Ever wondered why 63% of businesses say generating traffic and leads is their biggest marketing challenge? Could the answer to boosting your brand’s visibility lie in the changing nature of Google Ads? With questions like “How much do Google Ads cost?” and “What’s the average cost per click?” swirling in the minds of marketers and business owners alike, you’re far from alone in this quest for clarity.
Determining the cost of Google Ads can be complex due to several influencing factors, making it difficult to provide a straightforward answer. However, the platform is designed to allow advertisers to adjust their spending based on their specific needs and budget constraints.
So what should you know to budget effectively for Google Ads? In this article, we’ll outline the essential components that affect Google Ads pricing to help you make well-informed choices for your marketing strategy.
Table of Contents:
- How Does Google Ads Work?
- How Does Google Ads Pricing Work?
- Average Cost Per Click (CPC) for Google Ads
- How Much Does It Cost to Run a Google Ad?
- Additional Costs Involved in Google Ads
- Other Factors that Influence Your Google Ads Costs
- How Much Do Google Ads Cost In 2023?
- Comparison with Other Advertising Platforms
- Future Trends
- Frequently Asked Questions
- Seize Control of Your Google Ads Costs
How Does Google Ads Work?
For most ads, Google uses the pay-per-click (PPC) model, meaning that advertisers aren’t charged when the ad is displayed to the user but only when the user clicks on the ad.
An alternative to PPC is the cost-per-mile (CPM) model, available for video and display, and cost-per-view (CPV), available for video only. With CPM, advertisers pay a set bid per 1,000 impressions. CPV allows advertisers to pay for video views that last 30 seconds and longer (or the duration of the video if it’s shorter than 30 seconds) or clicks.
Your cost-per-click (CPC), CPM, or CPV fee may vary as it depends on many factors, such as ad rank, keyword bid or campaign targets, budget, and quality score, which is determined by Google Ads auction.
How Does Google Ads Pricing Work?
Google Ads auction controls which ads appear to the user and takes place whenever someone enters a query on Google or visits a site with ad placements. The Google Ads cost is determined if the search query contains keywords that advertisers are bidding on. Google then decides which ads will appear and their ad rank — essentially the order in which ads will be displayed – on three main factors:
By setting your bid, you tell Google the maximum amount you’re willing to pay for a click on your ad. However, the actual Google Ads cost per click usually ends up being lower, depending on various factors, including competitors’ bids and ad position.
- Quality score
Google evaluates how relevant and useful your ad and landing page may be to the user. This evaluation is reflected in your quality score, which can be monitored and improved within your Google Ads account.
- Expected impact from your ad extensions and other ad formats
When creating an ad, you can enhance it with additional information like a phone number or specific site links. These are known as ad extensions. Google Ads takes into account how these extensions and other formats might affect your ad’s performance.
Once your quality score and ad rank are established, the Google advertising cost for your click is decided through an algorithm. The formula looks like this:
Understanding how much Google ads cost involves grasping these key elements and how they interact. By improving the relevancy of your keywords, ads, and extensions and keeping a good quality score, you could still win a higher position while spending less on Google Ads than your competition.
Average Cost Per Click (CPC) for Google Ads
One of the key benefits of Google Ads is that advertisers can have full control over their bids and pay as much as their traffic is worth to them. Depending on your bids and brand’s industry, your CPCs could reach up to $50 or be as low as $0.5.
By Campaign Type
- $2.32 per click on Google Ads Search
- $0.67 per click on Google Ads Display
- $0.54 per click on Google Ads Shopping
- $0.1 per view on Google Ads Video
|Industry||Average CPC (Search)||Average CPC (Display)|
|Dating & Personals||$2.78||$1.49|
|Finance & Insurance||$3.44||$0.86|
|Health & Medical||$2.62||$0.63|
|Travel & Hospitality||$1.53||$0.44|
How Much Does It Cost to Run a Google Ad?
Much like the question “How much do Google keywords cost?” the answer would be “it depends.” No number or percentage would be the perfect fit for every brand and every account. Google Ads PPC pricing and spending is, in general, highly subjective and depends on numerous factors such as your goals, industry, location, your ad performance, etc.
However, when mapping out your Google Ads budget, there are several factors you should consider:
- Expected revenue, generated from a new customer
For businesses where having a customer convert means gaining a profit anywhere from $1000 to $10000, investing $100 a day in Google Ads would be well worth it. However, for brands with lower prices and lower conversion values, daily and monthly budgets should correspond to potential revenues they can gain from running paid ads.
- The scope
If you’re planning on promoting a wide variety of different products across many campaigns, you’ll need to determine how much you want to invest in each segment based on their possible ROAS (return on ad spend). Performance Planner is a great Google Ads tool that can help you plan your Google Ads campaigns and your spend.
- Keywords you’re planning to use
Broad, low-intent keywords, like “car insurance,” would be expensive to run and will quickly eat away at your budget. Using long-tail keywords demonstrating a high purchase intent, e.g., “car insurance for seniors,” could help you cut costs and capture a more relevant audience. Different keyword match types will also have different costs, so your approach to building your campaigns’ structure will also have a great impact on the cost of Google ads. It’s crucial to do a keyword research and learn how often people are looking for products or services similar to yours, what users are clicking on, which search queries are most competitive, what are the average CPCs and search volume for the keywords you want to target. Keyword Planner is a Google Ads tool that can help you find.
- Conversion rates
Your Google Ads campaign’s profitability is directly linked to your conversion rate. While a lot can depend on your campaigns’ set-up, the keywords, and the audiences you target, the landing page experience also greatly impacts Google Ads performance. Consider the current conversion rate on your website from organic traffic. Does your website follow all the best practices? Are there any sudden user drop-offs? Is there anything you can optimize? By ensuring a smooth experience for the user, you can boost your CVR, maximizing your ROAS from Google Ads campaigns.
If you’re new to Google Ads, it’s a good idea to start small, launching your campaigns with lower budgets (e.g., $50-$100 per day) at first. This way, you can collect initial data and make necessary tweaks and adjustments to your campaign set-up without wasting money. Once you get some results and insights, you can make data-backed decisions and scale your campaigns if you see fit.
However, while there is no minimum budget for Google Ads, you’re unlikely to benefit from going too low (e.g., $10 per day). It’ll take much longer to collect valuable data and might limit your campaigns’ delivery, preventing you from reaching the right customer at the right time.
In general, Google Ads provides advertisers with many options to control how their budget is spent. You can set bids on keyword or ad group level, or use bid adjustments to bid higher or lower on specific locations, audiences, genders, age groups, devices, etc. You can also schedule your ads delivery to show your ads times that are most profitable for your business.
Additional Costs Involved in Google Ads
Obviously, your ad budget will be the largest cost associated with your Google Ads campaigns. However, it’s not the only component of your paid search effort. There’re other potential costs depending on your strategy, goals, business, and individual situation. Some small businesses prefer to hire a digital marketing agency to manage their PPC work to save time and reduce stress. As a rule, an agency typically cuts around the 10% mark, although these numbers may vary from one agency to another. Also, some digital agencies guarantee a threshold ROI while others won’t. Anyway, having a full-fledged expert running your account can prevent you from costly errors and help generate the highest return on your ad spend.
Other Factors that Influence Your Google Ads Costs
The cost of advertising can be a major factor in determining how successful your campaign will be. But you may not realize that several other factors can influence the cost of your Google Ads, such as dayparting, geotargeting, and device targeting. Let’s examine these components and how they affect your Google Ads cost.
Dayparting is a strategy used to target specific times of day or days of the week when users are more likely to click on your ad. For example, if you know that most of your customers shop during weekday evenings, running ads during those hours could result in more clicks and, thus, lower cost-per-click (CPC) rates. On the other hand, if you run ads during off-peak hours when fewer people are likely to click on them, you could pay more for each click.
Geotargeting is a strategy to target specific geographic locations where users are likelier to click on your ad. This allows you to focus your ad campaigns on areas where people are most likely to be interested in what you have to offer. By targeting local or regional markets rather than global ones, you can reduce your CPC rates by focusing on an audience more likely to be interested in what you offer.
- Device targeting
Device targeting is another way to control the Google Ads cost by targeting certain types of devices, such as smartphones or tablets. This strategy lets you focus on users more likely to interact with ads displayed on their device’s screen size and resolution. For example, if most of your customers use iPhones or iPads, then it would make sense for you to target those devices specifically with optimized ads so that they show up correctly regardless of which device they’re using.
All three strategies — dayparting, geotargeting, and device targeting — can help reduce the cost of running Google Ads campaigns by ensuring that only relevant audiences see them.
How Much Do Google Ads Cost In 2023?
Every year, digital advertising costs steadily rise, and Google Ads are no exception. The platforms are getting more competitive, and brands are increasing their bids and budgets, trying to meet rising demand as consumer behavior shifts and the number of online shoppers keeps growing.
In 2023, Google Ads costs are predicted to increase by 20%-30% compared to a 5%-19% rise in 2022.
While there is a way to escape the trends and shifts across the platform fully, you still can combat rising costs on Google Ads by following the best practices:
- Build your campaigns in a way that would maximize the relevancy between your keywords, ads and landing pages
- Invest time into producing effective ad copies to boost your CTR, and don’t forget to add new ads into rotation regularly
- Add all the applicable ad extensions to your campaigns
- Ensure your landing pages are well-optimized
- Use negative keywords and placements to reduce spending on irrelevant traffic
- Use bid adjustments to maximize your ad delivery to the right audience
Comparison with Other Advertising Platforms
While Google Ads is one of the most popular and effective online advertising platforms, it’s not the only one available. In fact, there’re a plethora of other platforms that businesses can use to advertise their products or services. Each platform has its own advantages and disadvantages, and comparing the cost and benefits of each platform can help businesses make informed decisions about where to invest their advertising budget.
For example, Facebook Ads may be more effective for businesses targeting a younger demographic or looking to increase brand awareness. Facebook’s targeting options, such as age, gender, interests, and location, can help businesses precisely reach specific audiences. On the other hand, LinkedIn Ads may be more effective for businesses targeting a professional audience or looking to generate leads. LinkedIn’s targeting options, such as job title, industry, and company size, can help businesses reach decision-makers in specific industries or companies.
When comparing the cost of advertising on different platforms, it’s important to consider several factors. For instance, the cost per click or cost per impression can vary depending on the industry, geographic location, and audience size. It’s also important to consider each platform’s potential return on investment (ROI). While a platform like Google Ads may have a higher cost per click, it may also result in a higher conversion rate and ROI than other platforms.
Ultimately, the best advertising platform for a business will depend on its specific advertising goals, target audience, and budget. Businesses can make informed decisions about where to invest their advertising dollars by comparing the cost and benefits of different platforms.
As with any industry, the world of digital advertising is constantly evolving, and it’s important for businesses to stay up to date on future trends in Google Ads pricing. One potential trend to watch in the coming years is the impact of machine learning on Google Ads. Google’s machine learning technology can analyze massive amounts of data to help businesses optimize their ads and improve their ROI. For instance, Google’s Smart Bidding algorithm can automatically adjust real-time bids based on device, location, and time of day to maximize conversions.
Another trend to watch is the increasing importance of mobile advertising. As more and more people access the internet through their mobile devices, businesses will need to ensure that their ads are optimized for mobile platforms. This may include creating mobile-specific landing pages, using mobile-friendly ad formats such as video ads or app promotion ads, and targeting mobile users with specific ad campaigns.
Yet another emerging trend is the rise in cost-per-click (CPC) and cost-per-mille (CPM) rates across various industries. As competition increases and ad inventory becomes more limited, advertisers should anticipate paying higher costs to secure prominent placements. Take for example the bike industry. The average CPC in the US grew 17% YoY and was $0.72. Our projection is that this trend will continue to escalate.
Finally, it’s important for businesses to be prepared for potential changes in Google’s pricing model. Google has been known to make sudden changes to its pricing and ad policies, and businesses need to be agile and adaptable to these changes. One potential change that businesses may need to prepare for is the deprecation of third-party cookies, which may impact how advertisers track and target users across the web.
By adapting to these future trends, businesses can continue to get the most value out of their Google Ads campaigns and stay competitive in the digital advertising landscape.
Frequently Asked Questions
- Is it worth paying for Google Ads?
Regarding reaching a wide audience with specific targeting options, Google Ads can effectively drive traffic to your website and increase brand recognition. However, it’s important to have a clear understanding of your target audience and to continuously monitor your ad campaigns to ensure you’re getting a positive return on investment. While Google Ads can be pricey, it ultimately boils down to the effectiveness of your campaign and your willingness to invest in your business’s growth.
- Is Google Ads cheaper than Facebook?
While Facebook may have more daily active users, Google Ads can provide a higher return on investment. This is due to the fact that users on Google are actively searching for a product or service, making them more likely to convert into paying customers. Additionally, Google’s targeting capabilities allow businesses to hone in on their desired audience, further increasing the chance of a successful campaign. While both platforms have their pros and cons, it ultimately comes down to what works best for your business goals and budget.
- Why is Google Ads so expensive?
The answer lies in the competition. With more businesses turning to online advertising daily, the competition for ad space becomes greater, leading to higher costs per click. Additionally, Google Ads has advanced targeting and analytics tools that can help businesses reach their ideal audience, but these tools come at a premium. Ultimately, the cost of Google Ads may be high, but its potential return on investment makes it worthwhile for businesses looking to thrive in the digital space.
- What is a good monthly budget for Google Ads?
Determining a good monthly budget for Google Ads largely depends on your business goals, industry, and competition. A properly executed campaign on Google Ads can significantly increase website visitors, phone calls, and sales. Therefore, it’s important to consider all these factors and set a budget that aligns with your goals while ensuring you can still see a return on investment.
- How many clicks per day on Google Ads?
The number of clicks needed will depend on factors such as the industry, the competition, the target audience, and the budget. However, it’s important to focus on quality over quantity regarding clicks. It’s better to have a smaller number of clicks from highly targeted ads that convert into actual sales than a large number of clicks from irrelevant ads. The key is to constantly analyze and optimize your Google Ads campaign to get the most out of your investment.
- How much should a beginner budget for Google Ads?
While there’s no one-size-fits-all answer to this question, you can follow some general guidelines. For instance, looking at your business goals and what you hope to achieve with your ads can help you determine what kind of budget you’ll need. Additionally, keeping an eye on your competitors and what they’re spending on their own Google Ads campaigns can give you a good idea of what you’ll need to stay competitive. Ultimately, the key is to start small and experiment with different budgets to see what works best for your business.
- How long does it take for Google Ads to work?
Google Ads can start working immediately after your ads are approved, but it usually takes 2-4 weeks for your campaign to pick up momentum. In fact, a successful Google Ads campaign will take at least 90 days to mature, and then an additional 4-12 months to grow into a strong campaign.
- How to advertise on Google without a website?
You can advertise on Google without a website by creating a Google My Business (GMB) page. GMB pages are free to create and allow you to create a listing for your business that appears in Google Search and Maps. You can also use GMB to run Google Ads campaigns.
Seize Control of Your Google Ads Costs
Google Ads costs are on the rise, especially as industries become more competitive. But what if we told you that the upward trend in Google Ads pricing doesn’t have to be your reality? That’s right, with our expert strategies, you can’t only stabilize but actually lower your CPC, making your ad dollars work smarter.
Don’t just take our word for it — check out these stunning graphics. It’s not magic; it’s just great budget management and a deep understanding of Google Ads algorithms.
So why agree on rising costs when you can partner with us to make every cent count? We know how to bring your CPC down, saving you money while driving revenue. The growth you’ve been seeking is just a consultation away.
Book a consultation today, and our PPC experts will show you how to defy the cost trends and make Google Ads a profitable venture for your business.
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