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How Much Do Google Ads Cost? A Quick Pricing Guide

Google advertising image with Scorpion
Caitlyn Blair

How much does Google cost? The long-standing question for any small business owner. The answer can vary, but it all starts with understanding who your customer is and what they are searching for.

Digital advertising is a big part of any small business marketing plan, and when it comes to connecting with your customers, Google takes the center stage.

Are Google Ads worth it?

Google Ads (formerly called Google AdWords) stands out as Google's advertising platform. It allows advertisers to place bids on specific keywords and have their ads show up in Google's search results (Search Network). Ads can also show up on different websites via Google’s Display Network and Google's AdSense program.

Why consider Google Ads? It’s the most popular pay-per-click (PPC) network among digital advertisers, according to PPC Media Survey. What makes it even more enticing is its impressive return on investment (ROI): a solid $2 for every $1 spent. Google Ads not only drives people to click on your ads, but it can also facilitate appropriate actions afterwards. This proves that it may be a worthwhile digital marketing tool to invest in.

It can be a great way to only spend money on advertising that goes directly to your customer base.

Get help with your Google Ads

So how much do Google Ads cost exactly? This article takes a look at the Google Ads platform including how much Google Ads costs, how it works, and more.

What are Google Ads?

Google Ads is Google's Pay Per Click (PPC) advertising platform. You can create ads, bid on specific keywords (whether they’re simple or long tail), and decide how much you're willing to spend per click.

Now, imagine it like an auction happening in real time. Let's say you bid on a keyword and your bid is higher than your competitor's. When users search for this specific keyword, Google displays your ad at the top of the results page. It comes up with a little tag indicating that it is a paid result.

The best thing about advertising on Google is that you don’t pay for the ad placement; you only pay when someone clicks on your ad.

There are also various options to choose from. You can set an average daily budget and monthly PPC budget depending on the campaign. This means you can run your Google Ads campaign without going over your daily ad budget or monthly Google Ads spend.

How do Google Ads work?

To understand how much Google Ads cost, you first need to understand how it works. Doing so can help you set a realistic budget for your Google Ads campaigns.

The Google Ads auction determines your PPC ad placement and cost. The ad auction begins when someone searches for something on Google. If the search query involves keywords advertisers are bidding on, eligible ads go to auction.

During the ad auction process, your ad placement and cost per click (CPC) are determined by Adwords intelligence. determines your ad placement and cost per click during the ad auction process. It assigns your ad an Ad Rank score, which is very simple:

(Your maximum CPC bid) x (Your ad's Quality Score)

Get help with your Google Ads

The Quality Score of your ads results from a combination of factors. These include:

  • Relevance to the keyword that triggered it: How closely your ad matches the user’s search intent
  • Click-Through Rate (CTR): The percentage of users who click on your ad after seeing it
  • Landing page quality: The relevance and quality of the page users lands on after clicking your ad

Google typically determines a Quality Score on a scale of 1 to 10, with 10 being the highest score. Each keyword in your Google Ads account has an assigned Quality Score.

A higher Quality Score indicates that your ad and landing page are more relevant and useful to users. This can lead to better ad position and lower costs. It can also allow your ad to rank higher even if competitors are bidding more.

Let's illustrate with some numbers:

  • Your maximum bid for a specific keyword: $4
  • Quality score: 8

As a result, your Ad Rank will be $4 x 8 = 32. In the auction, the person who has the highest Ad Rank wins the top advertising spot.

Now, let’s look at how Google determines your costs per click rate using the Ad Rank.

The formula is:

CPC = (Ad Rank of the ad below yours ÷ Your Quality Score) + $0.01

Consider this scenario:

  • Maximum CPC bid: $4
  • Ad Quality score: 10/10

Resulting in an Ad Rank of 40. Now, let’s compare with a competitor below you:

  • Competitor’s maximum CPC bid: $8
  • Competitor’s quality score: 36

This leads to an Ad Rank of 36 for your competitor. Applying the formula for your CPC:

CPC = (Ad Rank of the ad below yours ÷ Your Quality Score) + $0.01

For example:

CPC = (36 ÷ 10) + $0.01 = $3.61

These numbers, influenced by the Quality Score, give you a practical insight into how the bidding and ranking system works in Google Ads, helping you make informed decisions for your ad budget.

How much do Google Ads cost?

So, how much does Google cost for its ads on the largest search engine out there? The cost of Google Ads varies and depends on several factors. On the Search Network (search results), the average Google AdWords cost per click (CPC) is between $1 and $2. For the Google Display Network (on other websites), the average CPC is under $1.

The most expensive keywords in AdWords and Bing Ads cost $50 or more per click. These are usually highly competitive keywords in industries with high customer lifetime values, such as law and insurance.

Giant retailers might spend up to $50 million per year on Google paid search campaigns. Small to midsize businesses have a monthly ad spend ranging from $1,000 to $10,000 on Google-paid search efforts, totaling $12,000 to $120,000 per year.

3 key factors that impact the price of Google Ads

Due to the unique formulas we’ve just covered, there is no way to say exactly how much Google advertising costs. Pricing varies and depends on a few factors including the following three:

1. Industry

Your industry is the biggest influence on your Google Ads cost. For example, industries like real estate, accounting, and legal, typically have a higher cost per click (CPC) rate. This is due to the nature of those industries. A single client can bring in upwards of $1,000-$10,000, making a CPC of $50 a small price to acquire that client.

2. Customer Lifecycle

The lifecycle of your customer can have an impact on your Google AdWords cost. It may take potential clients longer to move through the decision-making process. They may visit your website multiple times, download content, or take part in a webinar before making the final move. Your business should stay top of mind throughout this journey.

3. Market Trends

Consumer trends and online advertising platforms are in constant flux. Keeping up with current trends in your industry and niche allows you to tap in and reap the benefits.

Cost-effective Management of your Google Ads Account

Your cost can also depend on how well you manage your account. You can use PPC management software or a PPC agency to stay on top of things. To keep your Google Ads costs low and returns high, try:

  • Keeping a good Google Ad structure. This includes the right campaign type, ad group level, keyword selection, ad copy and ad extensions
  • Evaluating your performance using the Google Ads dashboard and making data-driven optimizations
  • Maintaining your keyword lists effectively with Google Keyword Planner
  • Performing regular account audits on your PPC campaign

How much should you spend on Google Adwords?

Google Ads pricing is subjective, depending on the expected revenue you hope to generate from a new customer. Advertisers in highly competitive industries that generate more revenue per customer are willing to spend more than $10 per click on average. Understanding the relative value between your per-customer revenue and how much you can spend on your ad campaigns is crucial.

If you're just starting to run advertisements on Google, start with a low daily budget. Monitor the performance of your PPC campaigns. If you see a better return on investment (ROI), consider increasing your Google Ads budget.

One of the significant advantages of online advertising is the ability to test effectively. Traditional print advertising does not offer this flexibility. However, online pay-per-click ads allow you to keep tweaking and adjusting as you see fit. This way, you can observe what works and what doesn't, optimizing for the best ROI.

Before investing any money in Google Ads, you should:

  • Create attention-grabbing and high-quality ads.
  • Conduct keyword research by paying attention to what your customers and prospects are clicking on in your industry.
  • Put effort into optimizing your landing pages for your products and services; improving your landing page experience gives you a better chance of converting a prospect to a customer once they click on your ad
  • Observe your competitors and see what is working for them; find creative ways to replicate their successful strategies or create more compelling offers

Get help with your Google Ads

Is it worth paying for Google Ads?

Let's take a look at some statistics to see if Google Ads is worth it or not.

Most people head to Google when searching for something on the internet. Google has 91.54% of the global search market, which makes it the largest paid search platform when compared to other search engines. This, along with the constant innovations at Google, is why brands invest in Google Ads. It provides a great opportunity to raise brand awareness and generate conversions.

Moreover, according to a survey by Clutch, 63% of people have clicked on a Google ad. This shows promise for anyone thinking about running Google ads. Even 33% of mobile ad spend goes to Google. With growing mobile traffic trends, brands are more than happy to spend on Google ads.

Further reinforcing its value, another study shows that PPC advertising generates twice the visitors that SEO does. This makes it a worthwhile investment for quicker results.

Lastly, a notable 65% of people click on Google ads when looking to buy. If your ad aligns with their needs, it attracts clicks and may lead to conversions.

In the end, these statistics show that investing in Google Ads is worth it.

What about search engine optimization?

Many companies pair a digital advertising strategy with a search engine optimization (SEO) strategy to help them attract organic and paid leads to their business. To learn all about SEO it's best to check out this Beginners Guide To Search Engine Optimization. Essentially, SEO involves producing content on your site that appears just below the paid ads when someone searches on Google.

It starts with understanding what your customers are searching for and then creating content that helps them find you. For example if you are a plumber, you might find that your customers are searching a lot for leaky kitchen faucets. You could create some guides and even a YouTube video on how to solve that issue. If you go in depth enough with step by step examples, Google will reward you over time.

SEO is a consistent, long-term effort, so plan on creating a lot of content for a long period of time before you start to see some results.

Google ads can offer valuable insights into the content you should create for your customers. You can find what keywords are converting and then create blog posts and pages of content on your website about those keywords. For example, if you are a plumber and you know people search, "Best plumbers in Los Angeles," you can create a series of blog posts such as "10 best plumbers in Los Angeles," "How to find the best plumber in Los Angeles," and more.

If you create a long thoughtful post about your keyword it will have a higher chance of ranking organically and then you won't have to pay for the Google ad anymore.

What are other advertising prices?

There are a lot of other channels where you can spend ad dollars. So, what are other advertising prices? It can vary greatly by industry, region, and channel you are advertising in. Some business areas are more competitive than others. The best advice we have to give while you research advertising prices is do a lot of testing. Here are a few things you should do.

  1. Research: If you are an existing business check out your current leads and see where they came from. A quick survey or review of your website analytics can be helpful. From there you can find out where they came from and which had the highest return on investment. As a small business you can usually make a great living by advertising in just a few places that create a big impact vs. spreading your money too thin.

  2. Test: Your nephew insists that you need to be on TikTok. Should you give it a shot and check out TikTok’s advertising prices? While giving it a try can be an option, keep in mind that successful testing requires a commitment of one to two quarters and it might take away focus from your other marketing efforts.

  3. Analyze: These days you should be able to track the value of every marketing dollar you spend. Make sure to look for trends and always be trying to understand where your customer is better. It can help to add a marketing agency to track your results for you.

Need some extra help with your advertising?

If you're ready to take the plunge, contact the experts at Scorpion about advertising a business on Google. We have helped thousands of small businesses just like yours get to the top of Google with SEO and paid advertising.

Our team of experts use technology to research your market and automatically make bids on the keywords that work in your area. If something isn't working our technology will shift your budget into something that is working. We will build you a great website, improve your organic search results with artificial intelligence, and get your advertising moving in the right direction.

See why thousands of businesses just like yours have been using Scorpion for 20+ years. Get started today.

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