Why waste is a natural part of Google Ads (and any advertising) and how to minimise it

Why all Google advertisers are losers and why some are winners too

“People seem to be more motivated by the thought of losing something than by the thought of gaining something of equal value.” Robert B. Cialdini, Influence: The Psychology of Persuasion

Here, we discuss how waste is a natural part of Google Ads and why focusing on returns is key to moving your business forward. We look at several ways to minimise waste in Google Ads so that you have the best outcome.

1. We dislike wasting money
2. Example of an ROI calculation
3. Google Ads, your business and the agency
4. Shift in mindset
5. Trial and error, learning, feeding back into the campaign and gradual improvement in return
6. The obfuscation strategy
7. Elements that waste money in Google Ads and how to minimise the impact
   1. Search terms and negative keywords
   2. AAR – auto-apply recommendations
   3. Automatically created assets
   4. Ensure conversions are tracked
8. Sometimes it’s the business and not Google Ads
9. Conclusion

We dislike wasting money

We all dislike wasting money, don’t we? When you bought that product and then saw it cheaper somewhere else the next day. The irony is you may well have known about that product through the marketing of it. Apparently, we’d rather not lose something than win something. Our brains are wired into not losing things, including money. I think that is why it’s hard for some business owners to get their head around the idea that you will waste some money when using Google Ads or indeed with any form of advertising. In other words, all advertisers are losers! But that’s not quite true if we look at the bigger picture and do the maths…

Example of an ROI calculation

If you mail 1000 flyers for your business, 96% of people will probably not take any action at all.  The flyers cost £100 but you wasted £96. It’s the £4 spend that’s important here. Of those 4% who do interact with your business, you might make one sale. So, you sold a service that is charged at £400 and it cost you £100 for the flyers. You are up £300. ROI = Income/Spend x 100 = £400/£100 x 100 = 400% or 4:1 or, for every £1 spent you make £4. Not bad! It’s the same with Google Ads. You spend £1000 to get 1000 clicks on your ads and only 40 of those clicks result in any interest in your business. It’s a logic of inputs and outputs. Google advertising is not gambling, Google Ads is a calculated investment. Google knows and we know.

Google Ads, your business and the agency

Google wants to gain, your business wants to gain and in between your business and Google is a Google Ads agency, like Espan, that also wants to gain. The odds are always in Google’s favour, it’s their platform and they make it quite easy for the uninitiated to waste money. The agency maximises the return on your ad spend, pushes the things that offer valuable returns and at the same time navigates and diminishes the impact of those elements in Google Ads that are wasteful. That’s why it’s always best to hire a Google Ads consultant that understands the intricacies of the system. Whilst Google Ads can waste money, in the right hands, it is able to deliver significant returns, as exemplified by our return of 12:1 on average for clients in 2022.

Shift in mindset

You’ve got to accept that only around 4% of the receivers of your message will act. And assuming you offer a good service, and everything is in place, you can win. Always keep in mind the return from your investment in Google Ads. When the motivation to not lose anything prevents you from making a marketing investment in your business, then something is wrong, stagnation results and your business is unable to grow. Business owners can be risk averse but it’s a spectrum. Taking no risk is a risk in itself. In my experience, the clients that do best with Google Ads provide a valuable service, listen to us as experts, are open to trying new ideas and don’t panic when there is a blip in performance, for whatever reason. They have sight that many parameters are at play, including the market, competition, their ability to recruit and deliver their service, as well as Google Ads as one channel in their marketing. They keep the big picture in mind and that overall, ROI is strong, even if it wavers from time to time.

Trial and error, learning, feeding back into the campaign and gradual improvement in return

Google Ads is not something to set and forget, and that’s why we work closely on Google accounts with monthly optimisation and improvements. It takes time to get the best out of an account. Even though our account set up process is honed and results in decent base performance from the beginning, every account is different, even if there are commonalities. And there is the risk for a business and the agency as you never fully know if the account will perform well until it’s been running for a few weeks. A campaign will run much better after six months than it did on day one, after adjustments, tweaking and optimisation. Analysis of results and assessment of what’s working and what isn’t is valuable to feed back into account changes, it’s a virtuous circle; build, analyse, feedback improvements into the campaign, improve performance and repeat. OK so it’s working well, but how did we achieve this in relation to reducing wasted spend? Let’s discuss why there is waste in Google Ads, the elements that result in wasted spend and how to minimise this.

The obfuscation strategy

Google hides a lot of things these days in Google Ads, so, for example, there is limited transparency on which search terms resulted in clicks on your ads. Google makes other things difficult to find. And further, some useful functions for the advertiser are missing. For example, the ability to segment data in certain ways that could save advertisers money are missing. Google makes some settings that have a negative impact difficult to find for the unknowing advertiser. Google could make it easier to assess which keywords assisted other converting keywords. I could go on. Shake the Cushions – even a song has been written about Google Ads squeezing everything it can out of advertisers.

Elements that waste money in Google Ads and how to minimise the impact

Search terms and negative keywords

In one group of keywords within a campaign I found that 80% of the search terms were hidden. Even so, to prevent waste, regularly review the search terms report and add negative keywords to block irrelevant search terms. I’d like to see the ability to have keyword/search term rules that mean that every search in Google that triggers your ad must include a specific term, for example “contractor”. In the old days this wasn’t required, because the matching was very aligned with the keyword, but this is now necessary as keywords are triggered by so many irrelevant search terms when searching on Google. Many clients have moved to exact match keywords as they are spooked about wasting budget.

AAR – auto-apply recommendations

Auto-apply recommendations are pushed by Google who assert that these changes will improve the performance of your account. We opt out of all of these. They include things like Google automatically adding more keywords and new ads. Not great for the advertiser and could lead to several issues and negatively impact performance. See how to turn off auto-apply recommendations.

Automatically created assets

Automatically created assets are additional assets such as ad headlines and descriptions, business name and logo, as well as other elements that can appear with your ad such as dynamic sitelinks, callouts and structured snippets extensions etc. Google says these will improve performance, but again using this may negatively impact performance. Espan always writes ads and extensions so that your business is represented publicly in the best way possible. These automatic assets may also lead to compliance issues and so on. Here is a video and article on how to opt out of automatically created assets.

Ensure conversions are tracked

Not tracking conversions, or valuable actions on your website effectively, is seen as a sin in the PPC community and quite rightly so. It’s vital to measure conversions. Conversion tracking is key as you then have visibility of which Google Ads elements resulted in valuable actions on your website, for example, phone calls or form submissions. This is essential in delivering a decent return on your investment.

Sometimes it’s the business and not Google Ads

It’s easy to blame Google Ads or the agency when things aren’t initially working, but there is always more than one side to the story. Great products and services with a great offer are relatively easy to sell and vice versa. Sometimes a business doesn’t have a good product or service and perhaps has a poor website and a dysfunctional milieu and no matter how hard you try the offer will be difficult to sell. It’s a people thing too, we like working with clients who don’t knee jerk or are reactive, rather, they see the bigger picture, learn, adapt and move forward in a functional way. We admire people who believe in their product or service and invest in it and themselves to result in a worthy product or service. Why? Forward thinking people with the right attitude, are better able to believe in their product or service and this confidence flows through the presentation of the product to sale. They trust in the Google Ads agency. This is important. We build trust with clients from the start. Trust and belief in the business and service are vital for the end consumer too. As my friend, who is a sales expert, says, “sales is hard and requires developing a high level of trust and confidence in the buyer. Because buyers fundamentally know deep down that sales and persuasion are manipulative techniques, it makes being excellent at sales even harder!” It’s not just about the Google Ads account set up, it’s the quality of your service, desirability, pricing, reputation of the business, as well as the sales team’s ability to convert to a sale. I’m not saying that Google Ads will work if everything is in place as above, but the odds are more in your favour.

Conclusion

So, we’ve seen that Google Ads in the wrong hands is wasteful. In the right hands it can be brilliant and deliver strong returns. Ideally, you have a decent service that you believe in and an offer that is compelling and desirable as this is advantageous in generating interest and sales. You need a positive attitude and a mindset of openness and be on the risk spectrum at the right level to invest in Google Ads. We work with plenty of clients who do very well from using Google Ads. If you do not understand Google Ads yourself, ensure you work with an agency who do and ensure they are doing the right things like adding negative keywords, using conversion tracking and opting out of wasteful Google Ads settings etc. If you take one thing away from this article, it’s that Google Ads is worth testing for your business if you have the right risk profile and are going to give it a fair chance. But, find the right agency who also believe in your business and product or service and who are knowledgeable about the intricacies of Google Ads, an agency who will maximise return on your advertising investment and minimise wasted budget.