Google is one of the richest companies in the world for one simple reason.
A cutthroat battle for search return listing number one. First Place. Gold Medal. Second to None. If a company can grab first place on the page that Google returns for your keyword, it means website traffic, leads, customers, sales and revenue!
The geniuses at Google figured out a long time ago that they could turn that top spot into money with an elegant and effective solution. Just as there are well-defined criteria that govern the order in which the unpaid, non-ad results are arranged, the same is true for the results with the little orange "Ad" square attached. It's called PAY PER CLICK
In this case, Progressive Insurance probably pays top dollar for the ad shown here, but that's not the whole story. In fact it's possible that they paid LESS than GEICO.
How does PPC work?
That's the easy part. Just get yourself to Google AdWords and click "Start Now." Enter your credential information and use the forms to tell Google about your first ad campaign. Although you must enter your billing information here, you don't actually spend any money until you set a budget, launch the campaign, and start getting clicks.
The next step is to design a group of ads that meet a specific goal, like "increase traffic to my online store." From here, the possibilities are almost endless, with customizations and fine-tuned ads that target only the potential buyers you want. "Search Network" ads appear when your keyword or phrase is typed into Google and the returns appear on-screen. A "Display Network" ad appears on Google-related sites like Gmail or YouTube, or on apps that carry AdWord ads.
Now you've filled out all the forms, made all the decisions, carefully worded your keywords and ad copy… what happens when you cast your ad to the winds of Google?
If you go the "Auction" route, here's a very brief summary of what happens:
Starting with a searcher's query, Google takes a lightning fast poll of all the advertisers that have included a matching keyword in their ad. This triggers the auction, in which advertisers are bidding on the top spot in the search returns.
If your keyword qualifies you for a seat in the auction, you're pitted against anyone else bringing their ad to party. A winner is determined by this simple formula:
CPC bid x Quality Score = Ad rank
The CPC (cost per click) bid is the amount you filled in as a maximum amount you would pay to have someone click on your ad. It's not hard to figure out that the first slot is the most-clicked position in the ads on search returns.
The Quality Score is a bit more nuanced. Google looks at your landing page, the overall relevance of your keywords, the URL of your site and a few other factors. The goal for Google is to find the most relevant ad possible to the searcher. They don't like it when your ad says "High Quality Dogs" and a visitor looking for a purebred Dachshund lands on your premium frankfurters ecommerce site instead.
With this formula, it's possible to pay less for a top spot than a competitor because your quality score is so high.
Next, Google determines how much you owe them for giving you such a lovely perch at the top of the paid ads list. Now that you have your Ad Rank number using the formula above, Google uses it to find the value of your ad.
Your Fee = The ad rank score of the ad below yours / Your quality Score + $0.01
Here's an example from http://www.wordstream.com/articles/what-is-google-adwords:
Notice how a high quality score gets you the top spot for least money. Result? Google gets billions of dollars in revenue and you get sales leads!
Now here's the question everyone wants answered:
What's the average cost per click that I would pay?
(in other words, how can I budget for this?)
The statistical average cost per click (CPC) for Google AdWords displayed in Google search returns is between $1 and $2. But beware of averages.
- You also have an above average number of legs if you have two.
- Your left hand is in a bucket of ice and your right foot was on fire, you'd have to say that on average, you feel just fine.
FYI, the most costly keywords are paid by businesses that have a high "customer lifetime value," like insurance companies and lawyers. They often pay up to $50 per click.
The average small business using AdWords spends between $9000 and $10,000 per month, but again, your mileage may vary.
Your price may be a lot higher of lower based on the details above. In order to have a forecastable budget for AdWords, you need to jump in and experiment. Find out what your current cost per customer is, and decide what you are willing to risk on PPC. Carefully plan this out and research your buyer personas and keywords, and give it a try. And in the meantime, Find out more about us- We're United WebWorks of Savannah GA, wondering if you're ready for more leads, more customers and more revenue!