Google Ads Cost UK

google ads cost uk

The natural question when you’re looking at running ppc on Google in the UK is “Google Ads cost UK”. The search results (serps) often contain US based websites, even when we’re searching from the UK, so adding UK to the search term helps to refine the results.

And the answer is – it depends but the average is somewhere between 50p and £2 per click from my experience.

In general, the more competitive the market sector is and the more money there is to be made from a sale, the higher the click cost tends to be.

So, notoriously, clicks in the legal space can easily cost up to £50 per click.

But if you’re selling socks, clicks will be closer to 15p.

So how do you work out what a click is going to cost you, how many ad impresssions are available monthly, what the likely click through rate is and what your cost per lead or sale will be?. All of those numbers will be needed to work out your budget.

And if you’re already running Google Ads, how do you know how well you’re doing versus the average?

Google Ads Budget Forecasting

The average return on ad spend for an account is around 5.5x although I’ve seen accounts that run at 3.5x work commercially and I’ve seen accounts that run at over 50x work too. Very high returns on ad spend more often than not correspond to low profit margin sales and low returns on ad spend usually correspond to high profit margin sales.

So as a quick rule of thumb, if you want to make £100,000 of revenue monthly via Google ads, your ad budget will need to be around £8,500 pm to £20,000 per month.

£20,000 a month ad spend implies a 5x return and £12,500 a month implies an 8x return, but obviously the burn rate is very different.

Which is why companies engage people like me to help them.

It’s a situation that I’ve encountered a number of times. The PPC account is being run in house and they’re spending £20k a month on ads hitting a 5x return.

I take over and optimise the account and now we’re hitting 8x so the ad budget drops by £7,500 a month, less my £2,000 pm fee means the company is £5,500 a month to the good.

More importantly, there are now options to use that saving to get even more sales at an increased return.

And that’s the way that you can begin to dominate a market online.

The possible success in commercial terms of any google ads account and the campaigns and ad groups within them rest on a number of variables:

  • Profit Margin
  • Lifetime Customer Value
  • Keywords
  • Number of Available Ad Impressions
  • Ad Copy and Click Through Rate
  • Landing Page
  • Conversion Rate
  • Return on Ad Spend

Let’s look at them one by one:

Profit Margin:

A lot of businesses operate on a 33% profit margin, meaning that if they turn over £300,000, after expenses there’s £100,000 left. The kicker here is the owners salary. Limited Company owners used to take a low salary and the majority of their income in dividends because it was tax efficient. Recent changes mean that dividens have lost their appeal somewhat.

Business owners who are doing well financially also have to consider tax, ie. how to extract profits from the company whilst minimising the tax bill. One way to do that is to put money into a pension scheme. Currently in the UK, you can contribute up to £40,000 a year, or the same amount as your salary, whichever is lower. So if you’re making 6 figures a £40,000 salary and £40,000 pension contribution makes sense, topping up income with dividends if needed.

I digress a little, but owners salary and pension contributions is obviously a factor in play here.

So let’s say that you’re doing the above numbers and are looking at running Google Ads to facilitate growth.

Given that your fixed costs will not increase, it’s highly likely that you’re profit margin on additional sales will be more than 1/3. Quite likely in the 50-66% range.

Work out the number for your business and use it for your calculations.

Lifetime Customer Value (lcv)

Many businesses ignore this and that’s fatal when you’re paying for advertising.

If you’re a business where a customer pays you £50 a month (a dentist for example) then lcv is likely to be around £6000

If you look at it as a customer is worth £50 then you can probably only afford to spend £10 to acquire a customer. If you look at the reality over time (£6,000), then you can probably afford to spend £150 to £300 to acquire a customer.

Why is this distinction important?

Well, say for dentists, the cost to get your ad in the number 2 spot is £5 a click. If you can only afford to spend £10 to get a customer, then you can’t afford the number 2 spot. You can afford to pay £1 a click, which means your ad appears on page 2 of Google.

Where’s the best place to hide a dead body?

The second page of the search results – because nobody ever goes there.

But if you look at lifetime value, now £5 a click doesn’t seem so bad and if it costs you 30 clicks to generate a customer, you’ve got your money back in cash flow terms in 3 months and after that, it’s profit.

Keywords:

The crux of the matter. If someone Googles “replacement windows twickenham” and you happen to sell replacement windows in the Twickenham area, you want to be visible when they type it in. Because if you’re not, your competitors are.

You’ll find lots of tutorials and tools online to help you with keyword selection and they are a great starting point, but they are not going to be the key to profitability. Your Google Ads account and the feedback that you get on your selected keywords are.

Let me expain:

There are four different types of keyword match avalaible to you:

  • Broad match
  • Broad match modified
  • Phrase match
  • Exact match

In theory, this is how they work:

Broad match, by definition will show your ads when anything remotely related to your keyword is searched. So if your broad match keyword is dentist leeds, you’ll find that your ads show up and get clicked on for, for example: dental techncian leeds, denture repair leeds, free dentist leeds, home remedies for toothache, dental assistant jobs etc.

Which can be useful.

People search in all manner of wierd and wonderful ways, and broad match allows you to put your ads in front of anyone who might be at least somewhat interested in what you have to offer.

For small catchment areas, or search phrases where the indicated amount of monthly searches is low, you’ll reach all potential customers.

What you’ll need to do over time is check the search terms report in Google Ads and add negative keywords where you see searches that are unrelated to what you do.

Broad match modified keywords refine this process. So for example +dentist +leeds tells the google ads algorithm to show your ad when someone types in any search phrase which MUST contain the words “dentist” and “leeds”.

Phrase match keywords tighten things up in that the words must be in order in a search phrase. So the phrase match keyword “dentist leeds” means that your ad would appear if someone searched for “free dentist leeds” for example. But would not appear if someone typed in “Leeds dentist”.

Finally, exact match keywords are exactly that (sort of). If your exact match keyword is [leeds dentist], then your ad will only show, if someone types that exact phrase into Google.

When working with a UK dental practice a couple of years ago, I explored what the competition was doing, so manually google numerous dentist + location terms.

What I found is a caveat to the keyword settings and it’s this.

USA based dental practices were showing their ads when I googled, from a UK computer, “dentist Lancaster”.

Now there is a city called Lancaster in the USA, but clearly, I’m not going to hop on a plane to visit them when I’ve got dental issues.

In this case, their location targeting was poorly defined.

So the keywords you set, define when your ads will show for the range of search phrases that potential customers type into Google.

The Search Terms report, shows you those phrases and gives you data on the exact search terms that convert. That is gold dust.

Number of Available Ad Impressions

It depends on how popular your niche is and therefore how many people search google each month with search queries related to it.

If your niche is knitting patterns for jumpers for terrapins, you’re going to have to wait a long time for your ad to show up and even longer before someone clicks on it.

If you’re an emergency plumber in a city, provided you get your numbers right, you’re going to be very busy.

And that means that your location is a factor if you provide local services, but it’s not if you sell nationally.

For local services, if you live in an area where there are 100,000 people or more within a 20 mile radius, Google Ads will likely work for you. Competition will be lower for one thing and a lot of small businesses just are not on the ball when it comes to online advertising. Do it right, and you’ll corner the market. Ignore it and another busines, eventually will hire someone like me.

And then you’re in trouble.

How do you know how many ad impressions are available?

Short answer – you don’t until you run a test to find out. Stock answer is to use Google’s keyword planner which is supposed to give you those numbers, as are a number of online tools.

All I can tell you is that all of them, including Google’s keyword planner are wildly innacurate.

You really do have to run a test campaign to find out. The good news is that’s easy to do and you can find out what the real data is by running a test for a day or two. It will cost you maybe £100, but then you’ll know for sure. You might even get a conversion or two 🙂

Ad Copy:

You have a limited amount of space into which to fit your ad copy. It has to entice people to click on the ad. At the same time, you can’t over promise in the ad, because if the landing page doesn’t re-state what your promise is, you’ve just wasted a click.

A common problem that I see with many accounts is too many ads. If you have ten ads for example, you’ve got to get at least 200 clicks on each one in order to know which ad works best. That’s 2,000 clicks and if a click costs £2 ., you’ve just blown four grand testing ads.

My advice is test 3 ads.

Look at the data after each ad has had 200 clicks, or thereabouts, and make a decision on which the best ad is. That’s a combination of click through rate and conversions, or more accurately return on ad spend.

Keep the winner and add a variation.

Keep doing that.

I’ll often find that one ad will outperform any other by a factor of 2-5x. That can be the difference between a break even campaign and making a solid profit.

Click Through Rate:

So now your ads for “outside catering liverpool” are showing up when someone makes that search on Google. Click through rate is the number of times people click on your ad divided by the number of times your ad shows in the search results.

So if your ad shows up 100 times and 5 people click on it, your click through rate is 5%. And if one person clicks on it, your click through rate (ctr) is 1%

Why is Click Through Rate (CTR) Important?

Because if nobody clicks on your ad, Google doesn’t make money, so they’ll drop your ad position down till nobody sees it, replacing it with ads that people do click on.

Which means that you can heavily reduce the cost of Google Ads if your ad entices people to click on it.

And that the ad in the number one position, might be paying less per click than the ad in the number 2 position.

So obviously, getting people to click on your ads is key.

Landing Page:

You send traffic from clicks on Google ads to specific pages on your website.

Back in the day, you could send people to your home page and make a profit, but that’s unlikely to work now.

You need synergy between, the keywords that you choose and hence the search terms that your ads show for: the ad copy, and the information on the landing page.

If there’s a mis-match, you’ll find that you have poor conversions.

In simple terms, and taking it to extremes, if your landing page offers a “no brainer” deal to consumers, or businesses, you’re going to get great conversions. If your landing page is blank, you’ll just burn money.

Optimising a Google Ads accounts is mainly based around what happens when that traffic actually hits your website. The best Google Ads account in the world can’t make a poor landing page convert.

Conversion Rate:

The number of people who take a desired action ie. buy or enquire expressed as a percentage of people who click.

Every variable in the whole process affects the conversion rate. Your aim is to optimise every variable to improve it.

Return on ad spend:

Returns us to the initial question “google ads cost UK”

It doesn’t matter what the ads cost, provided that they give you a positive return on ad spend that’s acceptable.

I’ve taken over the management of numerous Google Ads accounts where bids and hence cost per click were set way too low. They were struggling to turn a profit. Sometimes paying more for a click will provide you with a much higher return.

The key is knowing how to work with the data you have to make that happen.