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Do Google Ads Work?

If you’ve found this post, chances are that you’ve tried Google Ads and didn’t quite get the results you were hoping for.

While the concept behind Google Ads sounds incredibly solid, the reality for many businesses isn’t always so. Google Ads can lose you money. But why do some succeed and others fail? And are they right for you?

In this article, I’ll answer this common question, do Google Ads work? I’ll also give examples and details about when and why Google Ads might work or fail.

The Genius Concept of Google Ads

It’s hard to not be tempted and try Google Ads, their logical appeal is so strong. Google re-defined advertising with this simple concept. Show your ads to people as they are searching for your exact product. What business owner wouldn’t want that? What’s more, there’s no minimum budget, you only pay when people click and ads can start running in hours. What’s not to like?

Even if Google Ads haven’t worked out for you so far, they must have worked for other businesses. After all, Google wouldn’t be one of the most powerful brands in the world if their ads didn’t work. More than 80% of Alphabet’s revenue (Google’s holding company) comes from Google Ads. (Source: CNBC), so they must be working for some advertisers.

Google's success

Some people must be paying for Google Ads...

Is the Google Ads Promise Too Good to Be True?

The short and simple answer is: They do work. I’ve seen them work for many businesses. But they don’t work for everyone. While the concept does work very well, several factors make it harder to win than you’d expect.

  1. Market demand means of your competitors knows about Google Ads too. So the concept works but the market dictates the costs. If you’re in a competitive market, that cost could be too high.
  2. Google Ads’ cost per click works on a bidding system. When it launched in the early 00’s fewer businesses were bidding. Now everyone’s using it so bids have gone up.
  3. Google Ads is a complex system. It’s not easy to choose the right strategies and optimise performance.
  4. PPC is not a magic pill. It can’t solve everything. You also need great copy, a great product, the right pricing, a killer website and a strong value proposition. Without all of these, you’ll struggle to win the competition.

When Do Google Ads Work Well?

  1. For Google Ads to work well you need enough search volume for your keywords. This indicates demand.
  2. For profitable Google Ads, the cost per click for your keywords need to make sense for your business. The cost per click is dictated by the competitive levels in your industry.
  3. A really important part of successful Google Ad campaigns is having a website or landing page that converts well. If people visit the site but don’t take action, you’ll struggle to be profitable.

What are Conversion Rates and Why are they Important?

High conversion rates, the formula to Google Ads success

Unlike this forumla, conversion rates should be really easy to understand.

You’ll find conversion rates in several places. On your website, it will be the number of conversions divided by the number of sessions. In Google Ads, the rate is calculated as conversions/clicks.

For example, you’ve had 3 conversions from 100 clicks on your ads. Your conversion rate will be 3%.

Why are Conversion Rates Important?

Here’s a simple example: Let’s imagine the cost per click in your industry is £1.

  • With a conversion rate of 1%, your cost per conversion (a sale or lead generated) will be £100.
  • With a conversion rate of 2%, your cost per conversion will be £50.

As you can imagine, a 100% difference in costs can make or break the profitability of your business. Small changes to your conversion rates have a big effect on your end profits.

When Google Ads Don't Work?

There could be several reasons why Google Ads don’t work for a business.

  1. Competitors have pushed the costs per click too high (this often happens in VC funded industries).
  2. Low search volume. This makes optimising and understanding performance slower.
  3. Mixed intents and audiences. Sometimes there is high search volume but the intent or audience isn’t right for the business.
    A typical example will be a B2B brand targeting keywords. But 90% of the searches come from consumers.
  4. Poor ad copy that doesn’t appeal or doesn’t describe your offer correctly.
  5. The account isn’t set up well. This can include anything from the targeting being too loose or too restrictive, to not choosing the best settings for your purpose.
  6. Poor website experience. People click but they don’t convert.
  7. Bidding and budgets haven’t been optimised. Part of the account is profitable, but the budget gets spent elsewhere.
  8. Tracking and conversions aren’t set up correctly. Without conversion data, it’s almost impossible to optimise and improve performance.
  9. Your competitors have a more appealing offer.

What Should Effective Google Ads Performance Look Like?

Google shopping campaigns with high eCommerce profit and ROAS

In this example, an eCommerce shopping campaign is delivering an x14 ROAS (return on ad spend).

Google Ads provides accurate reporting data. Assuming your conversions are set up correctly, you’ll be able to attribute conversions, cost per conversion and other meaningful stats to each campaign, ad group and keyword in your account. Healthy account metrics would usually look something like this:

  • Conversion rates: Pan-industry conversions rates usually fall between 2% - 6%. Low-value actions, such as brochure downloads, might have higher rates. High ticket items, such as expensive purchases might have lower conversion rates.
  • Bounce rates: Always compare bounce rates to other channels in Google Analytics. If your website average bounce rate is 50% and your Google Ad campaigns are 70% something's wrong. Aim for a better bounce rate than organic.
  • Cost per conversion: This has to make sense for the business. Find out what the margins are. Also, within your account, compare each element to the account average. If one ad group has a higher cost / conversion than the rest, take action.
  • CTR (click through rate): Though CTR isn't an end goal metric, it's a good indication of how good your ad copy and targeting are. Google rewards high CTR with lower costs per click.
  • Quality score: Keywords in your account get a score from Google. If you have many keywords with score of 4 or lower, this usually indicates a problem. Quality score should be taken with a pinch of salt, some accounts reach 10s while others average around 7.
  • Conversion value & ROAS (Return on ad spend): If you're selling on the website, you'll obviously want to look at the revenue generated compared to costs. The metric conv. value / cost indicates just that. It'll give you a very clear picture of how profitable each campaign is.
Cost effective lead generation Google Ads

The example above generated 363 leads for a cost of £29 each. A deal for this client is worth around £10,000 so this cost per lead is high profitable for them.

Generating revenue with Google Ads

Always compare Google Ad performance to other channels in Analytics. In this example, Google Ads are generating the highest amount of revenue.

Will Google Ads Work for You?

Hopefully, this article has helped shed light on Google Ads’ effectiveness and why performance may vary. If you’re thinking of trying Google Ads, your PPC manager should discuss projected costs and returns. It’s impossible to know in advance, but an experienced PPC consultant will be able to estimate.

If you’re running Google Ads but getting poor results, it’s worth auditing your account to find missed opportunities. There’s often a lot to improve, with some knowledge of the system.

Good luck with your campaigns.

About me

I'm a Google Ads PPC consultant with over 10 years of experience. I specialise in optimising lead generation Google Ads. I also run Effectivemarketing.uk, a PPC & SEO agency. If you have any questions about Google Ads or need help with your account, get in touch I'd be glad to help.

Odi Caspi
PPC Marketer

 

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