Blog Post / May 3, 2019

How Expensive are Local Google Ads for Restaurants?

by Jimmy Page

Google Ads can be an effective way for restaurants to reach guests in the area who are searching to make a dining decision (usually from their mobile phone). Many restaurant managers understand the potential value of advertising on Google but aren’t sure how much they should be spending. Today we’re going to talk about the different types of Google Ad campaigns and how to set a practical budget for each.

How much should a restaurant spend on Google Ads

How Do Google Ads Work?

Google Ads are Pay Per Click (PPC) which means you only pay for engagement like clicks to your website or calls to your business.  This category of ad has gained popularity on networks like Google and Facebook/Instagram because advertisers are only charged when the ad produces results and not for impressions.

Types of Google Ad Campaigns for Restaurants

A restaurant looking to advertise on Google can choose between two general types of ad campaigns:

  1. Google Search Ads

When you advertise on Google Search or Google Maps and your text ad is shown next to search results.

  1. Google Display Network

When you display your text and image ad to people while they’re browsing their favorite websites, showing a friend a YouTube video, checking their Gmail account, or using mobile devices and apps.

How to Measure Value from Google Ads

In order to understand which ad type to choose and how much to spend on your next campaign, it’s important to understand the basics of how to measure campaign success.

Here we’ve provided industry benchmarks for the Travel/Hospitality Industry:

Travel/Hospitality Industry AverageGoogle Search AdsGoogle Display Network
Click Through Rate (CTR)4.68%0.47%
Cost Per Click (CPC)$1.53$0.44
Cost Per Acquisition (Conversions) (CPA)$44.73$99.13

*Industry Averages provided by Wordstream

Click Through Rate (CTR): Click Through Rate is a measure of how attractive your ad is and how well it’s performing.  If your CTR is too low then you may need to redesign your ad or try some new creative.

Cost Per Click (CPC): Cost Per Click measures how expensive your ads are. A higher CPC should indicate engagement that has a higher probability of producing an immediate ROI.

Cost Per Acquisition (Conversions) (CPA): Cost per Acquisition is a final output metric to measure the ROI of your ad campaign.  This divides your total ad budget by the number of customers or sales acquired from the campaign.

Branded Search Terms vs Discovery Search Terms

It’s important to keep in mind that Cost Per Acquisition can vary substantially from campaign to campaign.  A common example of this is the difference between branded and discovery (non-branded) Google Search Ads.

For a branded search campaign the CPA may be much lower since you’re advertising to users who are already searching for your restaurant name. These users are more likely to make a reservation after clicking your ad, driving the conversion rate up and the Cost Per Acquisition down.

 

Comparing Search Ads and Display Ads

So which ad type is a better investment for a restaurant, Search Ads or Display Ads? The answer to this question depends on what you’re promoting and how quickly you need to generate sales.

Display Ads are a great fit for long term sales goals like a new restaurant opening or raising awareness for a new lunch offering.

Search Ads are better suited for short term sales goals like getting more reservations for an upcoming holiday or selling tickets to an event.

In either instance how much should a restaurant be spending on their next Google Ad Campaign? If you need to book 50 online reservations for an upcoming holiday special, then based on the industry averages provided above you’ll need to spend between $2000-2500 on Google Search Ads ($44.73 CPA x 50 Reservations).  If you’re reading this and thinking that $2K sounds like a lot of money to pay for 50 reservations then you’re not alone. This is where a great marketing employee or partnering agency can be worth their weight in gold. A knowledgeable marketing professional who understands your audience will be able to significantly beat these averages and get you more reservations per ad dollar spent.

The Marketing Funnel and Google Ad Campaign Types

Bonus Reading: Combining Search and Display Ads in a Single Campaign

Sometimes the answer isn’t as simple as just Search or Display Ads.  There are opportunities where you can combine both Search and Display Ads at different times during a campaign to achieve significantly better results.

Let’s take Valentine’s Day for example. After January 1st most romantic couples are not yet considering places to go out for Valentine’s Day. This is a perfect opportunity to run a Google Display Ad for your restaurant.  While someone is browsing the internet or Youtube you can plant an early idea where they should make a reservation for Valentine’s Day. When it comes time to make the reservation, a certain percentage of these people will remember that ad and consider your restaurant.

But once February 1st comes everyone is searching frantically for the most romantic restaurant with reservations still available. These guests are positioned at the bottom of the marketing funnel and ready to make a purchase decision. This is a perfect opportunity to switch your ad campaign over to Search Ads and capture these last minute reservations.

As with any marketing effort, Google Ads can be a useful tool to drive sales as long as you plan ahead and communicate effectively.  Make sure you understand how the campaign is connecting with your audience, and which stage of the marketing funnel you expect people to be in when they see your ad. This can help you better understand the results and strategize how to make sure your next campaign is more successful than your last one.

About the Author

Jimmy Page is the President of Hudson Creative, a leading Search Engine Marketing Firm in New York City. If you have any questions or would like to learn more about creating a digital marketing strategy for your restaurant please contact Jimmy by emailing jp@hudsoncreative.com or calling the Hudson Creative office at (646) 844-4952.

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