Google Ads (formerly called Google AdWords) is 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.
Google Ads is the most popular pay-per-click (PPC) network with digital advertisers, according to PPC Media Survey. Google Ads also has one of the best returns on investment of $2 for every $1 you spend. Not only can Google get people to click on your ads, but it can also take appropriate actions after they do so. This proves that it may be a worthwhile digital marketing tool to invest in.
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 advertising platform. You can create ads, bid on specific simple or long tail keywords, and determine how much you're willing to spend per click.
Google Ads utilizes an auction system that takes place 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. Your ad is given an Ad Rank score, which is very simple: (Your maximum CPC bid) x (Your ad's Quality Score)
Your ad's Quality Score is determined by a combination of things. These include:
- Its relevance to the keyword that triggered it
- The click-through rate
- The quality of the page users lands on after clicking your ad
Let's say your maximum bid for a specific keyword is $4 and a quality score of 8. As a result, your Ad Rank will be $4 x 8, which equals 32. In the auction, the person who has the highest Ad Rank wins the top advertising spot.
Google also uses the Ad Rank to calculate your cost per click rate. The formula is (Ad Rank of the ad below yours) / (Your Quality Score) + $0.01.
Let's say your maximum CPC bid is $4 and your ad Quality Score is 10/10, resulting in an Ad Rank of 40. Now, your competitor below you has a maximum CPC bid of $8 and a Quality Score of 36, which leads to an Ad Rank of 36. To calculate your CPC using the formula leads to (36 / 10) + $0.01, which equals $3.61.
How much do Google Ads cost?
So, how much does Google charge for ads? Google Ads pricing varies and is determined by several factors. However, the average Google AdWords cost per click is between $1 and $2 on the Search Network(search results). The average CPC on the Google Display Network(on other websites) 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, like law and insurance.
Some giant retailers spend up to $50 million per year on Google paid search campaigns. Small to mid-size businesses have a monthly ad spend of anywhere from $1,000 to $10,000 on Google-paid search efforts. That equals $12,000 to $120,000 per year.
Factors that impact Google Ads price
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 like:
Your industry is the biggest influence on your Google Ads cost. For example, if your industry is real estate, accounting, legal, etc., you'll have a higher cost per click (CPC) rate. This is because of the nature of the industry. A single client in these industries can bring upwards of $1,000-$10,000 depending on your business. This means a CPC of $50 is a small price to acquire that client.
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.
Consumer trends and online advertising platforms are never at rest. It is crucial that you keep up with current trends in your industry and within your niche. This way you can tap in and reap the benefits.
Managing 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 keep on top of things. To keep your Google Ads costs low and returns high, try:
Evaluating your performance using the Google Ads dashboard and making data-driven optimizations
Maintaining your keyword lists using Google Keyword Planner
Performing regular account audits on your PPC campaign and more
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), you increase your Google Ads budget.
This is one of the best things about online advertising. Traditional print advertising does not allow you to test effectively. However, online pay-per-click ads allow you to keep tweaking and adjusting as you like. This way you can see what works and what doesn't so you can get the best ROI.
Before spending any money on Google Ads, you should:
Be sure to create attention-grabbing and high-quality ads.
Do keyword research by paying attention to what your customers and prospects are clicking on in your industry.
Put some work in on 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 or create more compelling offers.
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 85.55% 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.
Moving on, another study shows that PPC advertising generates twice the visitors that SEO does. This makes it a worthwhile investment for quicker results.
Last but not least, 65% of people click on Google ads when looking to buy. If your ad shows what they're looking for, consumers will click on your ad and may even make a purchase.
In the end, these statistics show that investing in Google Ads is worth it.
Google Ads price FAQs
What is the ideal advertising budget for Google Ads?
The majority of Google's revenue depends on the success of Google Ads. This is why they have several PPC management tools to help you, like the Google Ads Cost Calculator. This tool can help to decide on Google Ad spend and Google Ads cost.
It can tell you how much your return on ad spend (ROAS) would be. All you need to know is the typical return you'll earn from a new customer. This helps determine whether the cost of a particular Google Ad is too expensive for your advertising budget or not.
Google Ads also offers budget control features. These allow you to adjust the cost of your ads on Google each day.
Is Google Ads free?
Unfortunately, Google Ads aren’t free. The average cost per click in Google Ads is between $1 and $2 on the Google Search Network. The average cost per link on Google Display Network is under $1.
How does Google Ads determine your cost per click?
Google determines your cost per click using the advertisement's Ad Rank. The Ad Rank is your maximum bid for a specific keyword multiplied by your ad's Quality Score.
Google advertising cost conclusion
How much you spend on your Google Ad campaign is entirely up to you. The right Google Ads spend for your business depends on various factors. These include ad performance, industry, and more.
Regardless of your approach, Google Ads is great for almost any business out there. If you're ready to take the plunge, contact the experts at Scorpion about advertising a business on Google.