Google Ads: What it is, how it works, and what is its effective cost for your business
Do you want to make your business more visible in the online world? Google Ads is one of the most effective ways to do so. How exactly does it work, what are the costs, and how do you set it up to achieve maximum results? This article will show you how!
What is Google Ads?
Google Ads is a form of paid advertising conducted through the Google Ads platform with precise targeting and efficient budget utilization.
It allows businesses and individuals to promote their products, services, or content across various Google platforms and services. Most commonly, these include search results (SERP), YouTube, Gmail, and partner websites.
As an effective digital marketing tool, it can serve various purposes – from increasing company visibility, supporting sales, and building personal or corporate brand, to acquiring new customers.
Google Ads provides businesses with the ability to precisely track how their ads perform, adjust campaign goals in real-time, and efficiently manage their budget.
With dynamic targeting, it can reach a specific audience based on demographics, interests, or previous online behavior (remarketing). It also allows A/B testing of different creatives to determine which ones work best.
How does Google Ads work?
The core of Google Ads operates on a Pay-Per-Click (PPC) model, where advertisers pay for each click on their ad.
The auction system determines the order of ads in search results. Each advertiser sets the maximum amount they are willing to pay per click (bid). Google then compares this bid with other factors, such as the Quality Score, which includes the relevance of the ad, the quality of the landing page, and the expected click-through rate (CTR). The combination of these factors determines the ad’s position on the search results page.
An ad campaign can be designed to precisely target a specific group of users based on factors such as keywords, geographic location, demographic data (age, gender), interests, user behavior (e.g., previous interactions with the website), and device type (mobile, computer, tablet).
Choosing the right keywords is a crucial pillar for the campaign’s success to ensure that the ad is shown to a relevant audience. It may sound simple, but as a complex process, it often requires expert assistance from professionals specializing in this area.
Campaign performance tracking tools
Google Ads offers various tools for tracking the performance of ad campaigns and allows for optimization based on the data collected. These include:
- Conversions – the number of actions your ad achieved, such as purchases or registrations.
- Return on Investment (ROI) – evaluates profit relative to the advertising costs.
- CPA (Cost per Acquisition) – the average cost of acquiring one customer, which is crucial for assessing campaign effectiveness.
- ROAS (Return on Ad Spend) – measures the revenue generated for every euro invested in advertising. It is useful for evaluating the performance of sales campaigns.
- Conversion Value – the total value of all conversions generated by the ad, helping to understand the overall contribution of campaigns.
- Conversion Rate – the ratio of conversions to the number of visits, showing how effectively ads are generating sales.
- Average Order Value (AOV) – the average amount customers spend per purchase, which can help in optimizing campaigns and offers.
Who is Google Ads suitable for?
Thanks to its diverse targeting options and formats, Google Ads is suitable for virtually any type of business or project. For example:
- Small and medium-sized businesses with services in a specific geographic area (restaurants, shops, craftsmen, or local services) – to attract local customers.
- Large companies (corporations) with a diverse portfolio (international automotive, fashion, technology, or finance brands) – for targeted campaigns on specific market segments, reaching customers worldwide with the ability to localize ads by country, language, and culture.
- E-commerce businesses – to increase sales by targeting people actively searching for specific products or product categories online, and to promote specific products directly in search results with images, prices, and reviews.
- Service providers (B2B and B2C sectors such as legal services, medical professionals, education, financial consulting, or marketing agencies) – to acquire new clients by targeting individuals searching for specific services.
- Individuals and Freelancers – to build a personal brand, showcase a portfolio, increase visibility, and attract new clients.
- Nonprofit organizations and social campaigns – to spread information about activities, fundraisers, or social campaigns, reaching a broader audience and encouraging donations or volunteerism.
Branding, webpages and online marketing
We help creative ideas grow.
Types of advertising campaigns on Google
Google Ads offers a wide range of campaign types that allow advertisers to reach their target audience at various stages of the buying process and across different platforms.
Different ad formats appear in various places within the Google ecosystem—text ads (in search results), display ads (banners), video ads (such as on YouTube), and product ads (products with images and prices).
Each campaign type has its specifics and is suited for different marketing goals, whether building awareness, increasing sales, promoting apps, or directly targeting people searching for specific products or services. What types of ad campaigns does Google offer?
Search Campaigns
They appear directly in Google search results at the top or bottom of the page, above or below the organic content marked with a small “Ad” label.
These campaigns are displayed in text form when users search using keywords. Success is achieved by those with the right choice of keyword phrases. They can include headlines, descriptions, URLs, and extensions like phone numbers, addresses, and site links.
They are suitable for: various types of businesses that want to target potential customers actively searching for their products or services online.
Display Campaigns
They appear on millions of websites, apps, and mobile devices that are part of the Google Display Network. These websites include popular news portals, blogs, and forums.
Ads can come in various formats, including banners (display ads), images, text, video, and interactive ads. This is closely related to the Google AdSense service, which matches appropriate ads based on the content of the website and its visitors.
They are suitable for: various types of businesses and entrepreneurs who want to raise brand awareness, reach a broad audience, or target users who may not be ready to purchase yet but can be influenced by ads.
Shopping Campaigns
Product ads appear directly in search results (usually at the top or alongside) and in the “Shopping” tab. They include a product image, price, store name, and reviews. Since the products are linked to online stores, the shopping process is simplified for customers.
They are suitable for: e-commerce businesses that sell physical products online or in brick-and-mortar stores and want to effectively increase sales, achieve greater visibility, and boost conversions.
Video Campaigns
On YouTube and other partner video platforms, ads appear before the video starts (pre-roll), during the video (mid-roll), after the video (post-roll), or as discovery ads (suggestions next to videos).
Video ads come in various formats:
- skippable/non-skippable ads
- bumper ads (short videos up to 6 seconds)
- discovery ads (text ads with a thumbnail image in the video list)
- banner ads displayed on video pages
They are suitable for: companies and brands that want to engage with their audience through captivating visual content to build brand awareness, increase visibility, reach new customers, or re-engage those who have already shown interest in their products or services.
App Campaigns
Ads pop up in apps on Android and iOS devices, which are automatically generated based on information from the app. They can appear as text, banners, videos, or interactive ads.
They are suitable for: businesses and developers who want to promote their mobile apps, expand their user base, encourage active usage, or re-engage existing users.
Local Campaigns
These optimized campaigns aim to attract visitors to physical stores or branches. They appear in the Google Maps app and desktop version when users search for local businesses or places.
They are suitable for: any business owner who provides services or sells products at a specific location and wants to increase foot traffic to their physical locations by reaching people nearby.
Discovery Campaigns
They use native formats and target users at moments when they are ready to discover new products and services.
For example, they appear in Gmail in the “Promotions” and “Social” tabs. They resemble regular emails but are labeled as ads. When clicked, they expand into a full email, allowing the use of images, videos, and links.
They are suitable for: companies and brands that want to reach users at different stages of the buying process while leveraging the power of visually appealing ads.
Branding, webpages and online marketing
We help creative ideas grow.
How to set up an ad on Google step-by-step
etting up ads on Google is a process that requires careful planning and optimization. Here’s a fundamental step-by-step guide on how to get started, from creating an account to launching your first campaign:
1. Creating a Google Ads account
Go to ads.google.com and click the “Get Started” button. Create a new account or log in to an existing one. Then, fill in the basic information, such as your business name, and website, set the time zone, and the currency you will use for your campaigns.
2. Defining the campaign goal
Google Ads will ask you to select a campaign goal. Some of the most common ones include:
- increasing sales of products or services
- generating leads and potential customers
- increasing website traffic
- building brand awareness
3. Choosing the campaign type
Depending on your chosen goal, you can select one of the campaign types we described above. When is it appropriate to use them?
- Search Campaign – for targeting people who are actively searching for your products/services
- Display Campaign – for building brand awareness
- Shopping Campaign – for e-commerce stores
- Video Campaign – for building awareness and engagement
- App Campaign – for businesses with mobile apps
4. Setting up the campaign
Select geographic targeting, specifying where you want your ads to appear (countries, regions, cities, or specific areas).
Set a daily budget and choose a bidding model (CPC – cost per click, CPA – cost per action). Automated bidding can help optimize campaign performance.
Add extensions, such as site links, phone numbers, or reviews, to enhance the appeal of your ads.
5. Creating ad groups and ads
An ad group focuses on a specific theme or set of keywords. Each campaign can contain multiple ad groups.
Select keywords that will trigger your ads to appear. A great tool to use is Google Keyword Planner, which can help find relevant keywords and phrases.
Create text ads with compelling headlines, descriptions, and a clear call to action. For display campaigns, upload visually engaging banners or graphics.
6. Monitoring and optimization
Make sure you have conversion tracking set up so you can measure how successful your campaign is. Once the setup is complete, click “Launch campaign.”
Then, monitor key metrics such as click-through rate (CTR), cost per conversion, and return on investment (ROI).
Based on the results, adjust keywords, ads, or bids to improve performance.
What should you watch out for?
Ensure that targeting is specific enough to reach the right audience but not too narrow to miss potential customers.
Monitor your budget and optimize bids to achieve the best performance at the lowest cost.
Create engaging and high-quality ads with a clear call to action. They should be relevant to the selected keywords.
Regularly track campaign performance and make necessary adjustments to improve results.
Branding, webpages and online marketing
We help creative ideas grow.
How to effectively set a budget for Google Ads?
Setting an effective budget for Google Ads can be crucial for achieving your marketing goals.
It’s an ongoing process of adjustment and optimization. The key is testing, analyzing results, and being willing to adjust your strategy based on data, which will help maximize return on investment and achieve business objectives.
Here are some tips and tricks to help you:
Clear campaign targeting on Google
Set clear goals before starting the campaign. What do you want to achieve? Do you want to gain more conversions (e.g., sales, sign-ups) or increase website traffic? It will help you make better decisions about how much money to invest and how to monitor the results.
Allocating a budget for Google Ads
Decide what portion of your marketing budget you want to allocate to Google Ads. Commonly, it is recommended to start with a small budget and gradually increase it based on the campaign’s performance.
Choosing a bidding strategy
Utilize a bidding strategy according to the campaign goal.
With Manual CPC bidding, the advertiser can set the maximum cost-per-click (CPC) for the ads. As a flexible approach, it allows bids to be adjusted based on the performance of individual keywords.
An automatic strategy is Maximize Conversion Value, which focuses on maximizing the total conversion value within the budget.
Target CPA (Cost per Acquisition) allows you to set a target cost per acquisition (e.g., per sale or registration). Conversely, Target ROAS (Return on Ad Spend) aims to achieve a specific return on your advertising investment.
Selecting keywords
Focus on keywords that have a direct impact on the effectiveness of your ads. Conduct thorough research and select those that have high relevance to your business. Also, use negative keywords to prevent your ads from appearing for unwanted search queries.
Local targeting
If you have a local business, focus on geographic targeting. Direct your ads to areas where your potential customers are located.
Optimizing ad scheduling
Check when your target audience most frequently interacts with your ads and schedule your ads to appear during the most effective hours or days.
Monitoring and optimizing campaigns
Regularly monitor campaign performance. Track metrics such as CTR (Click-Through Rate), CPC (Cost per Click), conversion rate, and CPA (Cost per Acquisition). Based on the results, adjust your budget, keywords, and bidding strategies.
Testing different ad variations
Test. A/B testing different versions of ads allows you to identify which ads perform best. You can test various headlines, descriptions, images, or CTAs (Call to Action).
Remarketing
Utilize remarketing, which allows you to target ads to users who have already visited your website but did not complete the desired action. It’s an effective way to increase return on investment.
Setting realistic expectations
Don’t expect immediate results. Campaign optimization can take some time, so it’s important to be patient and regularly adjust your strategy based on the data collected.
Utilizing automated tools
Use automated tools on Google that can help optimize your budget and campaign performance. For example, Smart Bidding automatically adjusts bids based on the likelihood of conversion.
Adapting to changes
If you have a product or service that is seasonally dependent, adjust your budget according to expected changes in demand. Monitor trends and adapt your campaigns to make the most of current events or shifts in consumer behavior.
Benchmarking
Monitoring competitors (benchmarking) can help you set a realistic budget and bids. Adjust your strategies based on changes in market conditions and competitors’ activities.
How to get advertising credit from Google Ads?
Google aims to encourage businesses to use their advertising tools by offering a promotional credit. When you spend €350, they will give you an additional €350 in advertising credit. However, this offer has certain restrictions and conditions that you need to meet to receive the credit.
First, you must be a new advertiser with a billing address in Slovakia.
After creating your account, you need to apply the promo offer within 14 days of your ad being displayed. If you meet this requirement, you must generate costs of at least €350 within 60 days, excluding taxes and applicable fees.
Once you fulfill all conditions, the credit will be applied to your Google Ads account within 35 days in a billing summary. You can then use it for future advertising campaigns, but only within 60 days.