How Much Do Google Ads Cost: 2021 vs. 2022

3 January 2022

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Olga is a digital marketing specialist @Viden, delivering results for brands through data-driven strategies and result-oriented tactics across Google & Bing Ads, Facebook Ads, Amazon Ads & more.
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Google Ads is one of the largest advertising platforms that allows brands to reach potential customers through a great variety of ad formats, including search, shopping, video and display. It’s a popular choice for brands that are looking to start advertising their business online, and many of them have a lot of questions about Google Ads. The most common one, however, is: “How much do Google Ads cost?”

In truth, there is no direct answer to this question. Google Ads costs depend on a number of variables that differ from brand to brand, however, the platform does provide a great degree of flexibility to the advertiser to control their spend. But if you want to get the most out of your campaigns and plan an effective Google marketing strategy, it’s important to understand the basics of Google Ads pricing.

So, let’s dive in.

How Does Google Ads Work?

For the majority of 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 a number of factors such as ad rank, keyword bid or campaign targets, budget, and quality score, and is determined by Google Ads auction.

What Is Google Ads Auction?

Google Ads auction controls which ads would show to the user and takes place every time someone enters a user query on Google or visits a site with ad placements. Google determines if the search query contains keywords that advertisers are bidding on, then determines which ads will appear and their Ad Rank – the order in which ads will be positioned – based on 3 main factors:

  • Bid – by setting your bid, you’re informing Google Ads of the maximum amount you’re willing to pay for a click on your ad. How much you actually pay, however, usually ends up being lower, and depends on a number of factors, including your competitors’ bids and your ad position.
  • Quality Score – Google Ads also evaluates how relevant and useful your ad and landing page may be to the user, reflecting it in the Quality Score. It can be easily monitored and improved in your Google Ads account.
  • The expected impact from your ad extensions and other ad formats – when you create an ad, you can enhance it with additional information and features, such as a phone number, or links to specific pages on your site. These are called ad extensions. Google Ads calculates how extensions and other ad formats you use might impact your ad’s performance.

Once your Quality Score and Ad Rank are determined, the algorithm then decides how much you’ll pay for the click. The formula looks like thisGoogle Ads CPC

As you can see, 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 than your competition.

Average Cost Per Click 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 your brand’s industry, your CPCs could reach up to $50 or be as low as $0.5. On average, however, advertisers can expect to pay:

  • $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
Average Cost Per Click (CPC) by Industry:
IndustryAverage 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

Data Source

What Is The Best Budget For Google Ads?

Much like with the question “How much do Google Ads cost?”, the answer would be “it depends”. There is no number or percentage that would be the perfect fit for every brand and every account. Google Ads spend is, in general, highly subjective and depends on numerous factors such as your goals and industry, you ad performance, etc.

However, when mapping out your 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 a large number of 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.
  • Which 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, while using long-tail keywords, demonstrating a high purchase intent, e.g. “car insurance for seniors” could help you cut your costs and capture a possibly 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 how expensive your campaigns can get. 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 – how profitable your Google Ads campaign will be 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 makes a great impact on the 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 something 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 your money. Once you get some results and insights, however, you can make data-backed decisions and scale your campaigns, if you see fit.

However, while there is no minimal 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 the advertiser with many options to control how your budget is spent. You can set bids either 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. 

How Much Will Google Ads Cost In 2022?

With every year, costs of digital advertising are steadily rising 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.

On average, Google Ads costs experienced a 15%-25% rise in 2021, and are predicted to increase for 20%-40% in 2022.

While there is way to fully escape the trends and shifts across the platform, 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 regularly add new ads into rotation;
  • Add all the applicable ad extensions to your campaigns;
  • Ensure your landing pages are well optimized;
  • Use negative keywords and placements to reduce spend on irrelevant traffic;
  • Use bid adjustments to maximize your ad delivery to the right audience. 

Conclusion

Advertising on Google Ads can be a great opportunity for brands to take their business to a new level, expanding reach, building an online presence and gaining new customers.

And while advertising can get expensive for some industries and brands, it is possible to drive growth starting at a smaller scale. Ultimately, how much you spend on your Google Ads campaigns is entirely up to you, depending on what makes most sense – and profit – for your business.  

If you’re looking for help determining your budget and planning your Google Ads strategy, you can contact us online. Our PPC experts will be happy to discuss with you how you can drive growth for your business with Google Ads.

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