Calculating Google Ads Advertising Spend – How Does it Work?

Tanel Vetik

Head of Strategy

“Google advertising is expensive, best stick to social media,” is a phrase that many business owners and marketing managers say here and there, when presenting their new (or first) digital marketing concept.

Is this just a prejudice and a general attitude that ads in PPC search engines are more expensive than their counterparts in social media? Or is it fear of an unfamiliar platform that constantly evolves and changes?

Google reklaami hind

Below, we pull back the curtain and show how agencies price Google advertising. We discuss whether Google is more expensive than Facebook, why Google advertising is great success for some, and a terribly bad investment for others.

Calculating Google Ads Advertising Spend – How Does it Work?

Tanel Vetik

Head of Strategy

“Google advertising is expensive, best stick to social media,” is a phrase that many business owners and marketing managers say here and there, when presenting their new (or first) digital marketing concept.

Is this just a prejudice and a general attitude that ads in PPC search engines are more expensive than their counterparts in social media? Or is it fear of an unfamiliar platform that constantly evolves and changes?

Below, we pull back the curtain and show how agencies price Google advertising. We discuss whether Google is more expensive than Facebook, why Google advertising is great success for some, and a terribly bad investment for others.

Google reklaami hind

“Google advertising is expensive, best stick to social media,” is a phrase that many business owners and marketing managers say here and there, when presenting their new (or first) digital marketing concept.

Is this just a prejudice and a general attitude that ads in PPC search engines are more expensive than their counterparts in social media? Or is it fear of an unfamiliar platform that constantly evolves and changes?

Below, we pull back the curtain and show how agencies price Google advertising. We discuss whether Google is more expensive than Facebook, why Google advertising is great success for some, and a terribly bad investment for others.

Google reklaami hind

How agencies price Google advertising services

This is a topic that most agencies only whisper about when clients press hard, and what agencies keep hidden on their websites. This process can seem very mysterious to the client. Asking for price quotes can cause a real headache if you want to find be best one to match your budget.

This is also probably why only 40% of agency clients change their digital marketing agency when they aren’t satisfied with the service. I repeat – when they are not satisfied with what they are paying for.

We have taken it as our goal to change this. There’s a 3-month results guarantee for all clients – if we don’t grow your results in 3 months, then we work for free. Our emphasis is on working with the client, not just for them.

The price of Google advertising is composed of several different factors. The biggest of these is the cost of labour, because hiring an agency means you’re not just hiring a single account manager, but you are also hiring customer support, a digital strategist, a project manager (to whom you submit complaints about any of the other ones), an agency-side Google representative, years of experience, and free time for yourself.

Looking at it this way, you’re paying a monthly management fee for 1-5 already specialized people and the opportunity to invest your time elsewhere. When hiring an in-house specialist, it generally means 6-9 months of onboarding, and having to manage them until they run the department or leave the business.

Is Google advertising more expensive than Facebook advertising?

It could well be, but Facebook can also be more expensive. It depends on the goals, the skills of the account manager, and the quality of the landing page, ad copy, and graphics. Let’s say, if you want to spend €100,000 on Google and Facebook in one month, then both platforms will gladly accept this sum and then burn it equally fast. The difference is in the strategy and your targeting setup.

Knowing your customers and target audience is key when determining which channel to invest more in. You want to be visible in the right place with the right value offer. If you manage to nail this, then whatever sum of money you invest in the platform, it will always be worth it.

Different products and brands work differently on Google and Facebook. Likely because of the purchasing journey and the stage of the conversion funnel. Google’s typical keyword advertising focuses on the final phase of the purchase journey, where people already quite certainly know what they want – they’re just looking for the best price and quality ratio.

However, Facebook targets mostly cold audiences, who may not know anything about your company, services, or products. However, Google’s CPM (cost per thousand impressions) for keyword-based advertising is noticeably more expensive than it would be on Facebook.

Here, we can already conclude that for one company Google is expensive and for another, Facebook advertising is like pouring water into sand. To achieve the best result, one should first map out their company’s goals, strategy, digital marketing concept, and then start compiling marketing channels.

It may well turn out that LinkedIn marketing, cold calls, and email marketing automations are the most profitable solutions for you. It all depends on what you want to get from your marketing activities and what constitutes profitable.

Why does Google advertising not succeed for many?

It’s hard. Really, it is. Google don’t tell us why its AI decided to show the ad to these 20 people and not those 5 others, or why your campaign impression share was at 80% due to limiting CPC limits. It just sort of decides on its own that those 20 people are worth £2.20 per click and the remaining 5 people are worth at least £20 per click.

But it’s not all so random as it may seem. There’s a massive algorithm behind this decision and it’s being fuelled by the 2 billion searches people perform on Google every day. It’s all behavioural data that tells Google which individual is more likely to become a client of any given business.

In short, a lot is happening in the background, and dealing with Google marketing can sometimes feel a bit like laying tarot cards. Most of the work is proactive, strategy-based activity to reach goals, but sometimes you just have to take a moment to understand why Google ads behave this way or that. This intuition gets better with time and experience – but no one really want to pay that tuition fee, right?

A good agency already knows these tricks by heart and invests time in implementing the strategy, not into correcting their own mistakes. It’s also one of the reasons why we have been awarded the official partnership agreement with Google.

Common mistakes include:

  • Too broad keyword targeting.
  • Too many targeting restrictions.
  • Suboptimal geographic targeting.
  • Poor landing page quality and visitor experience.
  • Incorrect mapping of the conversion journey.
  • Too large or too small a budget.
  • Bad bidding strategy.
  • Hiring an amateur.
  • Insufficient machine learning time (not allowing the ad to go through Google’s 7-day learning and data collection phase).

There can be many reasons, and most of them are fortunately easy to change. If you feel that we could be your Google Ads partners, then send us a message. We don’t hide anything, and our prices are publicly listed here.

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