How much does Google Ads cost? When it comes to advertising, the financial budget is impossible to predict. Because numerous factors influence the cost, in this article, we will go through all of the elements in Google Ads pricing so you can figure out how much Google Ads costs your business and how to set a reasonable budget.
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How does Google determine your cost?
Google Ads determines an ad’s cost per click (CPC) based on a bidding system known as Ad Auction. The Ad Auction takes into account multiple factors to determine the CPC, including:
Quality Score
Google checks to see if any advertisers are placing bids on keywords related to a user’s search when they conduct one. If yes, Google places all relevant ads in the auction. Each advertisement is given a Quality Score as the first step in selecting the winner. This score ranges from 1 to 10, depending on the keyword relevancy of the ad and landing page, anticipated click-through rate (which takes into account past performance), and landing page experience.
>>> Read more: What Is Google Ads Quality Score and How to Increase It
Ad Rank
The Ad Rank of each competing ad is then calculated by Google, determining if and where your ad will appear in the paid results area. The highest bid, or the amount you’re willing to spend per click on your ad, multiplied by your Quality Score, determines your Ad Rank. The commercials that have the highest Ad Rank scores are displayed.
>>> Read more: All About Google Ad Rank and Tips for Improving Ad Position
Cost-per-click
You only pay if someone clicks on your advertisement if it is shown. However, as mentioned, you don’t always place your highest bid. The formula for Google Ads cost per click is your Quality Score multiplied by the ad rank immediately behind you, plus one penny.
Using this formula, an advertiser in the SERP can pay less per click than another advertiser and still rank higher because of a greater Quality Score. Because of this, small-budget advertisers on Google can compete with those with large budgets.
Other factors
- Ad relevance and quality: Google Ads assigns a relevance score to each ad based on keywords, ad copy, and landing page quality. The higher the relevance score, the more likely the ad will receive a high CPC bid.
- Bid amount: The CPC bid is the amount an advertiser is willing to pay each time someone clicks on their ad. The highest bid amount will usually win the auction, but it’s not the only factor determining the CPC.
- Advertiser’s historical performance: Google Ads considers an advertiser’s historical performance when determining the CPC, including click-through rate (CTR) and conversion rate. Advertisers with a strong track record of high CTR and conversions are likelier to receive a high CPC bid.
- Competition: The level of competition for ad space can also impact the CPC. The CPC is likely higher if many advertisers bid on the exact keywords or target the same audience.
- Location and device targeting: An ad’s location and device targeting can also impact the CPC. For example, ads targeting a specific geographic location or devices such as mobile phones may receive a higher CPC bid.
How much does Google Ads cost in 2023?
“How much does it cost to advertise on Google?”
There is no one-size-fits-all answer to the cost of Google Ads per month.
Google sponsored ads cost can vary significantly based on several factors. On average, businesses can expect to spend anywhere from $1 to $10 or more per click on Google Ads. There’s no minimum spend for Google Ads. You can set a daily budget as low as $1. However, a low budget may limit ad reach and cost per click. An effective business budget ranges from a few hundred to several thousand dollars per month, depending on business size and goals.
Factors that influence Google Ads pricing
There is no way to determine the exact Google advertising price due to the complicated formulae we’ve just discussed. Pricing varies and is based on a few factors, including:
Industry
The main factor affecting Google Ads pricing is your industry. For instance, your cost-per-click (CPC) rate will be higher if your industry is real estate, accountancy, law, etc. Depending on your business, a single client in these sectors can bring you anything from $1,000 to $10,000. This indicates that a $50 CPC is a reasonable cost to get in that customer.
Customer lifecycle
The customer lifecycle may impact your Google Ads cost. Potential clients might need more time to complete their decision-making. Before deciding, they might pay you many visits, download information, or attend a webinar. Throughout this trip, keep your company at the forefront of your thoughts.
Google Ads account management
How effectively you handle your account may also affect your Google Advertising cost.
Scheduling
Dayparting, or ad scheduling, specifies when you want your advertisements to appear to prospective customers. Although your ads will still be subject to the ad auction process, you can tell Google when you want them to appear.
This is especially useful for local businesses looking to attract customers to a physical location through advertisements. If you own a bakery that closes at 7 pm, you might not want your ads to appear outside your normal business hours. You can also specify that your ads run continuously throughout the day but allocate a larger portion of your daily budget to hours when you want to increase visibility.
Location targeting
You can spend more of your Google Ads budget on specific geographical areas as you can spend more on specific times of the day. This is referred to as geotargeting or location targeting.
- Geotargeting ensures that your advertisements are only seen by Google users in designated locations, ranging from covering a large area, such as a state or province, to a limited area as tiny as a three-block area around your store.
- Geotargeting in Google Ads can be an excellent way to capitalize on growing mobile traffic trends and on-the-go shopping habits of today’s consumers. It may influence how you allocate your daily ad budget.
For example, you might want your ads to appear alongside relevant searches in a specific state, but you don’t know how.
Device targeting
Consumers today search online across multiple devices (often simultaneously), so you must pay attention to where your most valuable leads come from. Device targeting comes into play here.
Assume you want to appear in search results for both desktop and mobile searches, but you value mobile traffic more. You could designate a portion of your budget for desktop but a more significant portion for mobile devices. Depending on what you’re advertising or your ad copy, you might even want to spend more money on traffic from specific types of mobile devices.
Google Ads most expensive keywords
Here are the top keyword categories with high costs in Google Ads and their average cost per click. It’s essential to keep in mind that these are categories and not specific keywords; some keywords within these categories may have even higher CPCs than the listed averages:
- Insurance – $54.91
- Loans – $44.28
- Mortgage – $47.12
- Attorney – $47.07
- Credit – $36.06
- Lawyer – $42.51
- Donate – $42.02
- Degree – $40.61
- Hosting – $31.91
- Claim – $45.51
- Conference call – $42.05
- Trading – $33.19
- Software – $35.29
- Recovery – $42.03
- Transfer – $29.86
- Gas/Electricity – $54.62
- Classes – $35.04
- Rehab – $33.59
- Treatment – $37.18
- Cord blood – $27.80
Is Google Ads an effective advertising platform?
Is it worth it?
Google Ads is by far the largest PPC advertising platform used by large and small enterprises. Aside from asking, “How much are Google Ads?” you are also probably wondering if it’s worth the investment.
“How much should you spend on Google Ads?” Investing in Google Ads can be profitable, but only if done correctly. However, if you don’t manage your campaign well, you will spend more money with little to no returns. PPC data show that a dollar spent on Google Ads generates at least two dollars in income. Of course, the outcomes will differ from one business to another.
Currently, on the market, many companies rent Google ads agency accounts. However, using Mega Digital’s service, you only need 9% of the budget to use all the features, including renting fees and Google tax. In addition, you also receive care and enthusiastic support from a team of experts.
Key takeaways
Here are the main points discussed in this guide to help you understand the potential costs of a Google Ads campaign:
- The cost of a Google Ads campaign for a business will vary based on industry, consumer trends, and the customer lifecycle.
- Google Ads operates on an auction system that favors high-quality ads with lower costs and better placement.
- Advertisers can manage their budgets through tactics such as ad scheduling, geotargeting, and device targeting.
- A Google Search ad costs between $2 and $4, while Google Display ads cost under $1.
- The most expensive keywords of search engine advertising costs, costing $50 or more per click, are usually found in high-value industries like law and insurance.
- Major retailers may spend up to $50 million annually on Google Ads, while a small business’s advertising costs are typically from $1,000 to $10,000 monthly or $12,000 to $120,000 yearly.
Final word
As we’ve stated throughout, Google Ads cost has been influenced by numerous factors. However, the advertising price will not be the same in each industry. Hopefully, the article provided a good overview for users to visualize how to allocate a budget and run campaigns effectively.
Mega Digital has the best experts in the field with professional budget strategies. We have provided excellent advertising solutions and received positive feedback from our valued customers. Contact us to learn more about our Google Ads agency account rental service. On this interesting and dynamic platform, we look forward to assisting you in reaching your objectives.
