So you’re interested in starting a Google Ad campaign, but want to make sure it’s within your budget. Past that, you want to know if the money you’ll spend is worth it. Knowing how much Google Ads will cost for your business can get confusing. This is because there are several factors that determine what you will pay. Due to this, there is no standard price, but we’ll go over the information you need to form a general estimate. As far as whether it will be worth it, you should measure your ROI for optimization, but Google estimates an average ROI of 100%, which is certainly a promising percentage.
The reason there is no blanket answer to how much Google Ads cost can be understood by looking at how Google Ads work. Each Google search can yield a slightly different cost. Let’s dive in and examine the factors that influence the price of Google Ads.
Table of Contents
How Google Charges for Ads
When designing a Google Ads campaign, you will adjust your settings to include a budget, your maximum bid (what you’re willing to pay per each click on your ad), your keywords list, and other details that affect your Google Ads costs. The average daily budget you set should be data-driven. It should represent the amount your business is willing to pay per day on average over a 30-day period. According to Google, the amount you are charged on any given day varies but will never exceed twice your average daily budget. Your Google Ads will cost only 30.4 times your average daily budget over the month.
When someone searches one of your keywords on Google, but other advertisers have also placed bids on that keyword, you enter an ad auction. Each advertiser is assigned a Quality Score between 1 and 10 based mostly on the keyword’s relevance, the website’s landing page experience, and the estimated click-through rate of the ad. Your ad rank is then calculated by multiplying your Quality Score with your specified maximum bid, and the advertisers with the highest ad ranks win the auction. In addition to determining if your ad will be shown, the results of this auction ultimately determine the amount that Google charges you.
Per Click
Google Ads charges per click. The charge per click (CPC) is equal to the ad rank of the ad just under yours divided by your Quality Score, plus $0.01. With this equation, you can end up ranking higher than an ad with a more expensive CPC. This is possible if you receive a better Quality Score for the search. It also means that you can pay less than the maximum bid you’ve set. Even when your ad is displayed, you only get charged when your ad is clicked. Your Google Ads prices will also vary based on the network. The Google Search Network, in which your text-based ad is displayed above non-ad search results on Google, has an average CPC of $1.00 to $2.00.
The average CPC in the Google Display Network, which shows display ads across Google’s network of websites including Google Maps, Gmail, and YouTube, is about $1.00. While these average costs are a good baseline, some industries see a lot of competition for ads and profit far more from new customers, so Google charges significantly more per click in these categories.
Google Advertising Cost
The fluctuating factors that go into deciding an ad’s CPC in addition to other variables allow Google advertising costs to differ considerably. Your average daily budget and maximum bid amounts should take into account the competitiveness of your industry. Small or mid-sized businesses with average competition for ads will spend an average of $9,000 to $10,000 monthly. The larger businesses with high competition can have their Google Ads cost upwards of $50 million annually. Because there is so much variability, it can be beneficial to get assistance with designing and managing your Google Ads campaigns.
Professional Pay-Per-Click Management
Many businesses opt for professional pay-per-click (PPC) management. The benefits of professional Google Ads management are numerous. The service is equally valuable to large companies who have used paid search ads for years as it is to a small business about to launch its first campaign. This adds anywhere from a couple hundred to a few thousand dollars to your overall Google Advertising price.
Given that professional ad management costs only a fraction of your ad spending and your Google Ads have a 100% projected ROI, this is a reasonable and worthy investment. PPC marketing services like ours will help you set and meet your objectives through data-informed decisions that optimize your ad campaign. This includes, but is not limited to, increasing your Quality Score through careful review of your copy and landing page experience, organizing your keywords list, and researching new keywords that will earn you higher click-through and conversion rates.
Pay-Per-Click Management Software
The value of a professional ad management service is indisputable, but you may not feel it is right for you. Another option that will factor into your total Google Ads cost is the use of PPC management software such as Opteo, WordStream, or Optymzr. The monthly price of using these software solutions ranges. The price can depend based on the program you are using and the needs and scale of your business. Some of the software options require that your budget exceeds a certain minimum amount. So, your business may not qualify for every program.
The services provided also vary, but most offer assistance with bid and budget management. They also typically monitor for patterns that suggest your campaign and ad settings are not optimal. The data they gather and the suggestions they make are valuable, but there are limits to technology. A human will still need to weigh the information and make the decisions. You will have to consider this manpower and time in addition to the price of the software to calculate the true amount you will be devoting to this type of ad management.
Keyword Cost
One of the biggest influences on what your Google Ads cost is the keywords you’re bidding on. A keyword is either a single word or short phrase which is related to your company or the products or services you provide. It’s important to do research to optimize the list of keywords in your ad campaign. You should also make adjustments as needed based on performance results. The more relevant and accurate your keywords are to what your potential customers are searching for, the more often your ad will appear and get clicked on. We provide an in-depth look at keyword pricing in another section, but we will cover the basics here. The three main components that factor into keyword cost are competition, trends, and intent.
Competition
Competition from other advertisers drives up bid prices because there are far more relevant ads than there are spots for ads. This means that your ad may not appear at all if your ad ranking isn’t high enough. To improve your ad rank, your maximum bid, Quality Score, or both need to be increased. The bid has much more room to increase than the Quality Score (which tops out at 10), so the bid price is inflated to account for the competition. The most expensive keywords are Insurance, Loans, Mortgage, and Attorney, all hovering around $50.
Trends
Trends also affect keyword prices. Keywords associated with holidays or seasonal goods increase in cost at the times during the year when they are usually searched. Similarly, social trends can influence the search volume of terms. For example, cryptocurrencies are much more popular now than a decade ago. This trend has impacted the keyword cost for associated searches.
Search Intent
Search intent can raise or lower the price of a keyword. This is because it predicts how likely the user is to make a purchase. Consider the difference between someone searching “Honda Civic for sale” and “Honda Civic review.” With the former, the intention to purchase specifically a Honda Civic is clear. The person searching for a review of this car might have the intention to buy it, but it is equally probable that they are not yet ready to make a purchase. Because there is a chance of a lower conversion rate, “Honda Civic review” would be the less expensive keyword.
For those who want to keep keyword spending low without compromising their click-through and conversion rates, long-tail keywords are a great option. These are longer and more specific phrases that will have lower search volumes but high intent to purchase. Instead of choosing the pricey “Insurance,” you could bid on “Best insurance rates in Chicago.” This long-tail keyword costs less, but the users searching that phrase are still looking to purchase insurance. Using these longer keywords keeps your Google Ads costs manageable to help maximize your ROI.
Launch Your Ad Campaign With SEO Design Chicago
After this breakdown of their cost, we hope that marketing through Google Ads seems less daunting. Even if you want to explore alternatives to Google Ads, SEO Design Chicago’s experienced team can help you get started with our marketing management services.
FAQ:
- How does Google Ads work?
- How do I determine my budget for Google Ads?
- Are Google Ads worth it?
- What affects the cost of keywords?
- What are examples of pay-per-click management software?
Contact Us Today!