Whether Google ads are worth the money, or not, depends on two factors. First, there’s what you pay for the ad on Google AdWords. On Google this is pretty simple. You pay by the click – meaning you pay, if and only if, people click on your ads. You bid against other advertisers in the Google auction. Second, it depends on what happens after the ad click. If they land on your website, and convert to a paying customer and if that conversion is worth more at the end of the process (including all costs) then Google advertising is, indeed, worth it. If not, it’s not worth the money. After all, you must make more money from advertising than you are spending on advertising for it to be worth the money. So, in summary, whether or not Google ads are worth the money is answered by the proverbial: it depends.
Let’s dig a bit deeper. What Do You Mean By Worth it?
People who ask whether or not Google ads are worth the money are often really asking whether any type of advertising is worth it, and/or are reacting to the high cost per click for some keywords on Google AdWords (AdWords is the official name for Google’s advertising product). So, let’s look at that first issue. Any expenditure as a business is “worth it,” if (and only if) you make at least $1.01 for every $1.00 you spend. Easier said than done, and easier to calculate than you’d think. But the cost per click you get on a Google ad must be exceeded by the revenue per click generated by that ad, at the end of the day. It doesn’t matter if you pay $100.00 per click for a very expensive keyword like car insurance, if you make $100.01, just as it doesn’t matter if you pay $.55 per click and make only $.56 per click on a less expensive keyword like ice cream. What matters is whether there is profit in it. That’s why smart advertisers on Google track their conversions, and track not their cost per click so much as their cost per conversion.
The next issue has to do with emotions. People often look at the high cost of clicks on Google and gasp! But how can they charge $100 per click for such-and-such keyword? Well, that’s what the market will bear. It’s as ridiculous as getting upset that a Tesla costs $100,000 and a Toyota costs $25,000. Both can be good cars, and both do various things (e.g., transport you), but one has more “brand appeal” than the other, and both appeal to different market segments. What matters (to both the Tesla dealer and the Toyota dealer) is whether when you leave the lot, he is $1.00 richer or not. If so, all is good and it’s worth the money. If not – it (and AdWords) isn’t worth it.