Setting up your small business for Google advertising can get more eyes on your product than you’ve ever imagined. Google controls over 75% of the search engine market, with users conducting over 3.5 billion searches per day.

That means a lot of potential impressions, traffic and conversions for your site if used correctly. 

We’ll teach you the basics: how Google ads work, how much it costs and how to advertise on Google effectively to bring in a high return on investment.

What Is Google Ads?

Google Ads (formerly known as Google Adwords) is an advertising service featuring businesses on Google’s search engine results pages (SERPs) and across their partner sites.

The ads show up at the top and bottom of each page and look similar to organic results. The only difference is a small green “ad” disclaimer meant to ensure searchers are aware it’s a paid advertisement.

How Google ads work to show relevant businesses.

The placement of Google search advertising results makes them appealing to searchers. According to a WordStream Research study, Google ads are twice as likely to be clicked on than organic results for  high-intent commercial searches (consumers looking for a specific product/ service to fill a need).

How Does Google Ads Work?

Google Ads works by displaying a business’s advertisement when someone searches for the keyword they bid on.

For example, someone buying their first car may type “buying a used car” into Google. The top of the page will have ads for online resources, like Cars.com, for used car buyers. These companies rely on high web traffic to make money selling ad space on their site. They use Google advertising to bid on keywords consumers use, ensuring they get their ad in front of those likely to click through to their website.

(For more info on how you can advertise on other websites including YouTube and Gmail, read our blog on Google display ads.)

Google advertising gets your small business in front of the right customers.

How Does the Bidding Process Work?

Google Ads uses a pay-per-click (PPC) model, meaning you bid on keywords and pay each time your ad is clicked, seen or otherwise engaged with. The process is simple, but it takes more than just what you pay into account. 

How much your Google ads cost and your placement in search results are based on your “ad rank,” which is determined by multiple factors.

Maximum Bids

Google PPC bids aren’t like a live auction but are “max” bid amounts. In other words, you’re setting a maximum limit that you’re willing to pay for a certain keyword. If competitors bid more than you, the cost per click (CPC) rises, and they have a leg up in the bidding process.

Small business tip: You can also set your account to pay per impression if your goal is to raise awareness of your brand. This means you pay every time a customer sees your ad (at a much lower price), instead of when they click. Businesses looking to drive video views (or other actions) can pay by type of engagement, as well.

Ad and Landing Page Quality

The quality of both your ad and the webpage/site it links to are also weighted heavily in your ad rank.

Even if you’re willing to pay double what your competitors will for a certain keyword, a poorly optimized ad or landing page will make it harder to win ad placement.

Focus on making sure your ad and landing page match the keywords and search intent of the customers you want to reach. Doing so raises your quality score, which Google makes transparent so you can improve your chances of being seen. 

Higher quality scores can even lower your Google CPC, increasing the ROI on your ad spend.

Thresholds

For each search, Google assigns a minimum quality threshold that ads must meet. If their quality score doesn’t reach it, Google won’t show it. 

Some of the criteria that Google uses to create these thresholds include:

  • Ad quality
  • User location and device type
  • Topic and nature of the search
  • Other searches related to topic

All of these come together to provide the ad threshold. Ads placed above organic results have a higher threshold than those placed at the bottom of the SERP.

Note: Even if your ad is the only one eligible to show for a certain search, it may still be expensive. In this case, Google sets a reserve price based on how high the threshold is. You’ll be required to pay that price to run an ad, no matter what.

Ad Formats and Extensions

The impact that any ad extension (such as phone numbers or business locations) have on your ad’s performance is also taken into account.

If your ad is more likely to have a high click-through rate (CTR), it will be given a higher ad rank

Google wants users to find the right answers, so any resource that helps them find them creates a win all around.

How Much Does It Cost to Advertise on Google?

The amount it costs to advertise on Google will fluctuate by the keyword and the settings you included in your PPC campaign. All things considered, the average is usually around $2-$3 per click for most industries.

For highly competitive industries like the legal, real estate and employment fields, some searches can cost as high as $10 per click. Popular keywords like “best car dealership near me” will also have higher costs due to the competition for them.

The great thing about Google advertising is that you only pay when you get the result you want. On other platforms like Facebook, you pay a set amount and hope your post reaches the right audience to generate clicks. This makes Google more affordable and ensures you don’t waste as much of your ad spend.

How to Advertise on Google in 5 Steps

Now that you have an understanding of how Google Ads works, it’s time to learn how to advertise on the platform. 

We’ll start with the basics of getting your first campaign up and running. For a more in-depth look, read our guide on Google Ads tips and strategies.

Google offers an “express” option for less experienced business owners, but it’s best to learn how to do it yourself. The express route takes away autonomy for audience targeting and bidding, which can lower your ad’s performance.

The longer process only consists of 5 steps. When you’re done, you’ll be ready to start generating and converting leads from Google advertising.

Get Your Business on Google

Tens of thousands of owners type in “how to get my business on Google” in the search engine itself every year. The answer? It’s simple: Set up a Google My Business account.

This is one of the first things any business should do as part of its marketing strategy. A Google My Business account not only gives you access to Google Ads but also the rest of their suite of business tools, including:

  • Google Analytics (for evaluating your web traffic)
  • Google Search Console (for evaluating your performance in search results)
  • Google Tag Manager (for managing and tracking tags used in your website code)
  • Custom Gmail accounts and more

A My Business account also sets you up with a free Google site and business profile. These mainly offer free advertising on Google by allowing your business to be seen when people search for you or a related keyword. 

Adding in your location within your profile also allows you to advertise on Google Maps using local search ads for customers in your area.

Step 1: Select a Campaign Type

Once you setup your account, Google Ads will prompt you to create your first campaign. To do so, you have to start by selecting the campaign type you want.

  • Search: Normal PPC campaigns for ads on SERPs.
  • Display: Banner ads and other visuals placed on Google’s partner sites.
  • Video: Ads that run before and after Youtube videos.
  • App: Ads tailored to promote apps on the Google Play store.
  • Shopping: For businesses who want products displayed on Google’s “shopping” tab.

Your industry and product will determine which of these you utilize, but most businesses start with Search campaigns.

Step 2: Choose a Campaign Goal

The next step is choosing the goal of your Google Ads search campaign. There are 3 types for search: sales, leads and website traffic.

Knowing how to advertise on Google can generate leads, sales and website traffic.

Choosing “sales” will optimize your settings to target customers who are ready to make a purchase.

The “leads” setting provides recommendations for businesses looking to generate qualified leads. This includes positioning your business as a solution for consumers trying to address issues your product or service solves. Ad extensions like phone numbers and addresses are used to bring these leads to you.

If your goal is to get eyes on your website, choose the “website traffic” goal. This will help to drive CTR so you can convert customers with your site content.

Try and choose the best way to advertise on Google that’s specific to your business. Evaluate your product, industry and more to determine the right strategy.

Step 3: Create Your Campaign Settings

The campaign settings you choose will determine how much your Google ads cost and their performance.

Location

Location is an important part of your Google search advertising strategy. You want to make sure the right people see your ads, and that means different things for different businesses.

A large, multinational company would want their ads to be seen across countries and possibly even continents. On the other hand, a local bakery wouldn’t want to pay for someone two states over to click their ads. You can also exclude locations if you don’t want your ads to be seen by people in certain areas.

Google will give you an estimate of how many people your ad can reach based on population and search data. Use that to evaluate whether or not targeting a specific region will be worth a portion of your Google Ads budget.

Use location settings to advertise on Google Maps.

Audiences

Google PPC campaigns allow you to choose who you want to target. You can choose to reach consumers by age, marital status, education and interests.

This allows you to narrow your reach further when you know exactly what your target demographic is and what they’re looking for.

Budget and Bidding

Setting a budget and maximum bid limits how much it costs to advertise on Google. As we know, Google CPC varies. That makes it important to set a limit, so your spending doesn’t get out of control if a keyword’s CPC value skyrockets.

First, set your daily budget. A good rule of thumb is to take your monthly budget and divide it by 30.4, the average amount of days in a month.

Setting your maximum bid can lower your Google Ads cost by ensuring you don’t spend your whole budget on just a few clicks. Your max bid does affect your quality score. If it’s much lower than your competitors, you may have trouble winning ad placement.

Extensions

Adding site link, callout and phone number extensions can help drive CTR for your ad. The addition of these elements also improves your ad rank, which can push you over other businesses bidding more for your keywords.

Step 4: Pick Relevant Keywords

Choosing relevant, popular keywords is the key to effective Google advertising. Keywords make or break your ad strategy, as they do in organic search engine optimization (which, if done correctly, is like free advertising on Google).

Google will give you a list of suggestions based on your site and what products and services you input into the embedded keyword search tool. These are a great resource for those new to digital marketing and setting a PPC advertising strategy.

You can also choose negative keywords that you don’t want to be associated with. For example, a for-profit software business wouldn’t want to waste ad spend on keywords including the word “free” in it.

Small business tip: If you want to dive deeper and find more keyword opportunities, use Google Keyword Planner. This free tool allows you to see data on search volume, potential impressions and average CPC for long-tail keywords that provide more opportunities for small businesses.

Step 5: Write a Great Ad

Now that you’ve taken care of all the behind-the-scenes work it takes to advertise on Google search, it’s time to focus on what your potential customer will see—your ad.

You can do everything else well, but the best way to advertise on Google includes writing a compelling ad that draws clicks. Ensure your ad copy makes the reader want to take action. Each click lets Google know that your ad is both relevant to the customer’s search and is performing well. Both of those factors raise your ad rank, lowering your CPC and allowing you to be placed higher on future searches.

Writing great ads ensures your Google advertising campaign gets results.

There is limited space, so you have to make each word count. You can get up to 3 headlines of 30-characters each and 2 descriptions of 90-characters each. Keep in mind, however, that the device the user searches on can limit whether they see that third headline or second description.

Make sure to use the keywords you’re targeting, so Google knows the ad is relevant to the user’s search. This will also help show the user that you have the answer to their specific question.

Optimizing Your Google Advertising Campaign

Once you’ve learned how to advertise on Google and created a great ad, you can launch the campaign and optimize it as time goes on.

Focus on how changes to your quality score and how that affects how often you beat the competition for top ad placement. If you’re not performing well, it may be a good idea to take another look at your Google advertising strategy and ad copy. 

You can use Google Analytics to track and record data from your ad. There, you can see reports on CTR and conversions that can help you optimize current and future campaigns.

Remember, much of how Google Ads works is trial and error. Don’t be discouraged if your first campaign doesn’t get the results you hoped for. Take that experience and learn from it, and you’ll have a lucrative digital marketing platform in no time.