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, formerly Google AdWords, can be complex due to several 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 define the right ads spend for your business.
Table of Contents:
- How Does Google Ads Work?
- How Does Google Ads Pricing Work?
- Average CPC in 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 2024?
- Google Ads vs. Other Platforms: Is It Worth the Investment?
- How Much Do Small Businesses Spend on Google Ads?
- How to Optimize Your Google Ads Campaign
- 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-mille (CPM) model, available for video and display, and CPV (cost-per-view), 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 CPC (cost-per-click), CPM, or CPV fee may vary as it depends on many factors, such as ad rank, keyword bid, advertising 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:
- Bid. 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:
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 CPC in 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
By Industry
| Industry | Average CPC (Search) | Average CPC (Display) |
|---|---|---|
| Advocacy | $1.43 | $0.62 |
| Auto | $2.46 | $0.58 |
| B2B | $3.33 | $0.79 |
| Consumer Services | $6.40 | $0.81 |
| Dating & Personals | $2.78 | $1.49 |
| E-Commerce | $1.16 | $0.45 |
| Education | $2.40 | $0.47 |
| Employment Services | $2.04 | $0.78 |
| Finance & Insurance | $3.44 | $0.86 |
| Health & Medical | $2.62 | $0.63 |
| Home Goods | $2.94 | $0.60 |
| Industrial Services | $2.56 | $0.54 |
| Legal | $6.75 | $0.72 |
| Real Estate | $2.37 | $0.75 |
| Technology | $3.80 | $0.51 |
| Travel & Hospitality | $1.53 | $0.44 |
How to Expand to New Markets Using Google Ads
How to Create Highly Effective Google Ads for Your eCommerce Business
Microsoft (Bing) Ads vs. Google Ads: Which One to Choose?
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 price and spending is, in general, highly subjective and depends on numerous factors such as your goals, industry, location, your ad performance, etc.
However, when thinking about Google PPC cost and mapping out you budget, there are several factors you should consider.
1. 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.
2. 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 efforts and your spend.
3. 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 showing 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 important 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.
4. Conversion rates
Your Google Ads campaign’s profitability is directly linked to your CVR (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. Think about the current CVR 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?
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 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. Let’s look at some of them.
Hiring an agency
For busy entrepreneurs, entrusting your PPC work to a digital marketing agency can be cost-effective. They bring expertise, time-saving benefits, and the potential to prevent costly blunders. However, be prepared for agency fees, typically around 10% of your ad spend. Remember, not all agencies guarantee a specific return on investment, so do your research and choose wisely.
Tracking and optimization tools
Tools like Google Analytics 4, Google Tag Manager or Looker Studio can reveal which keywords drive conversions, how visitors navigate your landing pages, and where potential bottlenecks lie. Learning to wield this data effectively requires effort, but the resulting optimization can significantly improve your CVR and ROI
Ad copy and visuals
High-quality, targeted writing and captivating visuals can boost click-through rates and conversions, setting your brand apart in the search results. Hiring freelance designers or copywriters can unlock this creative potential, but budget allocation and finding the right talent are factors to consider.
A/B testing
A/B testing allows you to test different elements (headlines, images, calls to action) with smaller audience segments. By analyzing which variant resonates best, you can optimize your entire campaign. It’s a slow but data-driven approach, like running mini-experiments. However, running these experiments includes additional costs as you’re essentially paying for multiple ad variations. But the potential boost can often outweigh testing costs.
Expanding the network
The Google Display Network offers access to websites and apps, potentially broadening your reach. However, this wider stage requires careful targeting strategies to avoid irrelevant impressions and keep costs under control. Let’s take some examples. If you’re a boutique travel agency, targeting travel blogs and luxury lifestyle websites is a smart move. But casting your net to include general news sites or gaming forums would cost you a lot. Similarly, an eco-friendly cleaning product would win on green living blogs, not on car enthusiast forums.
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. 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, a Google Ads campaign 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. 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 and make sure that only relevant audiences see them.
How Much Do Google Ads Cost In 2024?
In 2023, the average Google Ads cost per click (CPC) stood at around $4.22. Competitive industries like finance or insurance had CPCs exceeding $10, while less competitive niches could see CPCs as low as $1.
Looking ahead to 2024, we can expect the overall cost of Google Ads to rise slightly, likely along with the general inflation rate. Some estimates suggest an increase of around 5-10%, which would push the average CPC to somewhere between $4.43 and $4.64. However, it’s important to remember that these are just estimates, and the actual cost of your Google ads in 2024 could be higher or lower depending on the specific factors mentioned earlier.
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
Google Ads vs. Other Platforms: Is It Worth the Investment?
While Google Ads is one of the most popular and effective online advertising platforms, it’s not the only one. In fact, there’re many other platforms you can use. For example, Facebook Ads may be more effective for businesses targeting a younger demographic or looking to increase brand awareness. On the other hand, LinkedIn Ads is perfect for targeting a professional audience or generating leads.
While Google Ads offers precise targeting and potential for high conversion rates, it’s important to note that it may come at a slightly higher cost per click (CPC) compared to some other platforms. This is because competition for certain keywords, particularly those with high commercial intent, can drive up CPCs on Google Ads. However, higher CPCs on Google Ads may be offset by a higher conversion rate. Users searching for specific keywords are often further along in the buying journey, and they are more likely to convert into paying customers compared to users passively scrolling through social media feeds. So if your focus is on targeted campaigns and driving direct conversions, Google Ads can deliver a strong return on investment.
How Much Do Small Businesses Spend on Google Ads?
The amount small businesses spend on Google Ads varies depending on industry, location, goals, and website conversion rate. On average, small-to-mid-size businesses spend between $1,000 and $10,000 per month, with competitive industries like law and healthcare potentially reaching $20,000 or more. While there’s no single answer, understanding these factors and consulting with a qualified expert can help determine the optimal budget for your business needs.
According to Clutch, the average monthly Google Ads spend for small businesses is $6,800. However, this number can vary widely depending on the factors mentioned above.
How to Optimize Your Google Ads Campaign
Optimizing your Google ads involves both careful budget management and increased effectiveness. To improve your campaign performance, you can look for professional Google Ads services or take the following steps:
- Refine your keywords. Instead of relying on broad terms, identify relevant long-tail keywords that accurately describe your target audience and offerings. This increases relevancy and ad quality, potentially lowering costs.
- Develop clear ad copy. Focus on creating informative and engaging headlines that highlight your (unique selling propositions) USPs and address user needs. Use numbers, calls to action, and relevant keywords to pique interest.
- Create seamless landing page experience. Make sure your landing page aligns perfectly with your ad’s message and keywords. Provide clear information, reduce distractions, and offer a smooth path to conversion.
- Use Smart Bidding strategies. Explore automated bidding options like target CPA (cost per acquisition) or target ROAS (return on ad spend). It will allow Google to dynamically adjust bids based on your conversion goals.
- Test and monitor results. Regularly experiment with different ad variations, keywords, and landing pages to discover what resonates with your audience. Track your results and make data-driven adjustments to optimize your campaign performance.
Future Trends
As with any industry, digital advertising is constantly evolving, and it’s important for businesses to stay up to date on future trends in Google Ads pricing. Let’s quickly review some of them.
- The impact of machine learning on Google Ads. Google’s ML 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 adjust real-time bids based on device, location, and time of day to maximize conversions.
- Mobile advertising. As more and more users access the internet through their mobile devices, businesses will need to optimize their ads for mobile. 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.
- CPC and CPM increase. Yet another emerging trend is the rise in cost-per-click (CPC) and cost-per-mille (CPM) rates across various sectors. 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.
- Pricing and ad policy changes. 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 is the deprecation of third-party cookies and the importance of creating a first-party data strategy.
Frequently Asked Questions
1. Is it worth paying for Google Ads?
If you have a clear target audience and budget, Google Ads can be a powerful tool for growth, turning website visitors into loyal customers who fuel your business.
2. Is Google Ads cheaper than Facebook?
It depends on what you’re selling and who you’re trying to reach. Both Google Ads and Facebook Ads can be effective, but they have different strengths and weaknesses, which can impact the cost.
3. 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.
4. How much does Google AdWords cost per month?
Google Ads pricing varies depending on your goals. Start small (e.g., $500/month) and experiment. Track results, then adjust based on performance and competitor spend.
5. How many clicks per day on Google Ads?
No set click for Google Ads. Focus on targeted clicks to boost sales, not just raw numbers. Analyze & optimize constantly for best results.
6. How much should a beginner budget for Google Ads?
Start small and experiment with $50-$100 per day on Google Ads. Track results, then adjust based on your goals and competitor spend.
7. How long does it take for Google Ads to work?
Google Ads can start working right away, but peak performance takes time. Expect 2-4 weeks for momentum, 90 days to mature, and 4-12 months to truly shine.
8. How to advertise on Google without a website?
Create a FREE Google My Business listing to appear in Search & Maps, run ads, and connect with customers.
9. How much does it cost to run Google ads?
It depends! Google Ads costs vary based on keywords, targeting, and campaign goals. Average CPCs (cost per click) range from $1-$5, but can be higher for competitive industries.
10. How much does Google Ads charge per click?
Google Ads clicks cost $1-$5 on average, but can skyrocket to $20+ in competitive fields like finance. Keyword, industry, and audience all play a role!
Seize Control of Your Google Ads Costs
Google pay per click 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? Our digital strategy consultancy knows 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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