Bidding Right! Easy way to grow your business
How much does it cost to use Google AdWords? How can we earn a profit over the expenditure? The question that moves many AdWords users cannot be answered with a single statement. To understand Google AdWords and it’s bidding system better, here are some important details:
How does the AdWords bid system work?
Paying to show your ads is not a good enough reason to stand out among other sponsored ads on the first page of Google. There are many other factors that determine your ranking in Google Search. Your ad positioning depends on Google algorithms. To be precise, Google uses a mathematical formula that can be easily calculated if we understand the factors that influence the order in which the ads appear in the list of paid links.
The first thing we need to know about Google AdWords bidding is that it is not really a single bid, but two, the first determines your position, and the second determines the final price that you are going to pay. Let’s start understanding the factors involved in this bidding system. The first and the most important factor is “CLICK”, this factor says, you’ll only pay when a user clicks on your advertisement.
For example, if you write on Google “Buy a sofa”. Google is going to offer you its paid results, but only the ones that best suit your search. Which means, it offers several ads where, if you click, you will quickly find what you are looking for, in web pages or landing pages that have been tested and valued according to their quality.
However, do not forget that Google only shows pages that offer relevant and original content, with transparency and ease of navigation. This is because Google wants us, as users, to keep clicking on their ads when we search for something, and to be satisfied with the services they offer. And as an advertiser, to receive the highest number of clicks from people who are strongly interested in our ads, so that we can receive a favourable return on investment of the advertising expenses and continue hiring their services.
The second factor that determines the evaluation of a Google AdWords’ ad, is the “AUCTION”. The auction occurs just at the moment when the user enters the keyword associated with your ad in the Google search engine, resulting in your ad displacement on Google Search. The auction is highly important in determining the position of your ad in the results of your search (even if it comes out or not) and the final price that you will pay if the user decides to click on it (in spite of what you have bid for your ad to be published)
It is evident that the advertisement that wins the auction is the one that will reach the first position, and the rest will follow in an orderly manner.
Google’s formula for positioning your ad in search results
Ads are paid when a user clicks on them and the advertiser offers a cost for those clicks. The advertiser who makes the maximum bid will get their ads positioned above all other ads. This is also known as the maximum Cost Per Click (CPC). However, the quality level of your chosen keywords also plays an important part in your ad positioning.
For the final positioning in the ranking, the first released will always be the one with the highest quality (from 1 to 10) that is obtained from the formula of multiplying your maximum Cost Per Click to the Quality Level of your advertisement.
How much does it cost for a click on the ad?
The click on an ad depends mainly on:
#1 The competition for the keyword: The more companies want to be found for a certain keyword, the higher is the price per click. The system is like an auction. The more people want to have a certain product, the higher is the price.
#2 The quality of the ads: Google awards a quality factor for each keyword, being 10 the best. This is roughly calculated from how well the keyword, the ad, and the website match. Ads with a higher quality factor are */therefore cheaper. Hence, you have to pay less to stay in the same position as a competitor with a lower quality factor keyword.
#3 Sufficient budget: If the budget that you have set for Google is used up, the ads will no longer be displayed. Determining whether the budget is set too low, can be seen in the “share of potential impressions on the search network” metrics. If this is below 90%, this is usually due to a low budget.
#4 AdWords is an auction platform: It scans in real time every time a user searches on Google Search, who all are willing to pay (CPC), how high the Quality Score is (1-10) and if the advertisers have enough budget for a click. Since the quality factors and the competition are always different, the click rates for each click are different, but never above the defined maximum cost-per-click. The Google Keyword Planner provides a rough guide to the price of a keyword. Usually, the prices are between $0.40 and $2.00 per click. However, there are also exceptions where it is cheaper or a lot more expensive.
Bidding Right: Automatic or Manual Bidding
An AdWords account is like a tree that is growing, spreading, both in width and in depth. The care and thus the management requires a lot of attention and know-how. Quite a few advertisers rely solely on automated solutions offered by the Google AdWords system. Settings are made at the beginning and then not adjusted for a long time. However, since AdWords is an auctioning principle, which involves a highly complex and extremely dynamic system, it is important to stay on the ball all the time.
If the bid adjustments in the account are only automated, the following factors may not be respected and may have a negative impact on performance:
#1 Influences of weather, unusual weather, change in search volume
#2 Competitors switch actions, bid higher
#3 TV advertising campaigns that drastically increase traffic for a short time
#4 Extraordinary events in the world with a lot of media coverage
#5 Holidays, depending on the state, country
#6 New AdWords features that require customization or competitive advantage over time
#7 Higher or lower quality factors, click prices, costs etc.
#8 Changes in a country’s economy, aggregate demand
#9 Demand fluctuations for certain products or services
This list is not exhaustive and it becomes clear how comprehensive the analysis and optimization tasks are, which the account managers make with their customers by means of the numbers and statistics and, based on that, incorporate them into the bid management.
So, should you go for the manual bid or the automated bidding system?
Manual work allows us to address everything that machines cannot do, especially in terms of semantic understanding. And the automation accounts for the large amounts of data that are now available in the accounts.
In short, Google has it all, just no downtime, so a steady work in the account is essential.
If you are still not sure about spending your money on Google AdWords’, you can also take help from Google AdWords agencies. Prices for a Google AdWords agency vary widely and usually reflect what you might expect. For the creation and support of these agencies think accordingly in the business model of the customer and try to find out what the customers are looking for.
