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Considering Google Ads for your business? Here is a litmus test to see if your business fits the bill

Businesses are continually seeking the most effective ways to reach their target audience. For small and medium-sized businesses (SMBs), this challenge is particularly pressing as they operate with limited resources and need to ensure every marketing dollar spent brings a return on investment (ROI). Google Ads, one of the most prominent online advertising platforms, presents a compelling option for businesses to increase visibility and drive conversions. However, not all businesses will benefit equally from Google Ads. Understanding when and how to use Google Ads can make the difference between a successful campaign and a wasted budget.


This articles list a few key conditions under which Google Ads can be a powerful tool for your business, helping you to determine whether it aligns with your marketing goals.


Keyword Search Volume and Purchase Intent

One of the foundational elements of a successful Google Ads campaign is the presence of sufficient keyword search volume combined with purchase intent. In simpler terms, people need to be actively searching for the products or services you offer, and those searches should indicate a likelihood of making a purchase.


Keyword Search Volume

Keyword search volume refers to the number of times a particular keyword is searched for within a specific period, typically measured on a monthly basis. For a Google Ads campaign to be effective, the keywords you target must have enough search volume to drive traffic to your website. Low search volume may result in minimal impressions, clicks, and ultimately, conversions, rendering your campaign ineffective. A low range of keywords can be something under 200 searches per month. But this is highly dependant because sometimes, you may benefit from low volume search terms, if you don't have a lot of competition and the keywords your are using are very industry jargon heavy (or long tail keywords)


To determine if Google Ads is right for your business, consider conducting thorough keyword research using tools like Google Keyword Planner, SEMrush, or Ahrefs. Look for keywords that not only have a high search volume (anything above 300 to 500 searches per month) but are also relevant to your offerings. High-volume keywords with low relevance can lead to wasted clicks and poor conversion rates.


Purchase Intent

It’s not just about people searching; it’s about what they intend to do once they find your business. Keywords with high purchase intent are those where the searcher is looking to make a purchase, sign up for a service, or take some action that benefits your business. For example, a search for “best running shoes for flat feet” suggests that the user is further down the purchase funnel and is likely closer to making a purchase than someone searching for “which shoes to use for flat feet.”


When evaluating the potential of Google Ads, focus on keywords that indicate strong purchase intent. These are typically long-tail keywords, which are more specific and less competitive but often convert at a higher rate. If your business targets a niche market with specific needs, Google Ads can be particularly effective in capturing these high-intent searches.



Product/Service Price and Profit Margins

The price of your product or service, coupled with your profit margins, plays a crucial role in determining the viability of using Google Ads. The cost per click (CPC) on Google Ads varies widely depending on the industry, keyword competitiveness, and geographical targeting. Therefore, your product or service must be priced in such a way that you can afford to pay for clicks while still maintaining profitability.


Competitive Pricing

In highly competitive industries, CPCs can be substantial, and unless your product is priced competitively, you may find that the cost of acquiring a customer exceeds the revenue generated from the sale. For example, in the financial industry for accountants, the CPC for certain keywords can exceed $90, which necessitates a high customer lifetime value (CLV) to justify the ad spend.


If your product or service is low-cost with thin margins, Google Ads may not be the best channel unless you can achieve a high volume of sales to offset the cost. Alternatively, you may need to focus on less competitive keywords or employ highly targeted campaigns to ensure that your ads reach the most relevant audience, minimizing wasted spend.


Profitability and Customer Lifetime Value

Beyond the initial sale, consider the long-term value of your customers. If your business model includes repeat purchases, subscriptions, or upsells, you can afford to spend more on acquiring customers because the lifetime value is higher. For instance, a software-as-a-service (SaaS) company might be willing to spend significantly on Google Ads because each customer has the potential to generate recurring revenue over time.


Calculating the break-even point where your cost per conversion equals your profit margin is essential. This helps you understand how much you can afford to bid on keywords without eroding your profitability. If your product or service has a high profit margin or a strong customer retention rate, Google Ads can be an effective channel for scaling your business.



Competition and Bidding Strategy

Google Ads operates on a bidding system, where advertisers compete for ad placements by bidding on keywords. The amount you’re willing to pay per click influences your ad’s position on the search engine results page (SERP). Therefore, understanding your competition and crafting a strategic bidding approach is critical.


Understanding the Competition

Before launching a Google Ads campaign, it's essential to assess the competitive landscape. Identify who your main competitors are, analyze their ad copy, and examine their keyword strategies. Tools like SpyFu, SEMrush, or Google’s Auction Insights report can provide insights into your competitors' bidding behavior, helping you to gauge the level of competition for your chosen keywords.


If your competitors are bidding aggressively on the same keywords, you’ll need to decide whether you have the budget to compete at their level or if it’s more prudent to target less competitive keywords. In some cases, it may be wise to focus on niche markets where competition is lower, allowing you to capture a specific segment of the market more cost-effectively.


Bidding Strategy

Your bidding strategy should align with your business objectives. If your goal is to drive traffic quickly, a higher bid can secure top positions on the SERP, but this approach can be costly, especially in competitive markets. On the other hand, a conservative bidding strategy may result in lower ad placements, leading to fewer clicks and conversions.


A balanced approach is often most effective. Start by setting a reasonable bid that aligns with your budget and gradually increase it as you gather data on your campaign’s performance. Utilize Google’s automated bidding strategies, such as Target CPA (Cost-Per-Acquisition) or Target ROAS (Return on Ad Spend), to optimize bids based on your campaign goals. Regular monitoring and adjustments are crucial to maintaining a competitive edge without overspending.



Understanding the Customer Journey

To maximize the effectiveness of your Google Ads campaigns, it’s essential to have a deep understanding of your customer journey—the path a customer takes from awareness to purchase. Google Ads can be highly effective at different stages of this journey, but your strategy should be tailored to meet the customer where they are.


Awareness Stage

In the awareness stage, potential customers are just beginning to recognize a need or problem. They might not be ready to make a purchase yet, but they are gathering information. Google Ads can be used to build brand awareness by targeting broader, informational keywords. Display ads and video ads on YouTube, for example, are excellent for reaching customers in this early stage.


However, awareness campaigns will have lower conversion rates, as their primary goal is to introduce your brand to a wider audience. If your primary objective is immediate sales, these campaigns should be avoided (in the start) by more targeted efforts aimed at customers further along the journey.


Consideration Stage

In the consideration stage, customers are comparing options and researching solutions. Here, Google Ads can play a pivotal role in influencing their decision-making process. Search ads targeting medium-intent keywords and remarketing campaigns that re-engage users who have visited your website can be highly effective.


Tailor your ad copy and landing pages to address the specific needs and concerns of customers at this stage. Highlight unique selling points, customer testimonials, and special offers to differentiate your business from the competition.


Decision Stage

When customers are ready to make a purchase, they are in the decision stage. This is where your Google Ads campaigns can drive conversions most effectively. Bidding on high-intent keywords, such as those that include “buy,” “order,” "near me" or “schedule,” can capture customers who are ready to take action.


Ensure that your landing pages are optimized for conversions, with clear calls to action, easy navigation, and minimal distractions. Additionally, consider using Google Shopping ads if you sell physical products, as these ads showcase your products directly in the search results, making it easier for customers to make a purchase.



Industry-Specific Considerations

Certain industries may benefit more from Google Ads due to specific factors such as audience behavior, product lifecycle, or regulatory environment.


High-Intent Industries

Industries where customers are actively searching for solutions or emergency repairs to specific problems, such as legal services, healthcare, HVAC, auto repair or home improvement, can greatly benefit from Google Ads. In these industries, potential customers often have an immediate need and are looking for a quick solution, making Google Ads an effective way to capture leads at the moment of intent.


For example, someone searching for “emergency plumber near me” is likely experiencing an urgent issue and ready to hire a plumber immediately. In such cases, appearing at the top of the search results can result in a quick conversion, making Google Ads a highly valuable channel.


Regulatory and Compliance Factors

Some industries are subject to strict regulations regarding advertising, such as finance, healthcare, and pharmaceuticals. Google Ads provides tools and options to help businesses in these industries comply with regulations while still reaching their target audience. For example, Google Ads offers certified ad formats for certain industries that meet regulatory requirements, ensuring that your ads are compliant while still effective.


Businesses in regulated industries should carefully consider Google Ads as a channel, as it does not allow for demographic targeting due to compliance management, increasing the risk of wasted ad spend.


Conclusion

Google Ads can be a powerful tool for driving business growth, but it’s not a one-size-fits-all solution. For small and medium-sized businesses, the decision to use Google Ads should be based on careful consideration of the above key factors: the search volume and purchase intent of your target keywords, the pricing and profitability of your products or services, the level of competition in your market, and a deep understanding of your customer journey.


In addition, you must also understand the Google Ads platform well to extract data, analyze trends and optimize your Google Ads campaigns based on your findings.


By evaluating these conditions and aligning your Google Ads strategy with your business goals, you can maximize the effectiveness of your campaigns and ensure that your marketing dollars are well-spent. Whether you’re looking to drive immediate sales, build brand awareness, or engage customers throughout their journey, Google Ads has the potential to deliver significant value—provided it’s used under the right circumstances.



 

Article written by Basar Optimization Inc, a digital marketing agency based in Calgary with offices in Edmonton, Chicago and New York.

Basar Optimization specializes in Search Engine Marketing (Google Adwords, Facebook Ads and LinkedIn ads) and Search Engine Optimization. Click Here to book a free consultation today


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