Not all industries are well suited for Google Ads. I don’t recommend Google Ads for many ecommerce companies selling “average” items. There is just too much competition and often margins are too small to warrant online ads for things like T-shirts or shoes online. The world is a big place and chances are that you’ll be paying too much for not enough profit. Real estate is another sector where I am hesitant to recommend Google Ads.
On the other hand, Google Ads are great for many local services. Chiropractors, dentists, and specialized construction usually show great Return on Investment (ROI). Some industries are a bit tougher, such as plumbing or home renovation companies, where bigger budgets and more patience are recommended.
Basic rule of thumb we consider is how much competition you have versus how much profit do you make on your good or service you provide. Last thing you want to do is lose all your profit to Ad spend.
Google Ads – What is my ideal budget
We have clients that spend $10/day. We have clients that spend $1,000+ per day. Your budget really only depends on 1 thing. How much more business do you need? Of course, this assumes a positive ROI (Return on Investment). At some point, your ads would no longer be successful – whether it be from saturating the market, or not enough profit vs amount spent on ads. Maybe you don’t have enough staff to manage the extra work. A Good ads person should have an idea of what budget is appropriate – to start and then ongoing. Often we’ll suggest a more modest budget to start. Then after we optimize, we can increase the budget (or stop ads altogether).
Factors Affecting Your Ad Budget
There are many factors affecting your online advertising budget. These include, but are not limited to:
- Cost per click
- Conversion rates
- How much business you want / need
- Size and competitiveness of Market
Each of these points have many influences that best be explained in a separate article.
How Do I Calculate ROI on Google Ads
If you want to really know if Ads are working for you, you need to calculate your return on investment. You could be losing money. Or you could be losing out on business. I won’t explain things further in this article but you can find a blog I posted on this at Why Do Online Advertising - Part 3.
Lifetime Value – Know Your Numbers
When determining if Ads is worth it, you need to think long term. Is this sale going to be a one time thing, or is this person going to make many purchases, plus refer your company to others (eg a chiropractor)? That single $5.00 ad can result in thousands in long term revenue. Also, every “referral” originates from somewhere. In order to know how well Ads are doing for you, you need to determine the value of this sale, plus an estimate lifetime spending, plus the rate of referral, as well as the total costs associated with the sale. I have written a blog article on this (Why Do Online Advertising, Part 2).
It's all about ROI (Return on Investment)
You need to do things right. Give Ads a fair chance. We recommend at least 3 months of optimization. To assess how successful your campaign has been, you need a very good idea of what enquiries / purchase are due to ads. If you’ve done that and online advertising is not bringing in a positive return on investment, then shut it down. Don’t waste your money. But if you have a good Ads team, for most industries, you should be pleasantly surprised.
 Optimization involves making ongoing changes to your campaign’s settings to maximize its effectiveness. A few related activities include 1) identifying and promoting relevant, high-performing keywords (while actively filtering out those that may not relevant); 2) adding and adjusting ads and related marketing extensions to ensure effectiveness and a high ‘Ad quality score’; 3) reviewing and updating as necessary campaign bid strategies; and 4) implementing or dismissing Google’s own recommendations (which are almost daily). Ongoing optimization helps maximize the performance of campaigns to get the most out of your budget and achieve better results.