiences are groups of users that Google has labelled as having specific interests, intents and demographics. For example, toys, childcare, shopaholics.
  • Devices. Advertisers can specify bid adjustments based on the users’ devices. For example, +10% for desktop, -10% for mobile.
  • Ad schedule. An advertiser can increase or decrease bidding for specific periods of the week or stop advertising entirely.
  • Demographics. Adjust bids based on the demographics of users, e.g., income, age, gender.

Campaign structure

Structure a Paid Search campaign carefully, as a good structure allows for easier account management and more targeted campaigns. Google Ads campaigns are built in a hierarchical structure, as shown in the diagram below.

Account

Each advertiser has an account where they specify their payment details and user access levels. To illustrate, let us imagine that the advertiser is a seller of computer equipment based in the UK.

Campaign

A Paid Search account consists of one or more campaigns. It is at the campaign level that variable such as budget, language and location are set. Our retailer might select to have campaigns related to their primary product lines, desktops, laptops and monitors.

Ad groups

A campaign consists of one or more Ad groups. For search ads, each consists of a list of keywords and one or more adverts that they wish to appear when the keywords are searched. Bids are specified at the ad group or individual keyword level. In our example campaign laptops, the retailer has Ad groups Lenovo, Dell, and Sony

Organising Campaigns

Keep Your Ad Groups Targeted

Organise Ad groups into themes with keywords and ad copy on the common theme. Ads will be most successful if ad copy is relevant to the search, and conversions will be highest when searchers are taken to a page that corresponds to the ad text’s content.

Break down your campaigns so that each ad group targets a specific product or service, and the number of keywords is kept small. Using 15-20 keywords per ad group will keep the message targeted and improve ad performance and conversion rates. The more ad groups you have, the more targeted your message can be.

Create Separate Brand Campaigns

Create separate Search campaigns for brand keywords. Your brand campaigns will perform differently from non-brand campaigns as these users are familiar with your business, products or services. You will want to budget, manage and report on brand campaigns separately from non-brand.

If brand and non-brand campaigns are created separately, be sure to add brand keywords as negatives to your non-brand campaigns to direct all brand traffic through your brand campaign.

Network-Specific Campaigns

Where a choice is available, do not target more than one network in each campaign. Google search and display networks can perform quite differently.

Keep it simple!

Whatever structure you opt for will need to be watched and maintained. Whist creating a granular structure with separate ad groups for each product will theoretically improve targeting, in practice, it will be too hard to support.

Measuring Google Ads Campaign Performance

There is little point in running any advertising campaign if you do not track its effectiveness and act on this information. One of Paid Search advertising’s great benefits is that it is highly trackable and return on investment can be calculated in a way that is just not possible with most traditional forms of advertising.

Tracking

Conversion tracking helps you to understand how effective your campaigns are at getting users to take the actions you want, e.g., sign up for your email or make a purchase after they click your search ads.

To enable sales data to be passed back to Google, you will also need some code on your site’s page and link your Google Analytics and Google Ads accounts. When setting up conversion tracking, there are several selections to make:

  • Conversion type. If you are an online retailer, the chances are you are most interested in sales. Other conversion types include an email sign up and white-paper downloads.
  • Conversion window. The conversion window is the maximum time you want to count a conversion after someone clicks or interacts with your ad. Remember that some users will make a purchase several days after they first view a product.
  • Attribution model. Customers may visit the same site via several different paths – in which case, how much of the sales should be attributed to PPC?  One option is the attribute all the sales to the last website visited, though this may underestimate the contribution from Google ads.

Once tracking is implemented and the accounts linked, conversion data will be available directly in your Google ads account. See chapter 6 for more information about Web Analytics.

Important Metrics

There are four basic metrics for CPC ad campaigns:

  • Impression. An impression is the number of viewers to whom the ad is displayed.
  • Click. A click is an instance of a viewer clicking on an ad.
  • Conversion. A conversion is recorded when a viewer was served an ad, clicked it and took the action you intended for them to take on your landing page.
  • Spend. Spend is the amount of money that you have spent on your campaign within a specified period.

These metrics are essential to track, but the measures that will be the most critical for optimising your campaigns derive from combinations of these simple metrics. These are:

Click-Through Rate (CTR)

Click Through Rate is the percentage of ads that are clicked. A high click-through rate indicates that your advert is attractive to users. Google uses the CTR as an input in its quality score, so a high CTR will positively affect your cost per click.

CTR (Click Through Rate) = Clicks / Impressions

Conversion Rate

Conversion Rate is the percentage of clicks that lead to a conversion. A higher conversion rate will reduce your Cost Per Click and Cost Per Acquisition.

Conversion Rate = Conversions / Clicks

Cost-Per-Click (CPC)

Cost Per Click (or CPC) is the amount of money spent on each click. Average CPC is calculated by dividing the total spend by the total number of clicks. A lower cost per click will reduce your Cost per Conversion.

CPC = Spend / Clicks

Cost Per Acquisition

Cost Per Acquisition (or CPA) is the amount of money spent to get each conversion. The average CPA is calculated by dividing the total spend by the total number of conversions.

CPA (Cost Per Acquisition) = Spend / Conversions

An effective campaign has high percentage metrics and low your cost metrics. It is a good practice to set goals for your campaign performance in terms of these metrics. As you continue optimising your keywords, ads and account structure, watch these metrics closely and use them to measure your campaign’s performance as you work toward reaching your goals.

Setting Goals

When running any advertising campaign, set goals against which to measure performance. Example goals include:

  • Number of clicks or impressions. If you are trying to gain exposure for a new product, you may be interested in getting the maximum number of clicks or impressions out of your budget.
  • ACoS. Advertising Cost of Sales is the % of the sale value spent on advertising. Depending on your margins, you could look to keep this below a certain level.
  • ROAS. Return on advertising spend is like ACoS but looks at the ratio of sales to advertising spend.
  • Cost per Acquisition. If you are looking at a customer’s lifetime value, you might work sim for a target cost per acquisition.

Google Ads Budgets and Bidding

Budgets

Budgets on Google ads are set at a daily level, averaged over a month, i.e., some days you may be under your daily budget and some days above, but over a month, you will not overspend. A Shared Budget option allows you to distribute one budget across multiple campaigns, with Google automatically adjusting the budget allocation.

Ad Delivery Method

Within the budget setting, you can choose if you want Google Ads to pace how often your ads are shown. There are two options:

  • Standard. Campaign budget is spread evenly through the day (or times when your ads are scheduled to show). Your ads will be seen throughout the day, but they may not always display as Google holds back delivery to ensure the budget lasts the entire day.
  • Accelerated. Delivery is not optimised to help your budget last through the day, but instead, it aims to ensure ads will show as often as the auction allows. Depending on the budget, the ads may not show all day.

Bidding Options

When running Google campaigns, you have the option of managing bids manually or using Google’s automatic bidding tools. With Google’s automated bidding, you are charged on a CPC basis, but Google will automatically alter the bids based on its estimation of the likelihood of a conversion to meet a specified goal.

Whilst some advertisers still prefer the control they get from managing campaigns manually, automated bidding is a time saver. Furthermore, automated bidding is based on machine learning and so will improve over time. Automated bidding strategies include:

  • Target CPA (Cost per Acquisition). You set your target CPA (how much you are willing to spend per conversion), and Google will try to set bids to meet that CPA target.
  • Target ROAS (Return on Advertising Spend). This strategy aims to maximise revenue or conversion value based on the target return on ad spend you set.
  • Maximise Conversions. This strategy tries to get the most conversions within your daily budget.
  • Enhanced CPC (ECPC). This strategy raises the max CPC in auctions that the algorithm predicts are more likely to convert and lowers the bid in auctions considered less likely to convert.

How Google Ads Work

To place an advert, an advertiser specifies a list of keywords (or sometimes landing pages or products) for which they want the advert to appear, the advert’s content and the price they are willing to pay for a click. Google displays a list of adverts next to the natural search results triggered by keywords in the search query when a user searches. The adverts’ order is decided by the cost per click the advertiser is willing to pay and the advert’s historical performance.

For example, imagine an online retailer wants to advertise its range of digital cameras. They create an advert triggered by the key phrase ‘Canon digital camera’. A user then uses Google to search for the phrase ‘buy Canon digital camera’. As the search phrase contains the specified keywords, the advert is displayed. If a user clicks on the advert, the retailer is charged. If not, there will be no cost.

Calculation of Cost-Per-Click

When deciding what to charge advertisers, Google uses an auction-style bidding process to set prices. For any two adverts of the same quality score (see below), Google will award the higher position to the ad with the highest bid. However, the winning bidder will pay only slightly more than the loser.

For example, suppose there are three ad slots available and four advertisers competing for those positions. The table below shows each advertiser’s maximum bid and what amount they end up paying if their ad is clicked:

AdvertiserPositionMax BidAmount Paid
Ad 11£4£3.01
Ad 22£3£2.01
Ad 33£2£1.01
Ad 44£1Ad not shown.

How Ads are Ranked

Google displays Paid Search results in order, just like organic search results. The position of an ad has a significant impact on traffic. To decide the relative positioning of ads, Google has devised a score call Ad Rank. The higher an ad scores, the better its position. Ad rank is decided by:

  • Bid amount. All other things being equal, bidding higher means higher rankings.
  • Quality score. A measure of the relevancy of the ad to the query
  • Context of search. Google will look at the searcher’s details (e.g., location, device, time, etc.) in relation to your ads.

Ad Rank recalculates each time that ad is eligible to appear and competes in an auction, so its position can fluctuate each time depending on your competition, the context of the search and your quality score at that moment.

Quality Score

The quality score is Google’s measure of the ‘quality’ of a search query/advert combination, i.e., how relevant the advert is to the search query. Quality score is decided by:

  • Historical Click-Through Rate. CTR indicates how relevant the advert is to its associated keywords.
  • Ad relevance. Google will analyse whether the ad is relevant to the search query.
  • Relevance of the landing page. Google analyses the landing page’s content to judge the page’s relevance to the advert and keyword. For example, imagine you are bidding on a competitor’s brand name, and the advert directs users to your website, where naturally your competitors brand name is not mentioned. In this situation, Google will analyse the landing page and may increase its minimum bid for this keyword.

The quality score rewards relevant, high performing ads with a higher position at a lower cost per click. For an advert to get an elevated position, it is not enough just to bid high, you also need to have a superior quality score.

The diagram below shows how the entire process works:

  1. When someone searches, Google identifies all the ads with keywords matching that search.
  2. From within those ads, Google ignores any that are ineligible e.g., ads that target a different location.
  3. Of the remaining ads, only those with a sufficiently high Ad Rank may display.

Ad Distribution

Google ads do not just appear on Google’s search pages (i.e., Google.com). The advertiser also has the choice to allow their ads to appear on other sites within Google’s Display Network and Search partners.

Google Display Network

The Google Display Network consists of over than 2 million websites. Your campaign will run on the Display Network with no additional set-up when you choose this option. Your ads will appear only when predicted to be effective, and you are not using all your budget on search.

Search Partners

Google search partners are search sites that show Google ads on their search results. Example sites include:

  • Amazon. Ads are displayed alongside search results.
  • Guardian. This site uses Google custom search to power site search.
  • YouTube. YouTube is the world’s second largest search engine.

Should you Advertise on Google’s Partner Sites?

The benefit of Google partner sites is that they enable your ads to reach a much wider audience. Search results pages make up a tiny fraction (around 5%) of all pages viewed online, and the Google Network lets advertisers reach the wider internet audience. Google analyses each page’s content, examining text, language, link structure, and page structure to serve the most relevant ads.

Advertisers can opt in or out of partner sites, and Google provides performance reporting that breaks out the partner sites. You can always include the partner sites initially and exclude them if they do not meet your performance targets.

Paid Search Fundamentals

When users search on Google, it will generate natural and Paid Search results. Both results are ranked with the most prestigious position at the top. If a user clicks on a Paid Search result, they are taken to the advertiser’s website, and the advertiser is charged. As the advertiser is only charged when an advert is clicked, this system is known as Cost Per Click (CPC). Advertisers will set a maximum CPC, which they are willing to pay to drive a customer to their website.

Benefits of Paid Search

Google Ads enables advertisers to reach customers all over the world when they are searching for products and services.  Before Paid Search, national advertising was out of the reach of most small businesses. However, Paid Search has levelled the playing field, allowing small businesses to advertise on the same platform as larger businesses. Benefits include:

Cost

There is no minimum spend on Paid Search networks, and you only pay when users click on your ads.

Fast and Easy to Use

Unlike Search Engine Optimisation, Paid Search can start generating sales and traffic within hours. Simple campaigns can be set up in a matter of minutes.

Self-service

Google Ads is a self-service platform and is simple enough for most advertisers to manage their campaign internally, without the need for external agencies.

Flexible

Adverts can be changed at any time to focus your message and optimise performance.

Worldwide Reach

Google has a worldwide reach, and advertisers can create adverts targeting multiple locations and languages from the same account.

Targeted

Paid Search adverts are contextual to each search, targeting users as they research products or are looking to buy. Advertisers can also target by (amongst other things) location, device, demographics and time of day.

Range of Formats and Wide Distribution

Google Ads has a diverse range of ad formats, including search ads, shopping ads and retargeting to suit every business type. Alongside Google search, they can also serve your ad across the broader Internet via their wider network, which includes:

  • Search network. This includes the Google search results page, Google properties like Google Maps and Google Shopping and partner search sites that show text ads.
  • Display network. This focuses on platforms and advertising methods that are not text-based. Display network sites include platforms like YouTube, Gmail and thousands of partner sites.

Unavoidable

As seen in the example above, Paid Search often takes up most of the page ‘above the fold’ (i.e., the screen’s content without scrolling). Sometimes Paid Search is the only way to get noticed as the natural search results are pushed down the page.