How does Google advertising work?

Marc Weisinger
Marc Weisinger

This article is accompanied by our webinar — Market Logic: Performance marketing foundations. You can access the webinar here.

A woman smiles at her computer in front of a background showing analytics and data

I tried Google but it didn’t “work”. I hear this a lot. Advertising is seen as a fundamental need for all businesses, yet at the same time, it progressively gets more nuanced, complex, and difficult. 

The goal of this article is to build the solid foundation of terms, metrics, concepts, and philosophies necessary to have an informed conversation on performance marketing. We’ll be using Google Advertising products as our focus since it’s the largest advertising platform that exists for founders today. Although this article focuses on Google Advertising, most of the concepts covered are applicable to Facebook, Amazon, and many other major advertising channels.

Why does language matter?

We generally take language (and the understanding of words and concepts) for granted in our day-to-day lives. If I go to Starbucks and order a medium Americano, they’ll give me a “grande” without having to ask anything else.

In marketing, the similarities and differences between a “medium” and “grande” aren’t as clear. I see it time and time again—people think they’re speaking the same language, but aren’t on the same page. While this might not be an issue when ordering coffee, it has far greater impact in business, ultimately impacting team trust and effectiveness.

Not knowing which campaigns are running on which platforms—or how to set up and optimize campaigns by channel—leaves a lot of unknowns and opens the door for miscommunications. If you’re on a team where your marketing channels are either “working well” or “not working”, this is the article for you. 

The rundown on Google Ads

Understanding what you can do with Google Ads gives you a leg up in understanding most ad platforms, like Facebook, Microsoft Advertising, Amazon, and Pinterest, to name a few. They’re all quite similar in how they function, so familiarizing yourself with Google Ads is more than half the battle. 

Google is the largest and most predominant ad platform in the world today. It provides advertisers with a wealth of tools for achieving all kinds of business objectives and drives results.

Some of the key features available on Google Ads include:

Flexible budgeting and pricing

  • Set budgets as low as $5/day
  • Turn your spending on or off whenever you please

Pay per click advertising

  • You can choose to only pay for users who visit your website through advertising

Reporting

  • In depth feedback on how your campaigns are performing

Targeting

  • Based on users explicitly searching for a product or service
  • Based on behaviours, like visiting a page or abandoning a cart
  • Based on demographics, like age, gender, and location
  • Based on interest, or search intent
  • Based on customer lists or lookalike audiences

How Google gets you in front of prospective customers:

There are 3 main ways that Google lets advertisers get in front of prospective customers.

1. Search 

There’s a reason people say “Google it” and not “Bing it”. Google is the most popular search engine in history, and its dominance in search is mirrored by its dominance in performance marketing.

A google search for the largest search engine in the world shows Google as the result

So most people search on Google. What’s the big deal?

The ability to target users searching for a specific product or service in a specific geography is extremely powerful. Beyond that, Google allows you to target them at the precise moment they’re looking for that product or service. This alone is not replicable by platforms like Facebook or Instagram. 

Let’s say you’re selling laptops. In the US and Canada there are more than 1,000,000 searches for the word “laptops'' per month. Comparatively, the term “Dell laptop” drives around 250,000 searches per month. 

Another potential term of interest could be “3060 ti laptop”. This term has far fewer searches monthly at only 4,000 searches per month.

Any of these searches could drive a sale for your laptop business, and Google will let you bid on all of these terms. But, the more specific and relevant the search terms are, the more relevant the results will be. This increases the chances you will convert a shopper into a customer.

A google search for a laptop shows multiple ads as the top result

2. The Google Display Network (GDN)

As I mentioned, search gives you the ability to target the right user looking for the right product at the right time. While it’s easy to think of this as a silver bullet to advertising your product, there’s a lot that needs to be “right” before you pull the trigger on a campaign. 

While search is a very powerful tool, people don’t spend the majority of their time online searching for things they’re ready to buy. People spend more time online browsing, reading, and consuming content. In fact, Google estimates that “browsing” represents over 90% of our online lives.

The Google Display Network is a vast network of websites with Google display advertising space available for businesses to advertise relevant products or services. It’s a great way to reach users when they’re browsing as opposed to searching. 

This allows advertisers to introduce their brand and products to prospective customers in a particular context, location, or audience. Brands can also re-engage users who have shown interest and intent via their previous browsing and search patterns. 

You can also specifically re-engage users who have visited your site (retargeting), or find and target users in your CRM or on a customer list.

A definition of the google display network highlighting that it covers over 2 million websites and reaches 90% of internet users

3. YouTube Ads

While you could technically lump YouTube into the Google Display Network, I’m going to make the case that the opportunity for advertisers on YouTube is uniquely attractive and powerful. Not only is YouTube the second most visited website in the world, it’s the platform users spend the most time per visit.

A list of the websites where users around the world spend the most time. Youtube is in the second spot, only behind Google.
Photo credit: https://www.digitalinformationworld.com/2021/08/how-does-world-spend-its-time-on.html https://zyro.com/websites-time/

We previously discussed how powerful search and user intent can be. As a search engine of sorts, YouTube would be the second largest in the world. But it’s also the place where we “browse” the most. It is a perfect intersection of these two concepts.

Now that we have an overview of Google’s major capabilities, let’s start to familiarize ourselves with the key terms that will come up time and time again when talking about performance marketing.

Paid advertising glossary

Performance marketing (sometimes called paid advertising) comes with a whole set of terms, concepts, and jargon—just like Google Ads. I’ve put together a list of the common performance marketing and Google Ads terms that will help you better understand paid advertising and Google’s ad platform. 

Common paid advertising terms

  • Clicks: The number of times your ad was clicked on by a user taking that user to your website or a page of your choosing.
  • Impressions: The number of times an ad was viewed.
  • Click-through rate (CTR): The total number of clicks on an ad divided by the total number of times an ad is shown to a lead. If an ad is shown 100 times and generates 15 clicks, its click-through rate would be 15%.
  • Cost: The amount of money a campaign spends on paid advertising.
  • Cost-per-click (CPC): The ad buyer’s cost-per-click. CPC could be a few cents or a few hundred dollars, all depending on your industry, competition, and audience targeting.
  • Conversion: The specific goal you are tracking (e.g. a sale, a page view, an email sign up).
  • Cost-per-conversion: The ad buyer’s cost-per-conversion. A conversion could be defined as an order, new customer, or another conversion goal you’ve set.
  • Conversion rate: The number of conversions divided by the number of clicks, expressed as a percentage.
  • Revenue: The total value, in dollars, generated by an ad.
  • Return on ad spend (ROAS): Revenue generated from an ad divided by the money spent on that ad. For example, if you make $5 for every $1 spent on advertising, you have a ROAS of 5:1.
  • Average order value (AOV): The average dollar amount a customer spends on a site. AOV is calculated by dividing the total revenue by the number of orders.
  • Budget: The total amount of money that you set to be spent on an ad campaign. Usually set as a daily limit.
  • Cost-per-thousand impressions (CPM): The ad buyer’s average cost of 1,000 impressions, used for display advertising campaigns.
  • Profit: The total value, in dollars, generated by an ad after subtracting expenses, such as advertising costs and cost of goods.
  • View through conversions: Measured when a user registers a conversion after “seeing” an ad but doesn’t click through directly to the website. This measurement is meant to show a “lift” from display advertising that affects brand awareness.
  • Lifetime value (LTV): The predicted total value of a single customer throughout their relationship with a company, including projected future purchases.

Common Google Ads terms

  • Ad: The advertisement itself. The creative (text and design) that users see.
  • Ad group: A group of one or more of your ads targeted to one or more audiences. When done correctly, an ad group should contain several ads that speak to your target audience(s).
  • Campaign: A campaign contains a single advertising targeting objective for one or more ad groups, such as traffic (visitors to your site) or conversions (clicks or purchases). 
  • Keyword: The phrase or word(s) a user enters into the search engine to trigger ads. Also referred to as a query.
  • Keyword match type: Keyword match type lets you control how broad or exact your chosen keywords must be to trigger an ad. For example, you can decide if you want synonyms or related searches to trigger your ad, or only more specific keywords that must be in the search query to trigger your ads.
  • Negative keywords: These allow you to prevent your ad being shown based on certain keywords or phrases. For example, Apple wouldn’t want customers searching “apple cider” and seeing one of their ads. 
  • Quality score: The relevance of an ad to the search term or audience being targeted. Generally, the higher the quality score, the lower your CPC, leading to a better ad position.

A quick look at the Google Ads auction

Another key concept to understand when it comes to Google Ads and search marketing is that all ads are put into an auction system to determine which ads show to whom and how much advertisers pay.

This video from Google’s own Hal Varian is my go-to when giving someone an introduction to the Google Ads auction system.

What are the different types of Google Ads campaigns?

1. Branded search

A google search for "Adidas sneakers" with an ad for Adidas shown below

Branded search involves actively bidding on your own brand or product names. If you’re selling sneakers, non-branded keywords would include “sneakers” or “basketball shoes”. A branded keyword, however, would include your brand name in the search—so for Adidas, “Adidas sneakers” or “Adidas basketball shoes” would be considered branded keywords. 

Although it might seem counterintuitive to bid on your own brand name, some of your competitors might bid on your brand name as a way of “stealing” customers from you. But that’s not the only reason to bid on branded keywords—you can use Google’s ad extensions to promote specific information and control the messaging and pages where you’d like people to land. 

While CPCs for branded search might be lower, it’s important to make sure you’re targeting the right keywords. For example, “apple picking” wouldn’t be a good branded keyword for Apple, because the searcher’s intent doesn’t align with what Apple sells. 

Objective: Capturing searchers actively looking for your brand and products by name.

Targeting relevance: High

CPC estimate: Typically low (~$0.20 to $4.00).

ROAS range: Typically high (3:1 to 30:1). These searchers are looking specifically for your brand.

Campaign goal: High ROAS, profitability, order volume.

Scalability: It depends. If your brand is established and frequently searched for, this will be scalable. If you’re a newer brand with low search volume for your brand name, branded search won’t be as scalable to start.

Best for: Any business. Regardless of size and industry, you’ll likely drive sales because there’s search intent for your specific brand. Prioritize spending on this campaign if resources allow.

How easy is it to set up? Search campaigns can be hard to implement if you don’t have experience with Google Ads or search engine marketing. You may require an in-house expert or agency to set it up correctly.

If set up correctly, branded search campaigns are one of the less intensive to manage compared to other campaigns.

2. Generic non-branded search

A google search for "sneakers" shows a Nike ad as the top result

As I mentioned before, non-branded search is similar to branded search, except it doesn’t include any mention of a specific brand name. An example of a generic non-branded search term would be “Sneakers”, vs. a niche non-branded search term, like “Dark, high top basketball shoes”.

The broader your search term, the higher your CPC will likely be because your relevance to users is lower or equal to that of your competitors. The goal of this campaign is driving new visitors and customers to your site as efficiently as possible. But these campaigns can also have great ROAS and offer a much higher ceiling in terms of scalability than niche- or brand- specific queries.

Objective: Driving qualified intent based traffic and hopefully new customers who might not yet be familiar with your brand but are searching for the products you sell.

Targeting relevance: Low to medium.

CPC estimate: Medium to high ~($2 to $30).

ROAS range: Medium (0:1 to 3:1). This depends on competition and product/market fit.

Campaign Goal: New customer acquisition, top line revenue, traffic, order volume.

Scalability: Potentially large, depending on the category.

Best for: Any business, especially those looking at growing top-line revenue and new customer acquisition. I wouldn’t prioritize this method over some of the more profitable options in this guide.

How easy is it to set up? As with the other search campaigns this can be hard to implement correctly if you don’t have experience with Google Ads or search engine marketing. 

Non-branded search campaigns require a lot of manual work to create, manage, optimize, and test. It’s best to tackle these campaigns with experts to ensure you’re targeting and optimizing effectively.

3. Niche non-branded search

A google search for "black high top basketball shoes" shows an Under Armour ad as the top result

Niche non-branded search is quite similar to broad non-branded search, except it targets more specific search terms. Think “Sneakers” (broad) vs. “Dark, high top basketball shoes” (niche). 

Because they’re niche, they usually involve less competition than broad non-branded search. If your company offers niche products, it’s definitely worth exploring niche non-branded search campaigns. Even outside of advertising on Google, niche marketing is known for driving website traffic with great potential for a positive ROI. 

Although niche and broad non-branded search are often lumped together under the umbrella of “non-branded search”, I think it’s worth looking at them as two different campaign types. 

Some might include the names of third-party brands sold on your site as a more niche term within a category. It’s okay to advertise other brand names in your search ads as long as users land on a page with those products.

Objective: Acquiring new customers searching for products within your niche.

Targeting relevance: Medium to high. The more niche the search term, the more relevant your niche product (assuming you’re bidding on accurate keywords).

CPC estimate: Medium to high ($2 to $30)

ROAS range: Medium (0:1 to 6:1).

Campaign goal: New customer acquisition, top line revenue, traffic, order volume.

Scalability: It depends: niche search terms tend to have lower search volume. If, for some reason, you have a niche search term with a high search volume, this could be more scalable. 

Best for: Brands with a niche product (and/or those trying to target a niche market).

How easy is it to set up? Compared to the other search campaigns mentioned, I’d say this campaign type isn’t easy to set up and maintain. Those who are not familiar with keyword match types and search query reporting should hire an expert to run these campaigns.

4. Competitor search

A google search for "Dove body soap" shows the top result as an ad for Uasau Soap.

Competitor search is almost the opposite of branded search: you’re bidding on a different brand’s name instead of your own. Although it sounds like a sleek strategy to steal traffic from the competition, it’s sometimes expensive because your ads aren’t exactly the most relevant for the searcher. Because of this, I’d recommend this strategy for brands with a more expensive product, or those with a high AOV or LTV.

If the competitor whose name you’re bidding on doesn’t bid on their own brand name, this could be a profitable strategy for customer acquisition. To avoid your competition stealing your traffic with this type of campaign, I recommend bidding on your own brand name.

You should avoid using dynamic keyword insertion in any ads in a competitor search advertising campaign. 

Objective: Acquiring new customers who might not be familiar with your brand by advertising to them when they search for your competitors.

Targeting relevance: Low. They’re searching specifically for one of your competitors, not your brand or even a generic product.

CPC: Medium to high ($2 to $40).

ROAS range: Medium (0:1 to 6:1)

Campaign goal: New customer acquisition, top line revenue, traffic, order volume.

Scalability: The scale of these campaigns depends on the size of your competitors, and how many people search for their brand and products by name.

Best for: Brands who want to aggressively ramp up customer acquisition and test all available options, and those with a high AOV or LTV.

How easy is it to set up? As with the other search campaigns, competitor search is not easy to set up or manage. By its very nature, it could be an expensive proposition. Ideally, you’d have an expert dedicated to managing this.

5. Branded Google Shopping

A google search for "Adidas sneakers" shows ads for Adidas sneakers as the top results

Google Shopping campaigns are great for user experience because when someone searches for your product, they see product images, prices, and ratings at the top of the results. Then—if they click on your product—they’re taken directly to your product page.

It’s important to differentiate between branded and non-branded Google Shopping campaigns in your paid advertising strategy. This is because the users searching for your brand directly are the most likely to convert, but your branded search volume will be lower than your non-branded search volume. 

If you fail to segment branded traffic in shopping campaigns, you’ll have both branded and non-branded search terms clumped together, with non-branded searches likely eating up most of your budget. This opens up the door for competitors to siphon off your traffic by bidding on your branded search terms. This means you’re paying for lower converting (non-branded) keywords without reaping the benefits of your branded keywords. 

If you’ve got the brand loyalty and search volume to justify separating Google Shopping campaigns for a brand specific strategy, I highly recommend you do so.

Objective: Capturing searchers actively shopping for your brand by name.

Targeting relevance: High—they’re directly looking for your brand.

CPC estimate: Low (~$0.25 to $3.00).

ROAS range: High (3:1 to 30:1). 

Campaign goal: High ROAS, profitability, order volume.

Scalability: It depends. If your brand is established and frequently searched for, this will be scalable. If you’re a newer brand with low search volume, it won’t be very scalable.

Best for: Any business selling physical products that has invested in building brand awareness.

How easy is it to set up? Ranges from easy to hard depending on your e-commerce platform, if you have a working feed, and your experience with shopping and feed campaigns. Shopping campaigns are generally easier to set up than search but shopping campaigns also require you have a working product feed

Shopify and other e-commerce platforms have ways of setting up shoppable product feeds to use for Google campaigns. There are feed management vendors and technologies that can help as well, or you can manually get a feed set up in the Google merchant center

6. Non-branded Google Shopping

A Google search for "Sneakers" shows several shopping ads for different sneaker brands

As discussed above, if you’ve got the search volume to justify it, we recommend splitting your branded and non-branded Google Shopping campaigns into two separate campaigns. 

Non-branded Google Shopping campaigns work quite similarly to non-branded Google Search campaigns. If you’re an e-commerce business and have budget set aside for paid advertising, non-branded Google Shopping campaigns are a must. 

Objective: Capturing searchers looking for products you sell and winning over new customers who may not be familiar with your brand but are searching for a product you sell.

Targeting relevance: Low to medium

CPC estimate: Medium (~$0.25 to $20.00).

ROAS range: Medium (0:1 to 6:1).

Campaign goal: New customer acquisition, top line revenue, traffic, order volume.

Scalability: Typically high, but this all depends on the search volumes for your product categories.

Best for: Any business selling physical products, especially if you have specific goals relating to customer acquisition and growth. That being said, this shouldn’t be prioritized above more profitable campaign types.

How easy is it to set up? Similar to branded shopping campaigns, this depends on your e-commerce platform and if you already have a feed set up.

7. Retargeting (text, banner, video)

A retargeted ad for The Bay shows above a CNN article

Getting visitors to your site is a great first step to making them convert and become customers, but it’s not the only thing you should be focusing on. Just think—a company with a 5% website conversion rate would impress almost any marketer, but what about the other 95% of visitors who don’t convert? 

This is where retargeting comes in—it’s a targeting strategy that lets you pool previous website visitors in a group and then advertise to them on different websites in the Google Display Network. It’s often cheaper than the other Google Ads campaigns available and allows you to speak directly to smaller groups of people to keep your brand top of mind.

Keep in mind that retargeting on Google works very similarly to campaigns on Facebook and Instagram. 

Let’s look at a simple example of retargeting:

  • A woman browses your website and looks at three different shirts.
  • She leaves the website without making a purchase.
  • One day later, she opens YouTube only to see an advertisement featuring one (or all three) of the shirts she looked at.
  • She clicks on the ad, lands directly on the product page for your shirt, and makes a purchase.

As you might imagine, retargeting ads can be quite powerful when employed correctly. The customer has already seen your brand so they’re more likely to take notice when they see your ad. 

But like with other campaigns there is a nuance to retargeting effectively. The more segmented an approach you take with who you retarget, the more likely you are to succeed. Will you be targeting previous site visitors? Or those who abandoned their shopping carts? What about those who’ve already made a purchase but haven’t recently returned to your site? 

All of these factors are important in determining who to target and when to target them. A customer who abandoned their cart one day ago will probably have a better chance of converting than one who abandoned their cart one month ago. 

Objective: Advertising to prospective customers who’ve already interacted with your website—whether it be searching for something, adding products to their cart, or making a purchase.

Targeting relevance: High—they already know your brand and have been on your website.

CPC estimate: ow (~$0.25 to $4.00).

ROAS: Medium to High (2:1 to 30:1).

Metrics: ROAS, profitability, order volume, impressions.

Scalability: This depends on the audience you’re retargeting and the size of that audience. For example, retargeting previous purchasers will yield a smaller audience than retargeting those who’ve just visited your site.

Best for: Any business—if you’re already driving traffic to your site, you should be retargeting visitors.

How easy is it to set up? I’d say this campaign is one of the easier campaigns to set up at a high level to start spending money. 

The more nuanced your set up with positive and negative audiences, the more complicated it becomes. The complexity of your creative, like a text ad vs. a YouTube pre-roll Trueview campaign, also dictates the difficulty here.

8. Topic- and interest-based display ads

A NordicTrack ad is shown above an article about Star Wars.

Display advertising allows you to target prospective customers outside of search engines on millions of publisher sites and apps. It allows you to advertise in three formats:

  • Text
  • Image
  • Video banners

Topic- and interest-based display campaigns will be the first of three separate awareness driving categories we’ll lay out. Targeting display ads through topics or interests allows you to target topics like apparel, travel, and fitness, among many others. 

Topic-based targeting results in your ads being shown on websites within that category whereas interest-based targeting results in your ads being shown to users who’ve shown an interest in that category. 

This article gives a great overview of all the different types of audience targeting on the display network.

Objective: Creating awareness of your product or service by advertising on specific websites or to specific people who’ve shown an affinity for an interest/topic category.

Targeting relevance: It depends—if you’re targeting topics and interests very closely related to your product and brand, it should be medium to high.

CPC estimate: Low to medium (~$0.25 to $3.00).

ROAS range: Low (0:1 to 2:1).

Metrics: Impressions, clicks, email signups (or other micro conversions), page visits, number of orders.

Scalability: Typically high, but could be lower if you’re targeting niche topics that aren’t well represented on the sites within the Google Display Network. 

Best for: Brands wanting to build brand awareness and get their product in front of a specific segment.

How easy is it to set up? Setting up interest- or topic-based display creative is pretty easy and straightforward. Optimizing your ads is slightly more difficult as it requires time, attention, and knowing where to look for the right reporting.

9. Contextual display ads

An ad for Cozey is shown above an article on Fast Company

With contextual display ads, your ads are served to users on websites or pages that contain the keywords and themes you’re targeting. Because users spend the majority of their time consuming content rather than just searching on Google, these are a great way to get your brand in front of new users. 

Although I wouldn’t prioritize contextual advertising over higher intent search or shopping campaigns, the fact that you don’t pay unless a user clicks on your ad presents a great opportunity for building awareness of your brand or offering. Contextual display advertising is a great way to get familiar with the Google Display Network as Google will show you different sites that fit within your brand’s niche. 

I’d caution against using search campaigns and keywords that target both the search and display network together because search and display campaigns have very different goals. Instead, I’d advise turning the Display Network off for your search campaigns and specifically setting up a keyword contextual targeting strategy for the display network.

Objective: Driving brand and product awareness and increasing sales.

Targeting relevance: It depends—if you’re targeting topics and interests related to your product and brand, it should be medium to high.

CPC estimate: Low to medium (~$0.25 to $3.00).

ROAS range: Low (0:1 to 2:1).

Campaign goal: Impressions, clicks, email signups, page visits, number of orders.

Scalability: Typically high, but could be lower if you’re targeting niche topics that aren’t well represented on the sites within the Google Display Network.

Best for: Brands with a medium to high AOV/LTV that have already had success with high-intent campaigns. Brands looking to drive more product awareness on certain types of content and for certain audiences.

How easy is it to set up? Contextual display campaigns are pretty easy to set up.

And just like topic- and interest-based ads, optimizing for performance requires reviewing placement performance reports to optimize what sites your ads are showing up on

10. Managed placement display ads 

A Clearco ad is shown above an Entrepreneur.com article

Managed placement display ads allow you to go even more granular in your targeting while also giving you more control than contextual display ads. You can choose which website or webpage you’d like to feature your ads on, as long as the website is part of the Google Display Network. 

I’d recommend you only jump into managed placement advertising after running the other forms of display ads I’ve touched on. That way, you can first figure out which placements and websites worked best for you before managing exactly where they’re placed. 

Objective: Building brand awareness by specifying the domains on the display network where your ads will be shown. 

Relevance to searcher: It depends, but would be high if your ad was placed on a niche website that’s complementary to your brand and products.

CPC estimate: Typically medium (~$1.00 to $10.00).

ROAS range: Typically low (0:1 to 2:1).

Campaign goal: Impressions, clicks, email signups, page visits, number of orders.

Scalability: Usually lower, but it depends on the website domains that you’re targeting and how much traffic they receive.

Best for: Brands wanting to build brand awareness and get their product in front of a specific segment.

How easy is it to set up? This is one of the easiest campaigns to set up. You just select the website domains you’re interested in targeting and the display campaign settings.

11. Google Smart Shopping

An image showing a screen selecting a budget for a Google Smart Shopping campaign

With Google Smart Shopping campaigns, Google uses machine learning to take different items from your product feed to create a variety of ads across Google Search, the Google Display Network, YouTube, and Gmail.

More specifically, Google Smart Shopping combines four of the campaign types we’ve covered: 

  • Branded shopping
  • Non-branded shopping
  • Retargeting
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  • Prospecting on the display network
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Because Google Smart Shopping campaigns include retargeting and branded search, your performance will depend on how many people have visited your site as well as the number of users who search for your brand, products, or branded keywords. 

Objective: Driving orders through a data-driven approach to paid advertising.

Targeting relevance: This depends, because multiple advertising campaigns are involved.

CPC estimate: Low to medium (~$0.25 to $5.00).

ROAS range: Medium to High (0:1 to 12:1).

Campaign goal: ROAS, order volume, new customer acquisition, awareness, and traffic.

Scalability: High—non-branded search terms are rolled into your mix, making this scalable.

Best for: Businesses who aren’t currently retargeting or using Google Shopping campaigns, and aren’t experts at manually creating and optimizing Google Ads.

How easy is it to set up? Smart Shopping represents the easiest way to get involved with Google advertising. Granted you have a workable product feed, Smart Shopping campaigns are extremely quick to set up and manage, and they optimize themselves (with specific inputs for you to manage at a high level).

If you see success, there may be a greater opportunity to transition to a more segmented, manual campaign strategy in the future.

12. CRM (search, YouTube, Gmail)

A Clearco ad is shown on the youtube mobile app

Running a customer relationship management (CRM) campaign involves marketing to your existing email subscribers and/or customers. Because this group has already purchased from you or subscribed to email, you can expect this campaign type to be successful, assuming it’s executed properly. 

One barrier to entry with a CRM campaign is that you’ll need to have thousands of emails in your email list, which prevents newer—or smaller—companies from running this campaign type. If you’ve got the subscribers for it, CRM campaigns are great for hyper-targeted messaging and they allow you to use the information you’ve collected from your subscribers in your CRM. You can then target your list on Gmail, YouTube, or Google Search. 

Just be sure your company meets the following prerequisites, which have been added to run CRM campaigns on Google Ads.

To use Customer Match, your account must have:

  • A good history of policy compliance
  • A good payment history
  • At least 90 days history in Google Ads
  • More than $50K USD total lifetime spend 

One important factor to note is that not every email in your CRM will match in Google’s database, so if you upload a list of 5,000 emails, you can expect that a couple thousand of those won’t match. That being said, Gmail accounts typically match better than non-Gmail ones. 

It’s a good idea to load your customer-specific lists to Facebook as well to use on Facebook and Instagram for similar hyper-targeted campaigns.

Objective: Converting email subscribers into customers and driving repeat purchases from existing customers. 

Target relevance: Very high—they’ve already expressed interest in your brand by making a purchase or subscribing to your email list. 

CPC estimate: Typically low ($0.25 to $5.00).

ROAS range: Typically very high (5:1 to 60:1).

Campaign goal: ROAS, order volume, traffic.

Scalability: Typically low, but if you have a large email list with a high match rate within Google, it’ll be higher. 

Best for: Any company with over 1,000 subscribers/customers in their email list that hits the Google prerequisites.

How easy is it to set up? CRM campaigns require access to an email database and to a customer list that can be targeted in Google Ads. I’d say identifying the lists you want and adding them to Google Ads is low to medium in difficulty.

13. Look-alike audiences 

A screenshot of Google Ads audience manager on the data segmentation page

Look-alike audience campaigns are quite similar to CRM campaigns, but with one key difference: instead of advertising to your existing list, you advertise to a similar audience. 

Google takes your list of subscribers and identifies their interests, using this information to target an audience in a similar demographic and/or with similar interests. They then serve ads to this new audience across the Google Display Network. 

Objective: Creating brand awareness and acquiring new customers based on their interests. 

Targeting relevance: This depends on how similar your subscriber list is to the audience that Google targets. If done correctly, it should be medium to high relevance. 

CPC estimate: Low (~$0.25 to $3.00).

ROAS range: Low (0:1 to 2:1).

Campaign goal: ROAS, impressions, traffic, order volume.

Scalability: Typically high, but this depends on how niche your audience is and Google’s ability to create a similar audience. 

Best for: Companies who already have a medium to large audience and have already set up and optimized their other paid advertising campaigns. 

How easy is it to set up? If you already have CRM lists created in Google Ads or Facebook Ads, the look-alike audiences are essentially auto created, making this easy to set up. You just need to go ahead and target those lists in your newly created or existing ad campaigns.

14. Dynamic search ads

A screenshot of the Dynamic ad targets section of Google Ads

Dynamic search campaigns are a great starting point for those who are new to search marketing because they do a lot of the work for you. They create search advertising campaigns based on the data on your website—things like branded and non-branded keywords, product names, keywords from your product and company descriptions, among others. To put it simply: they create search campaigns based on all the information on your website. 

One issue with dynamic search ads is that they treat all of your audience as one, with little segmentation. They’re a great way to start ramping up your search marketing efforts, but they’re not something you’ll want to keep running long term. 

Objective: Driving orders from keywords automatically generated by Google.

Targeting relevance: This really depends on the keywords on your website and those generated by Google.

CPC estimate: Low to medium (~$0.25 to $5).

ROAS range: Medium (0:1 to 12:1).

Campaign goals: ROAS, order volume, website traffic.

Scalability: Typically high—these campaigns use both branded and non-branded keywords, but this also depends on the keywords you feature on your site. 

Best for: Businesses new to performance marketing that want to test the waters before further investing in paid advertising. 

How easy is it to set up? Very easy—just input some key webpages after choosing smart campaigns and Google does the rest. 

Ad budgeting: How to plan

If you’re relatively new to paid advertising, you might be asking yourself “How do I build a budget and where do I start?” 

The good news is that it’s not too complicated! Instead of looking at all the different advertising campaign types individually, we’ll break them down into two budget segments: “always on” and “testing” budgets. 

Always on campaigns: Lower funnel advertising 

Lower funnel campaigns (also known as “always on” campaigns) are focused on intent: you’re targeting users who have already shopped on your website or searched for your brand by name. 

With these lower funnel campaigns, I recommend using an “always-on” approach, meaning that you’re constantly running these paid advertising campaigns and spending as much as is available (whilst still profitable) to drive revenue. 

Google is all about relevance and user experience. Nothing is more relevant in Google’s eyes than a user who searches for your brand name—which is also your domain name. Your CTR for these campaigns can be as high as 30%! This means your CPCs should be low and your conversion rates high resulting in a high return on ad spend.

It’s best to invest as much money as your budget allows into lower funnel campaigns because they’re more likely to result in conversions that feed your bottom line. Determine how much money per day you’re willing to spend on these campaigns and then increase your budget as you start to see a positive ROI. 

Whether you’ve got $50, $500, or $50,000 to spend daily, putting money towards these campaigns effectively gives you more working capital to put into other parts of your business. 

Lower funnel campaign types include:

  • Branded search campaigns
  • Branded shopping campaigns
  • CRM campaigns
  • Retargeting campaigns for abandoned carts

Test campaigns: Middle and upper funnel advertising 

It can be harder to tell when a test campaign is working well. The key with test campaigns is to give them enough budget to get a significant read on their performance and how that aligns with your company goals. Create budgets based on what you are okay with spending daily for 1-2 weeks and with minimum KPIs as benchmarks.

We want to hope for the best but plan for the worst here so we don’t have unrealistic expectations, especially with new campaigns where a large amount of learning is needed to optimize and scale.

Generally advertisers blend the results of these campaigns with lower funnel campaigns in the hopes of attracting new customers and driving awareness, while achieving a portfolio return on ad spend they are happy with.

I would generally categorize both middle and upper funnel advertising campaigns as candidates for a test budget.

While generally higher test budgets are given to middle funnel versus upper funnel campaigns, founders should understand the differences in the goals of both middle and upper funnel campaigns and work to incorporate these based on their performance and their impact into their overall marketing strategy.

Middle funnel advertising campaigns

The goal of middle funnel campaigns is new customer acquisition. 

Outside of a customer having shown intent for your specific brand, being on your website, or searching for your product by name, these campaigns are your best shot at converting those interested in your product or services for more revenue than they cost to acquire.

Generally we expect these campaigns to add to your top line revenue but it’s not uncommon that they do so at a negative return on ad spend (less than 100%). These campaigns target customers searching for categories relevant for your product, customers searching for competitors, or audiences with similar attributes as your current or best customers.

Ideally, these campaigns will perform very well and allow us to reach new audiences while continuing to grow our customer base. But when launching net new campaigns, you should always start conservatively and ramp up from there. Alternatively, you can consider any spend on these campaigns a test where you might not initially see optimized performance above the average.

Middle funnel campaigns include:

  • All forms of non-branded search campaigns
  • Non branded shopping campaigns
  • Look-alike audience campaigns

Upper funnel advertising campaigns 

Upper funnel campaigns focus on creating brand awareness and driving traffic to your website. They’re not as much of a sure shot for driving conversions and bringing in revenue, and when they do, the focus is to drive new customers versus maximum profitability. That being said, if you’re a new brand in the market, it wouldn’t make sense to jump into lower funnel campaigns as you likely don’t yet have a loyal following.

Budgeting for upper funnel campaigns is a bit more complex than for lower funnel campaigns. You should make sure the budget you’re spending on these campaigns ties into your broader marketing and company goals—are you looking to create brand awareness, drive page views or visits to your website, or maybe acquire new customers? 

Once you determine how your paid advertising goals tie into your broader organizational goals, you can then set a budget. Just remember that you should be tracking your ROAS and general performance of these campaigns rather than just setting a daily budget and letting things run. 

Upper funnel campaign types:

  • Contextual display ad campaigns
  • Interest-based targeting campaigns
  • Managed placement display ads

A final note on budgeting: Smart campaigns

In full transparency, I normally don’t recommend smart campaigns for larger companies that want to scale. For companies looking to test a variety of different campaign types quickly, easily, and with minimal maintenance, smart campaigns may be a good way to see quick results.

The case for smart campaigns is made even stronger for companies without deep knowledge or experience managing search, shopping, and remarketing campaigns on Google. From a budgeting perspective, it’s a bit more complicated to make recommendations since these campaigns are a mix of lower, middle, and upper funnel.

If you’re a large brand getting above average results as referenced in the campaign guide, I’d recommend treating smart shopping campaigns as “always on” campaigns. If your brand is newer and you’re not seeing great results, I’d recommend budgeting as if it were a test campaign.

If this all sounds terrifying to you, consider looping in an agency to help you get your paid advertising off the ground.

Hiring an agency: The dos and don’ts

As an entrepreneur, you can’t wear all hats at all times, so it might be more efficient to outsource your paid advertising efforts to an agency until you’ve got the budget to hire a digital marketing manager. But instead of just Googling an agency and hoping for the best, I’ve got some tips to make sure you’re hiring the right team for the job. 

Tips for hiring an agency to run your Google Ads:

Keep it flexible

Don’t enter into a long-term contract with a new agency. Better yet, consider asking the agency if you can work together as a paid trial for the first few months to determine if you really want to work with them. The last thing you want is to be stuck in a years-long contract with an agency when you’re not happy with the results or the working relationship.

Keep control

No matter what, you want to be the owner of your Google Ads account. Of course any agency or partner will need access to your account, but there's no good reason you shouldn’t own all the accounts, campaigns, and assets of your company's marketing.

Keep in touch

When interviewing and choosing an agency it’s important to form a relationship with your account manager. The person who works on your campaign management day in and day out is the most important relationship for your advertising.

Any good relationship is built on trust, so you want to know who is actually managing your ads directly. Then you’ll be able to quickly get in touch should you encounter any problems.

Keep your goals in mind

Make sure you understand what the agency is agreeing to do for you—how long will it take for your ads to get up and running, how will your advertising budget work, what ROAS can you expect? Preferably get this information in writing so you can keep the agency accountable if they start to slip. 

Keep pricing in mind

Most agencies have one of two pricing models: a flat fee, or a fee based on a percentage of your advertising spend (typically with a minimum spend required). Make sure you’re comfortable with the pricing model and are clear on any additional—or hidden—setup fees. 

If you don’t like the sound of an agency’s approach to payment, shop around and gather quotes to see if there are any alternative options in terms of how you might be billed.

Keep it specialized

Don’t just roll in an agency that’s already working on another part of your business simply because it’s easy or cheap. Some agencies do have several areas of expertise, but I’d recommend speaking to agencies who specialize in Google Ads or paid advertising and comparing them to other “full service” agencies. 

The recap

Google Ads and paid advertising aren’t easy. There are so many different campaign types and considerations to make when first starting out. It’s worth speaking to other founders in your network to understand their successes and pitfalls on the road to setting up Google Ads campaigns. Luckily for you, there are lots of resources online to help you better understand the world of paid advertising—this article included!

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