In the era of digital technology, when consumers spend a significant part of their time online, every business strives to attract as many customers as possible and increase its visibility. One of the most effective tools for achieving this goal is advertising through Google Ads. This powerful platform allows you to display your ads to users who are actively searching for the products or services you offer. By placing ads on Google Ads, you not only increase traffic to your website but also have the opportunity to attract a targeted audience ready to make a purchase. So, how exactly does Google Ads work, why is it a beneficial investment for a business, and which strategies will help achieve maximum results and increase profits? Let’s explore these questions in more detail.
How Google search works
This is a complex but extremely important process that happens in fractions of a second. When a person enters a query into Google, whether it’s a specific question or just a keyword, they are looking for an answer, information, a solution to a problem, or a particular product. In response, Google, using complex algorithms, analyzes billions of web pages indexed in its database to provide the most relevant results.
Search results can be divided into two main types:
- Organic results – these are websites that rank naturally based on many factors such as content quality, site authority, keyword relevance, SEO optimization, user-friendliness, and many others. Reaching the top of organic results requires time, hard work on content, and an SEO strategy.
- Ad results (Google Ads) – these are companies that pay Google to have their ads appear at the top positions of the search engine results page (SERP), as well as on other platforms within Google’s advertising network. Ad results are usually marked with a small “Ad” or “sponsored” label.
Google Ads allows businesses to instantly appear on the first page of search results and attract the attention of potential customers who are actively looking for exactly the products or services they offer. This is especially important for new companies that need to quickly establish a flow of customers, or for companies that want to promote specific promotions or products. Thanks to Google Ads, businesses can control who, when, and where their ads are shown, as well as accurately measure the effectiveness of their advertising campaign. This allows for optimizing costs and maximizing return on investment.
Why you should use Google Ads?
While search engine optimization (SEO) is undoubtedly an important component of successful online promotion, it requires significant effort, time, and constant improvement. Building organic traffic is a long-term prospect. While you work on optimizing your site and content for search engines, advertising through Google Ads provides instant results. It allows your business to almost immediately appear in a prominent position in search results and, accordingly, acquire customers right after launching the campaign. This is especially valuable for new businesses, for promoting seasonal offers, or for quickly testing new products or services.
Moreover, Google Ads operates on a pay-per-click (PPC) model, which makes it a financially advantageous tool. This means you only pay when a user is genuinely interested in your offer and clicks on your ad, visiting your site. Therefore, you do not spend money on displaying ads to those uninterested in your product or service. This allows for effective management of the advertising budget, clear control over expenses, and measuring the return on investment (ROI). The PPC model makes Google Ads accessible to businesses of any size, from small startups to large corporations.
How the bidding system works
Advertising in Google Ads operates on an auction principle, where advertisers compete with each other for the right to display their ads for certain keywords. The more advertisers interested in a particular keyword, and the more users searching for that word, the higher its cost. This is because competition for the attention of potential customers increases. For example, imagine you are willing to pay 40 UAH for each click on your ad related to the keyword “buy sneakers.” However, if your competitor is willing to offer 44 UAH for the same click, their ad will likely appear higher in the search results, giving them more chances to acquire a customer.
But it’s not just the bid amount that determines who gets the best position and the most visibility. Google considers many other factors to ensure users receive the most relevant and useful results. The quality of your ad plays an important role, which includes clarity, attractiveness of the text, and the presence of relevant extensions (such as links to specific sections of the site, contact information, promotional offers, etc.). Additionally, Google analyzes the relevance of the ad to the user’s search query – whether it matches what the person is looking for. Finally, the convenience and relevance of the landing page, where the user lands after clicking on the ad, are of great importance. If the page loads quickly, has a clear design, relevant content, and easy navigation, it significantly increases the likelihood that the user will stay on the site and make a purchase or take another targeted action. Google Ads evaluates these factors and assigns each ad a quality score (Quality Score), which affects the cost per click and the ad’s position. Thus, even with a lower bid, you can achieve better results if your ad is of higher quality and more relevant.
How to evaluate the profitability of advertising
Evaluating the profitability of advertising in Google Ads is a key aspect of ensuring the success of any advertising campaign. To understand whether the advertising is profitable and whether the money spent is worth it, it is necessary to carefully calculate the ROMI (return on marketing investment). This allows you to determine how effectively your advertising works and whether it generates profit.
Imagine you decided to invest in Google Ads, allocating 4000 UAH per month for advertising. This is like investing in a new tool for attracting customers. When someone searches for “buy a coffee machine” on Google and sees your ad, then clicks on it to go to your site – this is called a “click.” Google charges for each such click, and in our case, each click costs 20 UAH.
If your budget is 4000 UAH, and the cost per click is 20 UAH, then you will get 200 clicks per month (4000 UAH / 20 UAH per click = 200 clicks). This means that 200 potential customers visited your site thanks to the advertising. But not all visitors make purchases. Imagine that out of these 200 clicks, only 10 people bought a coffee machine.
This is called a “conversion” – turning a visitor into a customer. The number “10 clicks” is just an example used to simplify calculations.
To calculate the profitability of your advertising, we will perform the following steps:
- Total advertising costs: 4000 UAH
- Total revenue: You sell the coffee machine for 2000 UAH, and its cost price (purchase cost) is 1200 UAH, so the profit from each coffee machine is 800 UAH (2000 UAH – 1200 UAH = 800 UAH). Since you sold 10 coffee machines, the total profit was 8000 UAH (10 customers * 800 UAH per customer = 8000 UAH).
- Net profit: Total revenue (8000 UAH) minus advertising costs (4000 UAH) – 4000 UAH.
- ROI calculation: (Net profit / Total costs) * 100% = (4000 UAH / 4000 UAH) * 100% = 100%
Example in USD:
- Total advertising costs: $1000
- Total revenue: You sell the coffee machine for $500, and its cost price (purchase cost) is $300, so the profit from each coffee machine is $200 ($500 – $300 = $200). Since you sold 10 coffee machines, the total profit was $2000 (10 customers * $200 per customer = $2000).
- Net profit: Total revenue ($2000) minus advertising costs ($1000) = $1000.
- ROI calculation: (Net profit / Total costs) * 100% = ($1000 / $1000) * 100% = 100%
In this example, your ROI is 100%. This means that every hryvnia invested in advertising returned to you with another hryvnia of profit. The most important thing is to track your own data, because the better your advertising is set up, the fewer clicks are needed to attract one customer, and accordingly, your ROI will be higher.
“Subtle” nuances of setting up advertising for better results
Google Ads allows you to show ads only to users who are genuinely interested in your product. For this, the following options are available:
- Geo targeting – showing ads only in certain cities or regions.
- Time targeting – choosing the best time for displaying ads.
- Device analysis – separate ads for mobile or desktop users.
Additionally, it’s important to work with specific keywords.
Optimizing Ads through A/B testing
For maximum return on advertising in Google Ads, constant optimization is necessary, and here A/B testing comes to the rescue. This method allows you to identify the most effective ad versions, significantly improving the performance of your advertising campaign. The essence is simple: two (or more) slightly different versions of the same ad are launched simultaneously. For example, you can test different headlines, descriptions, calls to action, chosen keywords, or even direct traffic to different landing pages. Google Ads evenly distributes the display of these versions among users, and after accumulating sufficient data, an analysis is conducted. It’s important to pay attention to the click-through rate (CTR), which shows the percentage of users who clicked on the ad after viewing it. A high CTR indicates that the ad attracts attention and meets the audience’s queries. Additionally, it’s necessary to analyze the conversion rate, which shows the percentage of users who, after visiting the site, performed a targeted action (purchase, registration, ordering a service). The higher the rate, the more effectively the landing page encourages action. It’s no less important to track the cost per conversion, which shows how much it costs to attract one customer. By analyzing these indicators, you can determine which ad version works better. The successful version becomes the baseline, and then a new version is created for further testing with other changes. This continuous process allows for gradual optimization of the advertising campaign, increasing the number of clicks and conversions, reducing costs, and better understanding the needs of the target audience. The use of A/B testing is an investment in the effectiveness of your advertising, which pays off with significant improvements in results and contributes to business growth.
Sales funnel in Google Ads
To maximize sales, it’s necessary to understand user behavior:
- Initial stage — the person is looking for a product or service
- Middle stage — the user clicks on your ad and gets acquainted with the offer.
- Final stage — making a purchase or placing an order.
Optimizing each of these stages helps increase conversions and make advertising more effective.
Google Ads is a powerful tool that helps businesses attract customers quickly and effectively. Thanks to precise settings, analytics, and testing, it is possible to significantly reduce costs and increase profitability.