How Much Does Google Ads Cost? Setting an Appropriate Budget for Your Organisation! [with Video]

Mike

If you’re someone who’s interested in data then the chances are you’re familiar with “Google Analytics”, at least in it’s previous form. What you may also be aware of is that in June 2023 the version of Google Analytics that we all knew and loved was superceded by Google Analytics 4 (or GA4)… This has left users with a whole bunch of questions – we’re going to look at the top 5 of those!

What is GA4?

So what is GA4 exactly? Well, as the name suggests, it’s the 4th iteration of Google Analytics! A brief bit of history…

Way back in 2005 Google purchased a data visualisation platform developed by Urchin Software Corporation – this became the first iteration of Google Analytics and gave webmasters some basic information about the users of their websites in a visual format – it was fairly primitive by today’s standards, but it definitely beat the visitor counters that you may have seen back in the early 2000s!

Then in 2006, Google rebranded the platform and it became Google Analytics. Fast-forward 6 years to 2012 and Universal Analytics was born… This integrated cross-platform features, device-specific reporting and custom dimensions and metrics, and represented a big leap in the capabilities of the Google Analytics platform – that said, it kept a fairly similar user interface to the previous iteration and was fairly easy for users to get to grips with.

Then another 8 years later in the year 2020, Google announced the launch of the newest version of the platform… Google Analytics 4 (or GA4). Marketers had a few years to get to grips with the new GA which ran alongside Universal Analytics for a few years up until the changeover which began in July ‘23 – it represented a fairly huge departure from Universal Analytics, stripping the in-built reports from over 100 to just a handful, and it would be fair to say it wasn’t met with a particularly favourable response from anyone that had spent a good amount of time in the previous iteration of Google Analytics.

The official line is that GA4 is “built for privacy”, with a nod to the imminent depreciation of 3rd party cookies, and it aims to provide more data across the entire lifecycle of a user journey. The fact is that people use the internet in a very different way to how they would have in the mid-2000’s, so the platform was probably due an upgrade.

Whether or not they’ve done the typical user any favours in the way they have gone about stripping the “out the box” reporting… Well I’ll leave that to you to decide!

How to Find Bounce Rate in GA4

When GA4 was originally launched many marketers were left wondering where “bounce rate” could be found… The reason for this was that it was replaced with the more optimistic “engagement rate” – this was the exact opposite of bounce rate and provided the rate at which a user would engage with your content, as opposed to the rate at which they would bounce.

Frankly I have never considered bounce rate to be a particularly useful metric – not because it can’t give insight into how users are engaging with your content but more because it can be wrongly-interpreted… A high bounce rate isn’t always a bad thing!

That said, for those bounce rate fans out there, you’ll be pleased to hear that bounce rate was eventually introduced and you can access it fairly easily.

What is Cross-Network in GA4?

GA4 introduced some new default channel groupings to the channel breakdown report, including Organic and Paid Social, Organic Video and even SMS – these are fairly self-explanatory but something that certain GA4 accounts will see is a channel referred to as “cross-network”… So what does this mean?

According to Google this refers to “the channel by which users arrive at your site/app via ads that appear on a variety of networks” – basically it means any traffic generated through Performance Max campaigns in Google Ads! I won’t go into huge detail on this but Performance Max campaigns are Google’s latest “machine learning”-led campaign type which gives you very little information about exactly where users saw the ads that you’re paying for – the theory is that they are displayed to users across Google’s network in such a way that conversions will go through the roof, but I’ve personally seen very mixed results with this.

Ultimately if you see “cross-network” in your GA4 reporting, keep a close eye on engagement levels and conversion rates!

How to Set Up GA4

I’m going to do a separate video on this because there are several things to consider when setting up GA4, but at its core it’s very simple to set up GA4.

Once you have set up your data stream, there are essentially 2 options to install Google Analytics – you can either manually insert the Google code or run it through Google Tag Manager.

If you want to install it manually then Google gives you a piece of code that needs to be inserted into the <head> section of every page on your website.

If you want to take the Google Tag Manager route (which is the one I would suggest) then you just need to create a new Google tag and paste the measurement ID, and then configure that to fire on all pages of your website.

If you’re using Wordpress or another CMS then there are plugins that you can use to fire the measurement ID, but I would suggest Google Tag Manager if you can.

How to Use GA4

Okay so this obviously will require a series of videos rather than a quick answer, but the most important thing to remember is that pretty much all the data you could access in Universal Analytics is available one way or another in GA4. It’s nowhere near as visually appealing out the box and it’s certainly not as user-friendly, but for most users’ requirements the reports you need are fairly easy to access. For now I’ll just take you through some of the in-built reports…

So there you go – your top 5 GA4 questions, answered. If you have any questions then I will hopefully be covering them in upcoming videos but please do feel free to drop them in the comments section below and I’ll do my best to answer them. Otherwise you know the drill – like, subscribe, hit the bell notification, all that good stuff, and have a great day!

It Depends...

Whether you’ve never advertised on Google Ads before and are wondering how much it costs, or perhaps you’re familiar with Google Ads and have run ads in the past but you’re wondering how much you should be budgeting – the answer, I’m afraid, is the dreaded…

IT DEPENDS

Stick around though (or watch the video below) and we’ll let you know how you can work it out!

What is Google Ads?

Just to make sure we’re catering for everyone here, let’s really quickly take a look at exactly what Google Ads is and how it works… I would assume if you’re here then you have some level of understanding but just in case.

When you search for a product or service Google will present you with a set of results that comprises a variety of components (which changes depending on the search term)… Ads, Organic Listings, Maps, FAQs, Products, Images, Featured Snippets, and many more. At the very top of these will most likely be a set of ads which are (currently) labelled “Sponsored”.

These advertisers are engaged in a split second-bidding war whereby each offers to pay a fee should the user click on their ad after searching for that particular keyword – it’s much more complicated than this but to look at it very basically and assuming all things are equal, the advertiser willing to pay more should they get the click will appear above the others. If the user does end up clicking their ad then they pay a fee (known as a “cost per click” or “cpc”), and if the user doesn’t then they don’t pay anything – this is known as “pay per click” advertising, or “PPC”.

So to elaborate slightly on the “it depends” answer to how much it costs… It depends on how much the advertisers engaged in the bidding war are willing to pay for a click.

But I’m afraid it gets a little more complicated than that!

Whats Determines CPC?

Now depending on exactly what each advertiser is selling, and the potential value of their product or service, the amount that they are willing to spend on a single click to their website could vary dramatically.

Imagine a construction company that builds multi-million pound complexes – the chances are that a click from someone searching for their service could be extremely lucrative – potentially millions of pounds – and therefore they will likely be happy to spend several pounds on that click.

Now imagine a stationary retailer selling pencil sharpeners for 99p each… The chances are they’re not going to want to be spending several pounds on each click to their website when a sale will only make them 99p.

Here are some examples to give you an idea how much an average CPC varies depending on the keyword you’re bidding on.

Trainers – £0.74
Cruise Deals – £1.54
Corporate Solicitors – £7.55
Forex Trading – £11.38
Life Insurance – £33.47
Online Roulette – £75.43

So very generally speaking, the more value there is in a potential sale, the more expensive the click is likely to be because the chances are, there are other advertisers out there bidding on those clicks!

How to Estimate CPCs

Fortunately there are a variety of tools out there that can give you an indication as to how much you might expect to spend – I like to get my information from the source so I’ll use Google’s own Keyword Planner… All you need to do is type in a few keywords that you think people might search for and it will give you not only the search volumes and estimated costs for those keywords, but also a whole range of variations on the keywords you typed.

I’ll be doing more in-depth videos in the future on how to perform keyword research, but for now this should give you some indication as to what you might expect to spend on each click, as well as how many clicks might be on offer for that particular keyword.

Planning Your Budget

So we now know how much we’re likely to have to spend on a click to our website… How do we take this information and use it to plan a budget?

I could (and probably will) do a whole separate video on this because it’s something I see businesses fail to plan properly on a regular basis, but for now we’ll keep things really simple and assume we have just 1 x conversion rate at play – either click to purchase or click to enquiry, so either we’re looking to sell the user something or we want them to get in touch, whether that be via email, phone, form submission, live chat etc. The first step in either case is to ensure that you have comprehensive, accurate tracking in place. The more data you have about the likelihood of a user converting, the more reliable your forecasts are likely to be!

Once we have our estimated CPC and our estimated conversion rate, it’s very simple – we can work backwards from our objectives or targets 🙂

The Equation

Let’s say we want to achieve 10 sales or enquiries and we know our conversion rate from click to sale or enquiry is 5%… Well we now know that we need 20 clicks for every converted user, so if our average CPC is likely to be £1 then we’ll need to spend £20 for every conversion, multiplied by 10 conversions – we need £200 budget. If our CPC is likely to be closer to £10 though, we’ll need to spend £200 on each conversion, so for 10 conversion we’ll need £2000.

So that’s:

(Required Conversions / Conversion Rate) * CPC

Now obviously the more accurate your tracking is and the more historical data you have available, the more reliably you’ll be able to apply this equation, but hopefully it gives you a good starting point to be able to think about roughly how much budget you should be putting towards paid search advertising.