With that said, here are the five major factors that affect Google Ad Spend:
1. Industry Type
The cost-per-click (CPC) rate companies pay for an ad on Google’s search network will vary depending on their industry. Companies with a high value-per-conversion will be willing to pay more per click, as one conversion could be worth a lot of money. On the other hand, companies with a low value-per-conversion will need to pay a much lower CPC.
2. Target Keywords
The cost of Google Ads depends on the keywords you are targeting. Your industry will play a role, but the intent of the keyword and the competition also determine the cost. There are four types of search intent: informational, navigational, commercial investigation, and transactional. Each intent has its own cost, depending on the demand and competition. It’s important to understand the intent of your keywords to optimize your ad spend.
3. Quality Score
Google Ads gives each ad a Quality Score to measure its relevance and effectiveness for users. The score ranges from one to ten, with ten being the best. The higher the Quality Score, the better Google Ads will rank the ad and the likelier it is to win the bid. Google Ads determines the Quality Score by assessing the ad and landing page’s relevance to the keyword, the landing page experience, and the expected click-through rate based on the ad’s past performance.
4. Ad Rank
Google Ads runs an auction for businesses that have purchased keywords related to a search query. The ads with the highest Ad Rank, calculated by multiplying the Quality Score and the maximum bid, will be shown to the user. When the ad is clicked, the cost is determined by a formula that considers the ad rank below yours and the Quality Score. This system allows businesses of all sizes to compete and increase their visibility.
5. Targeting Capabilities
Google Ads provides targeting capabilities that allow you to tailor your ads to certain characteristics and audiences. You can target people based on personal interests, job, age, gender, location, and device type. You can also use remarketing to reach those who have already interacted with your ads or content or use dayparting to show your ads at certain times or days of the week. This way, you can ensure your budget is being used efficiently and that your ads reach the right people.
Many factors can influence the amount of money you spend on Google Ads. By understanding these factors and how they interact, you can better control your ad spend and ensure you get the most out of your budget. Additionally, if you are using an automated bidding system, you should be aware of the changes in these factors to ensure you get the best results.
Discover My Business is a Google Ads agency that provides pay-per-click, web design, marketing automation, and video production services. Businesses across the U.S. incorporate pay-per-click advertising into their marketing strategy to acquire new clients and build a relationship with current and future clients with consistent success. If you want to know what ads can do for your business growth, we’ve got you covered! Call us at (877) 522-7738 today!