Google Search Ads

Google search ads (previously known as Google AdWords) are the most universally used type of Google ad. Essentially, they’re text ads that show up when people are searching for a product or service that is of interest to them at the moment of the search.

Let’s imagine your business sells kayaks or installs windows. You set up a search campaign that features and promotes your product, choose the keywords you want the ads to show up for, and launch your campaign.

When a user types ‘buy kayaks’ or ‘Windows installation Ottawa’, your search ad is triggered, driving your potential customers to your website, where you convert them.

That’s capturing existing demand: the user is aware of the product/service and is actively searching for it.

On the flip side of the spectrum, there is demand generation (or demand gen), where you actively generate demand by showing your product/service through a banner (display ads) or a video (performance max or youtube ads).

How Can I Understand if Google Search Ads Help My Business?

Google search ads are good for all types of businesses. The main question we need to answer is this: will the cost of acquisition from Google Search Ads keep my business profitable?

For example, your average order value is $200, and the cost of acquisition is $250. In other words, you lose $50 on every new client from Google Search Ads.

Doesn’t make much sense, right? Not necessarily—here is another plot twist: the average customer orders three times, making the lifetime value (LTV) $200×3=$600.

Now we have a completely different situation: with every new client from Google Search Ads, we expect to make $600 in sales.

So, does running Google Search Ads make sense for your business? Yes, it does!

Calculating profits and losses associated with a particular business is called unit economics. It’s different for every business and should be calculated case-by-case.

Key Metrics in Unit Economics

Unit economics refers to the direct revenues and costs associated with a particular business model expressed on a per-unit basis. Key metrics in unit economics include:

  • Revenue per Unit: The amount of money earned from selling one unit of product or service.
  • Cost per Unit: The cost incurred to produce and deliver one unit of product or service, including variable and fixed costs.
  • Contribution Margin: The difference between the revenue per unit and the variable cost per unit, indicating the incremental profit earned for each unit sold.
  • Customer Acquisition Cost (CAC): cost of acquiring a new customer, often factored into unit economics to assess the long-term profitability of customer acquisition.
  • Customer Lifetime Value (CLTV): The total revenue expected from a customer over the duration of their relationship with the company, helping to evaluate the return on investment in customer acquisition.

Calculating your basic unit economics before even touching your campaign is critical. We always do this before starting any ads. This helps set clear KPIs and goals for your subsequent advertising efforts.

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Conversion Tracking Setup

Conversion tracking is essential for running effective Google Search Ads campaigns because it measures performance and enables optimization. By tracking conversions, advertisers can assess the effectiveness of their ads, calculate ROI, and make data-driven decisions about budget allocation and bid adjustments.

This helps identify high-performing keywords and ads, optimize campaigns, and eliminate underperforming elements, leading to more efficient use of the advertising budget.

Additionally, conversion tracking enhances bid strategies and provides valuable audience insights. It enables automated bidding strategies, like Target CPA and Target ROAS, which adjust bids based on the likelihood of conversions. Conversion data also helps create remarketing lists, target potential customers more effectively, and improve user experience with relevant ads.

Comprehensive reporting and transparency in campaign performance ensure accountability and demonstrate the value of marketing efforts to stakeholders.

Here are the most typical conversions with Google Ads:

For e-commerce business:

  • Sales. Depending on whether you’re using Shopify or WordPress, tracking might be set up easily through a third-party app or with the help of a developer.

For lead gen businesses:

  • Form submit. The main conversion action for lead gen businesses. It is best to set up via Google Tag Manager.
  • Click to call (or call). The second most important action for any lead gen businesses.
  • Click to email. A good secondary goal to track in lead gen campaigns.

Google Search Ads: Best Practices We Use

Researching Keyword Themes

Grouping similar keywords into cohesive themes helps Google accurately match the right ad to each query, improving ad relevance and performance. This relevance enhances the user experience, increases the likelihood of clicks and conversions, and contributes to higher Quality Scores. In contrast, throwing a lot of unrelated keywords into an ad group can confuse Google’s algorithms, leading to less effective ad targeting, lower ad performance, and potentially higher costs.

A hand turning a knob labeled "CTR" with settings ranging from "Low" to "High," symbolizing the concept of increasing click-through rate (CTR) performance in digital advertising.

Use of Themed Ad Groups

Thematically grouping keywords (keyword themes) helps Google better understand and match search queries with the most relevant ads. By grouping similar keywords into cohesive themes, advertisers enable Google to accurately select the best keyword and corresponding ad for each search query. This improves ad relevance and ensures that the most appropriate ad is shown to potential customers, enhancing the chances of attracting clicks and driving conversions.

Additionally, well-themed keyword groups contribute to better Quality Scores, which can lead to lower costs and higher ad positions, ultimately making campaigns more efficient and effective.

Leveraging the Power of AI in Google Search Ads

Leveraging broad match keywords in Google Ads expands the reach of campaigns by matching ads with various relevant search queries, including synonyms and related searches. This can uncover new keyword opportunities, driving more traffic and increasing potential conversions.

Broad match also provides valuable data on user search behaviour, informing future keyword strategies. Combined with smart bidding strategies, broad match helps optimize bids in real-time, improving overall campaign performance and ROI.

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Use of Smart Bidding Strategies

Using smart bidding in Google Ads is important because it leverages machine learning to optimize bids for each auction, maximizing the potential for conversions and return on investment. Smart bidding strategies, such as Target CPA and Target ROAS, adjust bids in real-time based on various signals like device, location, time of day, and user behaviour, ensuring that ads reach the right audience at the right time.

This automation saves time, reduces guesswork, and improves campaign efficiency by focusing on high-value opportunities. Additionally, smart bidding continuously learns and adapts to changing market conditions, enhancing overall campaign performance and helping achieve business goals more effectively.

Performance analytics

We constantly gauge the performance of Google Search Ads, assessing basic metrics such as CTR, quality score, conversion rates, and cost per conversion. These metrics help assess how effectively keywords drive traffic, generate conversions, and provide value relative to their cost.

Reporting Cadence

The reporting cadence is determined on a case-by-case basis. For most of our clients, reporting will be set to monthly, although with higher-spending accounts, reporting can be set to bi-weekly or weekly. The more the account spends, the more changes are required, and the higher the reporting frequency should be.

Frequently Asked Questions

Google Search ads fall within the category of PPC advertising, whereby you pay only when someone clicks on your ad. If your ad shows up on the client screen, but s/he doesn’t click on it, you won’t get billed for it.

The price you pay per click is going to depend on your niche. The lower the competition, the lower the cost per click.

Conversely, the higher the competition, the higher will be the cost of each click. In certain niches, such as software development or adoption, clicks can get as high as $50-$100 per click, and we’re talking about just clicks, not necessarily the conversion.

More and more advertisers are going digital, thus increasing the level of competition. Hundreds, if not thousands, of new websites are getting launched every day, thus increasing the demand for digital advertising.

During COVID-19 digital advertising was booming, with businesses going online and utilising paid ads as literally one of the few ways to get in front of their clients’ eyes.

The reverse side of that was the rise of cost – the number of businesses advertising online kept growing, while the number of people present online remained relatively stable.

We’re using the following 3 types of search ads:

  1. Responsive Search Ads
  2. Dynamic Search Ads
  3. Call-only Ads

Responsive search ads is our default type of ad. Before 2022 there was one more type – expanded search ads, which was discontinued by Google on June 30, 2022.

A responsive search ad is a set of different headlines and descriptions that are automatically mixed and matched to best respond to searcher’s queries. Google’s AI automatically determines which keyword would most efficiently respond to clients’ needs and utilises the best performing pair of headline/description.

A dynamic search ad is based on Google’s Index of your website. In other words, keywords are automatically pulled from the content of your website. Headlines and URLs will be generated automatically and the only thing you will have to provide is ad descriptions.

For dynamic search ads (DSA for short) to be effective, your website content needs to be well optimised – all titles, headlines and product descriptions need to be done properly and contain the keywords you want to appear in search results for.

A call-only ad is a mobile-only type of google search ads. It allows users to get in touch with the business via the phone by just clicking a phone number that shows up in search results. Again, it’s a mobile-only format, meaning that this type of ad won’t show on desktops.

The convenience of this format is that the click converts into the phone call directly, without the need to visit the website. Generally this type of ad is useful for lead-gen businesses, where users need to talk to a company representative/sales person.

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