How to calculate the cost of your Google Search Ads

teaching calculations

Google offers the largest online advertising platform, Google Ads, where affiliates can promote their online offers and websites to a worldwide audience with the flexibility of applying a number of targeting options to reach the desired audience. Google Ads is the best place to start for affiliates that are willing to spend money on paid ads in order to reach a given audience and from any location across the globe. Google advertising platform was launched in 2000 with 73% of the paid search market share belonging to Google in 2021 and forecasted to drive 29% market share of the digital ad spend worldwide in 2021. 

Google is by far the largest search engine, which presents an opportunity for affiliates to show the answer and solution that their website or blog has for a common problem. Google offers visitors organic results from highly relevant websites with good quality and unique content for free. Google also places at the top of the page results, Google Paid Ads and the way for affiliates to get to these results is by joining and opening a paid advertising account with the Google Ads platform.

The main advantage for affiliates running Google Paid Ads is that it speeds up your blog or website appearing in Google search results and drives targeted and relevant traffic to your affiliate offers. 

Google Search Ads for affiliate promotions

Affiliates using Google Search can bid on search keywords and phrases in order to show their ads to relevant users in Google search results. Affiliates have the option to apply different bidding strategies to drive traffic to their websites, for example, affiliates can use the strategy of cost per click bidding and only pay when a user clicks on their ad. Affiliates can also set a maximum cost per click that they can afford to spend for each click. Google operates an auction model to determine whether to show the ad and also in which position based on the bid set by the affiliate or advertiser.

How much to pay per click with Google Search Ads

Affiliates need to be aware that the more competitive an industry is the more expensive the cost per click is going to be. For example, software as a service is a product vertical that has a high customer value worth thousands of dollars and therefore commands a high cost per click. However, if you are running a carpet cleaning business, for example, your cost per click will be low because of the low sale value. Therefore, affiliates must understand and know how much that click is worth to them and how competitive their vertical is in order to understand the cost of the keywords and their future payback.

How does Google Ads work for affiliate marketing?

Fundamentally, Google Ads work based on a bidding system; you tell Google to display your paid ad at the top of the page results for certain keywords of your choice. For your notes, a keyword is basically what someone types and searches in Google. For example, you want one of your affiliate offers to appear at the top of Google search results when a user types in “website monitoring”. Google Ads wants to get paid for this so you can confirm to Google that you are willing to pay, say, £1 every time a user clicks on this paid ad and you the advertiser only pay Google when someone clicks on the ad. Google Ads platform works under a bidding system so if another affiliate comes and places a higher bid, for example at £1.50, then their ad will go to the top of the search result instead of yours as they are willing to pay more for that click.

There are a number of key considerations for running profitable affiliate offers, therefore, you must know your cost per click – CPC Rate, how many clicks you need to make a sale – Conversion Rate, how much it costs you to get a sale – CPS and how much profit you can make per sale. For example, you pay £1 per click and you need to get 10 clicks to generate 1 sale, so your cost is £10 per sale – (£1 CPC x 10 Clicks = £10), you also know that you make a profit of £20 every time you make a sale making this ad a very profitable advertising option.

Google Ads platform not only lets you target your desired keywords but also allows you to target by geography, time of day, day of the week, and device type too. In order to maximise your ad spend, affiliates should consider the ad, and pay attention to click-through rates – CTRs, as the higher the CTR the lower Google will charge you per each click.

Google Ads – Terms to know

Search Ad impressions

Impressions represent the number of times your ad is shown on a Google search result page or within the Google Network; each time your ad is shown, it is counted as one impression, regardless of whether someone clicks on it or not.

Search Ad click through rate

Click-through rate or CTR is another important metric to assess how successful your pay-per-click campaigns are running, and it measures the number of users who click your ads compared to the number of times the ad is viewed. Click-through rate is calculated by dividing the number of people who click your ad by the number of people who viewed your ad – so the higher your CTR, the better and the cheaper Google will charge you for that click. To work out this rate, just use this simple formula: CTR = Clicks on ad/total impressions.

Conversion rate

A very important metric to consider when running a Google Search Paid campaign is the conversion rate, which is the rate of visitors to a website or landing page that not only view its content but take an action, for example, completing a successful sale transaction. To assess the conversion rate, simply divide the number of the desired action, in our case sale, by the number of visitors: CVR = Sales/Visitors.

Cost per click

Cost per click (CPC) is the method that Google Ads uses to charge for its advertising services and is based on the number of times a visitor clicks on a Google Ad advertisement. In order to run CPC bidding campaigns with Google Ads, you have to set a maximum cost per click bid. Alternatively, you can also opt for the max CPC which is the highest amount that you are willing to pay for a click for your ad to appear in Google search.

Cost per sale

The cost per sale (CPS) is a vital metric that must be used to determine the amount of money paid for every sale generated when running a Google Ad campaign. To determine the CPS, affiliates must set up the correct ad tracking in place to ascertain the amount of money spent and the number of successfully completed sales. To calculate the CPS, simply divide the total amount of ad spend by the number of sales completed: CPS = Ad Spend/Number of Sales.

Using Google Ads for affiliate marketing is a sure and quick way to get your affiliate promotions at the top of the page results of the largest search engine in the world and drive traffic from a number of different countries. 

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