In this article, How Much Does Google Adwords Cost?, I will discuss that if done correctly, your Google ads won’t cost you anything. Your Google ads campaign should make you money every single time because in Google advertising, the one who can afford to acquire a customer at the highest price is gonna win in Google Ads.
Having said this, the right questions to ask are, “How much can I afford to pay to acquire a customer?” and “How many customers do I want to get in a month?”
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How Much Does Google Adwords Cost
When it comes to running your Google ads campaign, you need to understand the numbers. You should do the math ahead of time and calculate the numbers to determine how much can you pay to acquire customer.
Once you know the numbers, it is very easy to systematize your ad campaigns, which may mean that you can make $3 out of $1 that you may spend on Google ads. You can scale your business with Google Ads as the main driver.
Know the average customer lifetime value
You have to understand the customer lifetime value to successfully run your Google ads campaign so you can earn from it and scale your business up.
How much can I afford to acquire a customer?
For example, you have an average lifetime value of $1100 per customer based on the buying value and also the referrals that every customer will bring in to your business for a lifetime. Based on this data, you need to ask yourself, how much can I afford to acquire a new customer?
The average lifetime value, we based that value in a year. So for example I want to acquire 50 customers, we compute that by 50 x $1,100 so we have $55,000.
To get 50 customers we need to have 200 leads, just as an example. If you’re doing Google Ads, it is important to have a higher closing ratio. Let’s say we take an average of 5%, which means that we need 4,000 clicks to the landing page.
You will know the cost for each click when you do the keyword research. I suggest you go ahead to Google’s keyword research tool to find out the average cost per click. Once you have that CPC value, you can enter that under the CPC section.
For example, the average cost per click is $10 and the click-through rate is about 10%, then our ad budget is $57,000. The cost per lead is $280 per lead. now we’re spending $57,000, which means this is not profitable.
In this case, we need to go for less competitive keywords. Like for example, we can get $6.50 per click and about 13% click-through rate and about 30% conversion that leaves an ad cost of $30,000 to acquire $55,000 revenue. At a granular level,we are looking at $600 to generate $11,000 in revenue.
Can you become profitable spending $600 to generate $11,000 of revenue? When answering this question, you also need to take note that you’re competing in the auction against your own industry, along with your competitors who are bidding for the same keywords and they usually have the same profitability level as you do.
You need to have a really high value to generate as much revenue as you possibly can and have a really good sales model to generate revenue and to offset the cost of Google ads.
Running a successful Google ads campaign is is about one thing: “He who can acquire the customers or afford to acquire the customers at the highest price is going to win.” This is because you can easily scale the campaign.
So next time you are asked, “how much does Google AdWords cost?” You can answer that it is not how much it’s cost, but rather how much can I afford to spend to acquire a customer.”
Google ads does not cost you any money, it is a revenue source for your business. When you scale your campaign like that, you can earn more revenue in return. It depends on how how well you position and you structure your ads campaign to take advantage of that business.