Google Ads for small business: how it works for a small seller

How Google Ads works for a small business

Google Ads is Google's online advertising program. A small business uses it to show an ad to people while they search on Google for what it sells, or while they browse sites and apps such as YouTube. With cost-per-click bidding you pay for each click on your ads. Search ads can appear above or below search results on Google Search.

When someone searches, Google Ads finds all ads whose keywords match the search closely enough. The ad auction is a process that decides which ads are eligible to appear and in which order. Google orders the ads by Ad Rank, which combines your bid, the quality of your ads and landing page, the Ad Rank thresholds and the competitiveness of the auction, among other factors. Because quality counts, Google says a seller who bids less than a competitor can still win a higher position at a lower price with high-quality ads and landing pages.

You set a maximum bid for a click. The amount you are charged, called the actual cost per click, is often less than your maximum cost-per-click bid, because you pay only what is needed to clear the Ad Rank thresholds and beat the ad ranked just below yours. Google also says the auction repeats for every search, each time with potentially different results depending on the competition at that moment, so your position and the price of a click can change from one search to the next.

Google Ads is organized into three layers: account, campaigns and ad groups. The table also lists what sits inside an ad group and the page each ad opens.

Which Google Ads campaign type to start with

Google Ads has several campaign types, and each one shows ads in different places. For a small seller with a limited budget, the choice comes down to whether people already search for what you sell, and whether you have product data ready for Shopping ads.

Search is a practical place to start, because the search terms report shows which searches triggered your ads.

What Google Ads costs a small business

Google Ads costs what you decide to spend, within the budget rules in the table.

Example: a $10 average daily budget. On a busy day the campaign can spend up to $20, and over a billing period the charge stays at or under $304, which is $10 multiplied by 30.4, the average number of days in a month.

Google's own advice for a new budget is to start small and check your account daily after applying a new budget. A small first budget limits what a mistake can cost while you learn which searches lead to sales.

How much a small seller can afford to pay per click

Before you set a bid, work out the most a click is worth to you. You need two numbers: the profit on one sale before advertising, and the share of ad visitors who buy. The first comes from your prices and costs. The second is a guess at first, and conversion tracking replaces it with your real figure.

Example: you sell a $40 candle set that costs $24 to make, pack and ship, so each sale leaves $16 before ads. If 2 in every 100 visitors from your ads buy, which is an assumption and not a Google figure, 100 clicks bring $32 of profit. A click is then worth up to $0.32 to you, and paying more than that loses money on each sale. A product with a bigger profit per sale, such as a bundle, raises that limit if the same share of visitors buys.

How to set up Google Ads for a small business

These steps set up one Search campaign for an online store.

1. Decide what counts as a result

   Google Ads lets you choose which actions count as conversions, such as a purchase, sign-up or phone call, or another action you choose. For a store, track purchases, and set this up before the campaign starts.

2. Research keywords

   Keyword Planner shows keyword ideas with estimates of the searches they receive and the cost to target them. To use its basic features, you must first enter billing information to complete account setup. Pick a short list of specific searches that name your product, such as a material, size or use.

3. Choose match types and negative keywords

   In Google Ads, broad match is the default match type, and Google says it is critical to use Smart Bidding with broad match. With manual bids on a small budget, exact match is easier to control, because exact match gives the most control over who sees your ad but reaches fewer searches than phrase and broad match. Google uses quotes around a keyword for phrase match and square brackets for exact match. Add negative keywords for words you do not sell, because negative keywords stop your ads from showing on searches with that term.

4. Write a responsive search ad

   A responsive search ad takes up to 15 headlines and 4 descriptions, with up to 30 characters per headline and 90 characters per description. Google notes that assets can be shown in any order, so each should make sense individually or in combinations. Name the product, the price or offer, and what makes it different.

5. Set locations

   Google lets you show ads to people in a location, people interested in it, or both. Pick only the places you ship to, so you do not pay for clicks from people who cannot order.

6. Set the budget and bid

   Choose a daily budget you can afford to spend in full every day, remembering that one day can reach up to 2 times your average daily budget. Google says most people start out setting their bids with either Maximize Clicks or Manual CPC bidding. Manual CPC bidding lets you manage your maximum CPC bids yourself, so keep the maximum bid at or below the click value you worked out from your profit per sale.

7. Send each ad to the matching page

   Link each ad group to the product or collection page that matches its keywords. Sending every click to the homepage makes the buyer search again.

Google Shopping for a small online store

Shopping ads need a Merchant Center account where you can upload your product inventory, and Merchant Center is a free tool. You add your products there, and the same product data can feed both free listings and paid Shopping ads.

With free listings, products can appear at no cost on Google Search, Google Maps, Gemini, YouTube, the Shopping tab, Google Images and Google Lens. Google states that new Merchant Center accounts are opted in to free listings by default. It also notes that turning on free listings does not guarantee that your products will be shown, and that it relies on the data you provide to match your products with what customers might be searching for.

Paid Shopping ads use your Merchant Center product data, not keywords and appear on search results and the Google Shopping tab. That means the work goes into the product titles, photos and prices in Merchant Center rather than into keyword lists.

How to tell if Google Ads is working

Check three things each week: the cost per sale, the searches you paid for, and where the clicks came from. The search terms report shows how your ads performed on the actual searches that triggered them. Google's advice is to add a search term that is not relevant to what you offer as a negative keyword.

Quality Score is rated on a scale from 1-10, per keyword, based on expected clickthrough rate, ad relevance and landing page experience. Google calls it a diagnostic tool that shows how your ad quality compares to other advertisers and states that Quality Score is not an input in the ad auction, so use it to find which ads or pages to fix rather than as a goal.

Search campaigns can also show on search partner sites. Google states that search partners are included by default when you create a Search campaign, and you can opt out at any time in your campaign settings. It warns that clicks from search partner sites may not always be highly targeted traffic. If those clicks do not lead to sales, turn search partners off.

Common mistakes on a small first campaign:

• Running ads without conversion tracking, so there is no way to tell which keywords sell.
• Using broad match with a small budget and no negative keywords, so the budget goes to loosely related searches.
• Changing budgets and targets every day. Smart Bidding has a standard 7-14 day learning phase, and Google says frequent manual changes to budgets, targets or conversion goals reset the learning window.
• Judging the campaign after a handful of clicks, before there are enough sales to compare.

Where Nation fits

Questions about Google Ads for small business