📊 Google Ads (Pay-Per-Click)

How do Google Ads work?

Google Ads uses a live auction system that runs billions of auctions every day. When a user searches a term, Google auctions the available ad spots in milliseconds. The winners are determined by their Ad Rank, which is a combination of their maximum bid (the most they’re willing to pay per click) and their Quality Score.

It is not just about paying the most. A high Quality Score can help you win a higher ad position at a lower cost than a competitor.

• The Auction: You bid on keywords (e.g., “emergency plumber Sydney”).
• Ad Rank: This is the formula that decides your position: $Ad Rank = Max Bid \times Quality Score$.
• Quality Score (1-10): This is Google’s rating of your ad’s relevance. It’s based on:
  1. Expected Click-Through Rate (CTR): How likely users are to click your ad.
  2. Ad Relevance: How well your ad copy matches the user’s search.
  3. Landing Page Experience: How relevant, fast, and user-friendly your website page is.
• The Cost: You only pay when someone clicks (PPC). You typically pay $0.01 more than the Ad Rank of the advertiser below you.

What is a good budget for Google Ads?

A good starting budget for a small business in a competitive market like Sydney is typically $1,500 to $3,000 per month in ad spend. This is the amount paid directly to Google, separate from agency management fees.

However, a “good” budget is not a fixed number; it’s one based on your business goals and data.

• Budget for Data: Your first-month budget ($1,500+) is often designed to “buy data.” You need enough clicks to learn which keywords convert, what time of day is best, and which ads work.
• Budget Based on Goals: A better way to calculate your budget is to work backwards from your goal.
  • Example: You want 10 new customers per month.
  • You know 1 in 4 leads becomes a customer (25% conversion rate).
  • Therefore, you need 40 leads.
  • Your website’s landing page converts 10% of clicks into leads.
  • Therefore, you need 400 clicks.
  • The average Cost-Per-Click (CPC) in your industry is $5.00.
  • Required Budget: $400 clicks \times $5.00/click = $2,000 per month.

Should I hire a Google Ads agency or do it myself?

You should hire a Google Ads agency if you do not have at least 20-35 hours per week to dedicate to actively learning, managing, and optimising your campaigns.

For a business owner, any time spent in the Google Ads platform is time not spent running their business. The platform’s complexity means most DIY campaigns lose money by targeting the wrong keywords, using incorrect match types, or having poor Quality Scores, resulting in a high cost-per-click.

DIY vs. Hiring a Sydney Google Ads Agency (2025 Data)