How Much Should You Spend on Google Ads?

Google Ads (once called Google AdWords) allow you to run advertisements on Google Search Results Pages (SERP). Many experts believe Google Ads are the most effective way to reach people to advertise your business or products. They’re certainly a lot less expensive when compared to other forms of advertising, like radio, print or TV ads. Some experts say Google ads are much more impactful than other forms of ads – even social media ads. In a large study, Google found that businesses make an average of $2 for every $1 they spend on Google Ads.


What Are Google Ads?

You’re probably most familiar with the Google Ads that appear under the word “sponsored” at the top of search engine results pages after a person enters certain words into the search bar. They also offer other types of ads, including:

  • Running your ad with a corresponding on the sidebar when people check their Gmail.
  • Showing any products you may sell when people search in Google Shopping. 
  • Running video ads in the middle of or at the beginning of a video in Google videos or on YouTube (which is owned by Google)

How Much Does It Cost to Buy a Google Ad?

The cost of an ad depends on what you’re willing to pay. There’s no minimum or maximum amount set by Google. That said, what you can pay isn’t always the same as what you should pay. Sometimes you can afford more, but you shouldn’t pay extra. And other times, you may want to put some extra funds towards ads than you really want to. 

Like everything related to money, it’s about needs versus wants. It’s about can versus cannot. It’s about should vs. should not. 

The Google Ad process works like this: You bid a certain amount of money  on keywords that people search for that are related to your business. There’s a chance (which we’ll get to later) that your ads will appear in Google search results. That chance depends on how much you were willing to bid. Then you pay whatever your maximum bid was iif – and only if – the user clicks your ad to visit your ads pictures


What are People Bidding on Keywords?

Keyword bidding is like buying a used car. You don’t want to offer to pay too much. If you overbid, of course you’ll “win” the car. But if you underbid, then someone else may get the car of your dreams.

So be realistic. Let’s start with average prices of cost-per-click (CPC) ads. In 2023, the average is $1 to $2 per keyword for the Google Search Network and $1 per keyword for the Google Display Network (that’s the websites, apps, and Google-owned properties like YouTube and Gmail). 

You can’t just bid $2 and assume you’ll win and you’ll only pay $2 when a person clicks on your ad. You have to set a  monthly budget. 

Google’s help guide says, “To run your ads on Google, you’ll need to decide on the right budget and bidding options. Your budget establishes a charging limit for an individual campaign, so it should be the average amount you’d be comfortable spending per day. Your actual costs may be lower, depending on how you manage your bids.” 

They suggest setting a budget of $10 – $50 per day (but you must be willing to do this for a month, so the true cost is $300-$1500). While Google suggests starting small, most experts agree that most companies spend $1000-$10,000 per month in Google Ads. Often, when you buy a domain name or plan through WordPress, you’ll get a credit for Google Ads. 

You can get a sense of what companies in your industry spend on Google Ads by taking a look at the results of this study. These are the average CPC prices by industry.

Industry Average CPC (Search)
Advocacy $1.43
Auto $2.46
B2B $3.33
Consumer Services $6.40
Dating & Personals $2.78
E-Commerce $1.16
Education $2.40
Employment Services $2.04
Finance & Insurance $3.44
Health & Medical $2.62
Home Goods $2.94
Industrial Services $2.56
Legal $6.75
Real Estate $2.37
Technology $3.80
Travel & Hospitality $1.53

So How Much Should You Spend on Google Ads? It Depends

 Many people turn to third party vendors, like us at SEO Design Chicago, to help them get started, or maintain, their paid Google Ad campaigns because frankly, it’s tricky to figure out what to bid. And you have to constantly evaluate if you’re paying too much for the ROI you want. Your ROI goals may not always include “purchases.”

Other goals include:

  • Building brand awareness
  • Getting inquiries
  • Getting people to sign up for newsletters

We can help you figure out your goals and then help you figure out if ads are the best way to reach those goals. 

As Google Ads functions as a keyword auction website, determining a suitable budget is contingent on the cost of the keywords you intend to bid on. If several advertisers are bidding high on a particular keyword, the cost for that keyword will increase. If you are a small business, you can’t compete on the same level as a large business. So it may be to your advantage to not bother with high priced keywords and instead, focus on keywords that aren’t necessarily your first choice, but still make sense. 

Google ads price pictures

Should You Spend a Little Every Day, or a Lot in One Quarter? 

Another common mistake that we help people overcome is paying the same amount for keywords, without ever increasing your bids. This means that over a year, you may spend $5,000 but have almost nothing to show for it. 

If you had taken that $5,000 and invested it in a single quarter, you’d be able to see if there was any change in a shorter amount of time. If there’s no change, then don’t keep spending money on those keywords because you can’t compete. 


The Difference in Cost Per Click Between Keywords With Intent to Buy and Other Intention Keywords

Your goal for your ad will largely determine how much you pay. 

For example, let’s assume that you are a local plumbing company. If your goal is to get apprentice plumbers to work for you, your budget night look like this:

  • Plumbing jobs = CPC $1.05.
  • Apprentice plumber needed = CPC $2.18.
  • Plumbers wanted = CPC $2.81.

However, if you’re looking for customers, the price will likely go up, since more people are looking for plumbers than there are plumbers looking for jobs:

  • Plumbing company = CPC $12.23.
  • Plumbing company Chicago = CPC $9.53.
  • Local plumbing company = CPC $6.43.

That’s why it’s so important to base your cost-per-click and budget on the right keyword list. We help companies figure out their goals, and decide what keywords are worth bidding on. 

Remember that CPS depends on a lot of factors, including your geographical area and where you are willing to rank in ads (first vs. second, for example). 


Short Tail vs. Long Tail Keywords

Another factor to consider is whether or not you’re bidding on short-tail keywords. These are broad, generic, and popular terms that have high search volume and competition. For example, “lawyer” is a short tail keyword that’s extremely high priced. Ads with the word “lawyer” are hard to win.  

 Long-tail keywords are specific, niche, and low-volume terms that have less competition. Because people who search for these words already have a certain need, and know what they need, the prices are lower. There are simply not as many people searching for that term or phrase. So for example, the phrase “lawyer 503c” costs less because less people search for that term. Those that do already know the difference between a 501 and 503 business structure, and know they need a lawyer who specializes in 503. 

We can help you brainstorm long tail keywords for your business, and help you create ads with these words. 

pictures of google ads cost

How to Think Of Your Costs As A Worthwhile Investment vs. Expense

Expenses make you want to groan. Investments may make you groan – but not audibly. Investments pay off. Expenses don’t.

You want to think of your ads as investments, not pain-in-the-butt expenditures.

It will be hard to make that mental shift unless you are confident in your Google Ad strategy. Unless you know a lot about advertising and algorithms, it will be hard for you to have that confidence that your Google ads are paying off. So let us help you. We can work as a consultant in the beginning, until you get the hang of it. Or stick by your side for years.

We’ve helped dozens of companies, of all sizes, start or revamp their Google Ads campaign. Reach out to us so we can chat about how we can help you.  


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