Why Is Google AdWords So Expensive? - The Digital Prosperity Podcast – Season 2, Episode 1

Welcome to the Digital Prosperity Podcast with me Will Williamson. This week’s show is about why Google AdWords is so expensive, which is a question I get asked quite frequently by small and medium-sized business owners when I bring up the idea or the possibility of running Google advertising.

The Keyword Planner

Now when people ask, “Why is Google AdWords so expensive?” generally there are one of two things that are driving that question and one of those is that Google has a service called the Keyword Planner. Using the Keyword Planner, you can look up and research possible keywords that you might want to advertise for and Google will give you an estimated number of people searching for that keyword per month and it will give you an estimated cost per click.

When you look at some keywords, in particular, those costs can look really high. So quite often, it’s 50p, a pound, two pounds. But if you’re in some industries, where you have high-value products and services, so professional services is one that I’ve come across quite regularly for example and solicitors and IT services where it can be 10, 20,30, 40 pounds per click even.

The Horror Stories People Have Heard About Google AdWords

The second thing that drives that question is, people have often heard horror stories of Google AdWords of companies that start an account and the costs have completely run away with them and before they know it, they’ve spent a thousand pounds and have no control. Or you hear of big companies that are spending millions and millions on Google advertising and it sounds like a very expensive format and a slightly scary format for advertising.

Complete Control

So there are two important factors to know about with Google AdWords and the first is that you have complete control over how much you spend. You set a daily cap on how much you’re going to spend on your advertising. So you can set that cap at 1 pound a day, 5 pounds a day, 50 pounds a day, 500 pounds a day, according to your budget. So it’s exactly as expensive as you choose it to be. The second control you have is that you choose how much you’re prepared to spend per click. So you set a cap on the amount that you are prepared to spend per click. So that if you don’t want to go over five pounds a click, you can make sure that you set your cap at five pounds and it won’t go over that amount per click.

Why Have Estimated Keyword Costs Risen?

Now the reason that Google’s estimated keyword costs have got so high, is because Google runs on an auction basis. So if there are lots of people bidding on a particular keyword, the costs will go up because there is more competition for those top spots. When Google AdWords was first launched in the early 2000s, it was possible to get found on page one of Google for some really attractive keywords, for only pennies per click. But over time, more and more advertisers, marketers and companies have embraced Google AdWords as a format and more and more people are doing it and as a result, that has been driving the costs up.

But having said that, compared with other forms of advertising, for me, Google AdWords is not an expensive form of advertising. You see, with most other advertising, what you’re doing is reaching a passive audience. So even if your advertising is really targeted to a very specific group, it’s still passive.

With Google AdWords, you’re advertising directly to people who have chosen to search on Google for your products or your services. Those are people that are actively researching a purchase, looking for more information or looking to buy.

Further Benefits Of Using Google AdWords

But against other forms of advertising, Google AdWords has some other important benefits. It’s very measurable. So with a lot of advertising, you have no idea of the results once you’ve spent the money on it. You’re using your gut feel as to whether it works or not. With Google AdWords, you’ve got the data. You can actually see how many people clicked on the ads, what they did when they went through to the website and how many of those actually converted and became an enquiry or a sale. You will also have a greater degree of control.

So with Google AdWords, you’re able to make changes in real time. So if you have a day where you want to attract more enquiries, you can increase the budget. If you have a day where you’re going to be busy, you’re not going to be able to deal with enquiries, you can reduce the budget.

If you want to target a particular product, you can put more budget into that product. So if you want to target a particular geographical region, you can put more budget into that. You can do all these things in real time. So it gives you incredible flexibility to be able to pull levers in your marketing to get desired results that are what your business needs.

But Google advertising can be an expensive process if it’s not done right. If it’s done well, there are strategies that help you avoid paying those high costs per click that help you get traffic, get conversions in a cost-effective way.

When Does AdWords Fail?

Where we see Google AdWords fail, become expensive, is when the account is not managed or where it’s being managed but by someone that has no experience or knowledge of Google AdWords or limited experience or knowledge. That’s why we always recommend having your Google AdWords account managed by an expert, by someone that has experience and a knowledge of Google AdWords. It’s one of the most sophisticated advertising systems ever created. To have that managed by an expert in an on-going and active way, will lead to more cost-effectiveness in the form of advertising over time.

So whether that’s us or whether that’s another company, that’s what we would recommend. So thank you again for listening. A bit of a change of format in this show. But Dave will be joining me for future shows as we go deeper into particular topics. But we also wanted to use this podcast as a platform to answer some of your questions and some of the questions that we’re getting asked on a day by day basis by our clients and our prospects.

So I hope you found it useful. If you have a question that you would like me to answer, or you would like Dave to answer, you can email podcast@jdrgroup.co.uk. You can find us online at www.jdrgroup.co.uk. You can find me on Twitter, @willatjdr. You can find me on LinkedIn, Facebook and so on. I hope you’ve enjoyed it and I look forward to speaking to you very soon.