Google’s main revenue is from advertising – which is $54.5 billion compared to its total revenue of $69.1 billion, in Q3, 2022. In Google Ads, there are three main types – Search, Display and Video.
Search is typically text-based, Display is image and Video for those you see on YouTube. If there’s a business-owner who wants to advertise her clothing store (for instance), she can run a Search, Display or Video campaign. As an SEM (Search Engine Marketing) agency, we recommend they start with a Search campaign.
It's All About Alphabets
When it comes to text-based ads, the business-owner can select a few keywords that her customers are likely to type in. Let’s say she’s targeting all India because logistics is in place, her ad may appear in Search results when a user types in “traditional sarees for sale”.
Now, our client here pays Google (or any other Search Engine) only when the user clicks on her ad. If the user doesn’t click on the ad, she doesn’t have to pay. This is called PPC or Pay-Per-Click model which is usually quite effective.
Having a framework in Search campaigns may help organise others like Display and Video. In Facebook (Meta), the keywords are called “interests”.
Creating an ad campaign is quite simple these days. Also, there’s complete transparency in the costing part, so the client can turn off the campaign anytime she wants to. There’s also daily-budgets and many other control factors to ensure the funds don’t get exhausted too soon.
Conversions
With any form of marketing, all that matters at the end of the day is revenue. The money made based on how much was spent. Advertisers are looking to spend $1 and make $10 off it.
Coming back to our Indian business-owner, if she sets a daily budget of ₹1,000, the ads might be shown 100 times (impressions) compared to those who read and actually click on that link – let’s say 10 of them click and visit the website, she’s now paying only for those 10 clicks.
From these 10 clicks, if one customer pays for the item, it not only covers the advertising cost, but also makes a substantial profit. This purchase made is called a conversion.
As an ad agency, when we report on the campaign’s performance, we talk about the cost per click and cost per conversion. Based on our optimisations, we aim to reduce the cost, while increasing the number of sales (or conversions).
Ad Grants
So that’s a very broad overview of how Google Ads works and why the PPC model has been quite successful for Search Engine companies.
The conversion may also be someone filling up a form, as opposed to making a purchase. When we consider NGOs and nonprofits, the organisation might be looking for donors and volunteers.
In this case, there is a separate Search campaign created for organisations that quality for an Ad Grant account. The maximum Cost Per Click (CPC) is set at $2 and many other such limitations.
We would love to setup this ad grant account for nonprofits for free. If you have a built-up space (like a pet adoption centre or a healthcare facility, for instance), we’ll also be happy to create a Matterport virtual tour for you, without any charges. Here’s a sample:
