Cost Analysis

Google Analytics

The cost of Google Analytics varies, for beginners and the standard version, it is free. However, Google offers Google Analytics 360 Suite with a starting rate of close to $150,000 yearly (Blast, n.d). Google Analytics 360 Suite is a combination of seven measurement solutions that combines enterprise analytics, tagging, site optimization, data visualization, market research, attribution and audience management. Service and support is included in the price point as well as ongoing training (Google, n.d.). Suppose, the cost of running the free Google Analytics system is $0. Let the cost of all utilities be $10,000, the total tax to be paid be $20,000 and the maintenance costs be $20,000. In this case, even though the cost of running the Google Analytics system is $0, the fixed cost associated with running the system is going to be the sum of all these which will be $50,000. Google Analytics offers 5 million impressions per month, however if more hits are sent, there is no assurance that the hits will be processed (Google Data Limits, n.d.). The free version of Google Analytics offers a lifetime free package to small companies allowing customers to monitor a single website/mobile app and add a tracking code, making it easier for them to research their audience. For the purpose and to serve the needs of the concerned corporation, it is not imperative that Google Analytics 360 be purchased. Instead, the free version of Google Analytics would suffice the organization’s needs. Although it seems as if the free version of Google Analytics would not mean any ancillary cost for the organization in question, it is certainly untrue. This suggests that the organization is still going to have to pay the fixed costs to run the business. Irrespective of the level of production, an organization must pay the fixed costs. This is because, fixed costs are not bound by any business activity. Google Analytics tool although free of costs, an organization that uses it is going to have to pay internet costs to be able to use this service. Without the cloud/internet, no organization would be able to use this system. Moreover, to run the systems, the organization in question is also going to use electricity. The costs associated with consumption of electricity is again a utility expense that cannot be ignored by an organization. This suggests that although the Google Analytics services might be completely free in theory, however, the company is going to have to pay other operating activities like paying for utilities, taxes and other costs to keep its business running.

Google AdWords

Google AdWords is an assistant that helps to market products or services to people searching for a keyword related to what your business offers. “Not only are search ads highly targeted, advertisers only pay for results. Text ads appearing on Google search pages are billed on a pay-per-click (PPC) basis, meaning that advertisers don’t spend a penny unless someone actually clicks on their ad. Note that the term pay-per-click is sometimes used interchangeably with the term cost-per-click (CPC)” (Gallaugher, 2016). The benefits to AdWords is that payment is required only for those ads that pay off. It allows a business to work within a budget by allowing an ad campaign to start and stop at any time without penalty, provides real-time results, has flexible AdWords pricing, and multiple ways to pay (Google AdWords, n.d.). Because AdWords pays per click, the costs may be variable from month to month, however it should be set up to work within the established budget. Since, Google AdWords is a tool through which companies can market and sell their products to reach out to potential customers, it is not free. Instead, there are costs associated with buying, leasing and subscribing to this tool. Costs of running Google AdWords might be daunting for large enterprises. However, in case of small and mid-sized companies the cost of running the system is not going to be so onerous. For example, if the concerned company were to purchase Google AdWords and if it were to cost the company say $10,000 to 20,000 annually then the company would require paying all other costs like maintenance costs, costs associated with utilities and other operating expense. This suggests that Google AdWords would certainly require the organization to have more resources when compared with Google Analytics.
As for Google overall and its finances, they are expanding its core business and have several ambitious projects in the works. For now, these projects remain in various phases of research and development with no significant revenue. The revenue growth that Google has encountered has had a growth of over 10%. This signifies that the core business is doing well and that the company product and service as in high demand. With these increasing values, it portrays that merchants are paying for ad placement in Google’s search result at a great rate.
As described above, making the decision to use Google Analytics and AdWords can be difficult due the time, effort, and investment required. According to Andrew McAfee, adapting to the digital world can bring challenges to organizations. McAfee states three considerations that can’t be overlooked when investing in new technology:
1.         “Organizations must become familiar with new technologies”
2.         “It can be difficult to develop a compelling financial justification for switching technologies”
3.         “Companies must change their mindset and envision where digital technology is taking the business world” (McAfee, 2014).                                                     
Another example of challenges that organizations face is when investing in or transitioning to a new technology is that “most organizations aren’t ready to benefit from the powerful capabilities of predictive analytics. They may have the technology, but most lack the organizational capacity” (McCarthy, 2014). Lastly, challenges can come with the new technology itself. For example, in 2016, Apple Mac users were at risk due to an advertising campaign against Google AdWords. "I didn't think anyone had the guts to squat on Google's own page," says Cylance security researcher Jeffrey Tang, who discovered the attack (Peters, 2016). Return on Investment analysis for google AdWords and analytics can be done using ROI analysis or cost analysis reports. In general ROI analysis is done via Return on advertising spend (ROAS).
 

Google Campaign ROI

This Graph demonstrates how the amount of clicks affect the overall return that a company gets on their investment in Adwords.

For cost analysis, the cost data can be imported from the google analytics and then we can see the cost and ROAS data in the report as below
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In case of cost data not being imported from analytics then the report look like this :

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The only issue with cost analysis report is that Return on average spending data is calculated using only one attribution model called last non direct click.
Hence for different attribution models, ROI analysis report can be used.
To access the ROI analysis report,go to conversions - attribution - ROI analysis which gives the following result :

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There are four requirements for doing ROI analysis in google analytics

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