The question “How much does Google Ads cost?” is common among many advertisers and marketers. If you are new to paid search, consider reaping these ad campaigns’ benefits.
Many factors determine the cost, from budget to goals and more. However, there is no one answer to this question, as it depends on your business, industry, campaign, and more.
Fortunately, you can follow certain average costs and benchmarks to determine how much you might have to pay. So, if you want to know more about Google Ads cost, you are in the right place.
Our PPC experts have created a guide to help you understand Google Ads pricing.
How Much Does Google Ads Cost in 2023?
The cost of ads on Google can range anywhere between $1,000 and $10,000.
The average CPC (cost-per-click) for these ads can also range from:
- Between $1 and $2 for the Search Network
- And a dollar for the Display Network
However, the answer to how much do Google Ads cost is not as simple as that. There are many factors you have to take into account before you can accurately gauge the cost.
Keep reading to find out more about these costs.
Top 7 Factors that Affect Google Ads Cost
So, how much does Google Ads cost? Well, there are a myriad of factors that affect it, and here is what you must know about each of them in detail:
One of the top factors affecting Google Ads cost is the industry size. For example, the most competitive industries online are real estate, accounting, legal, and more.
These industries have higher CPCs because of the professional services they offer. One converted user can become a long-term client that can generate a revenue of $1,000 to more than $10,000.
So, paying for clicks will not put your business out. On the other hand, the entertainment and art industry has a lower CPC.
This is because they need to reach more people to reach the same benchmark. You must comprehensively analyze your industry to determine the CPC and how much Google Adwords will cost your business.
2. Ad Rank
Users search for queries daily on Google. When they conduct this search, Google will work to determine whether any companies are bidding on keywords relevant to the query.
For example, if companies bid for a specific keyword, then Google will enter all these ads into an auction and calculate an Ad Rank for each.
It calculates the Ad Rank through this formula:
Quality Score x Your Maximum Bid (most you will pay for CPC)
If your Ad Rank is high, your ad will appear on the top of Google. Now, the Google Ads cost for this will depend on other things.
You might have gone for the maximum bid on Google, but the search engine doesn’t need to charge you for that click. Instead, Google uses a formula to determine the CPC, which is:
Ad Rank of the ad below yours/Quality Score + $0.01 = CPC
If you run a small business and your budget is not that high, the formula will allow you to compete with businesses spending more. So, if you put in the work for the ad, your Quality Score will be high, which means your ad will show up higher.
3. Campaign Targeting
Campaign targeting is another factor that will affect your Google Ads cost. You must take advantage of the targeting capabilities to reduce your ad spend.
Here are some Google Ads targeting capabilities you must know about:
- Location Targeting: You can use this to target certain locations, such as specific states or regions. Local businesses will find this to be a great option.
- Dayparting: You can set your ad to show certain times or days in the week. As you adjust the bid based on these specific times, you can take advantage of the times your target audience is most active. For example, if you are a breakfast café, morning times will work best for your ads.
- Audience: The entire purpose of campaign targeting is to reach your target audience. You can use Google Ads to target your audience based on their buyer persona. So, your ads will show to people who want to engage with your content or have already engaged.
- Devices: You can also set your Google Ads based on the devices people use. For example, you can set the campaign to mobile users to lower your Google Ads cost while maximizing the ad spend.
Campaign targeting is important, and you must consider costs based on the campaign. Conduct thorough research for each of these targeting goals for your industry, and then decide how you would like to spend your Google ads budget for maximum ROI.
4. Quality Score
The Quality Score of your ad will also determine the cost. Quality Score measures the relevance and quality of your Google ad.
Its score can range anywhere between 1 and 10, and it will evaluate the experience of the ads’:
- Click-through rate (CTR)
- Landing page experience
- And more
As a business, you must strive to score close to ten. A higher score means that Google views your ad as useful and relevant for users.
In the long run, this will help you get a high rank in search engine rankings. Remember that the score will also affect keyword biddings.
For example, a high score and a lower bid can help you rank high. However, if you have a lower score, you must bid higher to get the top spot on the search engine.
5. Market Trends
Trends come and go, especially in the marketing world. Businesses must keep up with the changes to stay ahead of the curve.
You must monitor your audience’s needs, behaviour, and interests to determine how to post ads. This means that you must keep changing your bidding strategy with time.
It also means you must find relevant keywords occasionally and bid on them. The average CPC will go up or down with time, depending on the market trends.
So, what keywords may be competitive right now may not be as competitive later on. Conduct a comprehensive market analysis to determine your Google Ads cost based on the market trends.
Keywords are one of the top ranking factors for Google, be it for ads, website blogs, or anything else on the search engine. Some keywords are highly competitive, while others are not.
So, the keywords you select for your campaign can be one of the most important factors determining your spending on Google Ads.
Competitive keywords mean that your ad budget will have to be higher. It will depend on the industry you belong to and how much competition you will face.
7. Google Ads Account Management
Yes, the pay-per-click (PPC) amount will also depend on how you manage your Google Adwords account. You can hire a PPC management agency or invest in PPC tools to help you.
If you can’t do this yet because of budget limitations, you can implement the following practices:
- Use Google Keyword Planner to maintain the keyword lists
- Utilize the Google Ads dashboard to create data-driven optimizations
- Keep a structure for your campaign, such as ad copy, type of campaign, ad group level, keyword selection, and more
- Regularly audit the PPC campaign for maximum Google Ads ROI
You will require a dedicated professional to manage Google Ads for your business. If you don’t, you outsource this task to professionals.
Average CPC for Google Ads
We already discussed the average CPC for Google Ads in 2023. However, another aspect of this is the CPC for long-tail keywords.
Remember that long-tail keywords make up a small proportion of the keyword volume on search engines. However, they account for most searches and can be cheaper to target than short keywords.
Let’s say you are running a specialty coffee place. Targeting for coffee near me will be a broad category with a high search volume and a CPC of $1.40.
However, breaking this down and targeting a long-tail keyword for a specific query will lower your cost. For example, if you search for “where can I buy coffee beans near me,” your CPC will lower to $0.90.
How to Budget for Google Adwords
Now that you have some idea about the Google Ads cost, you might wonder how you are going to budget your ad spend. Many first-time advertisers burn their budget in a few days.
However, it is crucial to understand some factors of budgeting that will allow you to maximize your spending. These include the following:
- Bid: This is the amount you are willing to pay for the CPC
- Budget: The amount you are willing to spend on Google Ads
- Cost: Amount you end up paying for the ad click
- Spend: The amount Google will take from your budget whenever your ad participates for an auction
Now that you have some basic budgeting factors down let’s understand how you will budget in more detail.
1. Provide a Daily Average Budget to Google
The first thing you need to do while setting up Google Ads is to provide your daily average budget. For example, you can set a budget for each ad campaign you run for your business.
Remember that just because you set a daily average budget doesn’t mean that Google will spend this daily. Instead, the budget roughly estimates what you want to spend each month.
So, it can easily fall below or rise above the amount you set daily. Because of this, it is also crucial to specify a spending limit for your Google Ads.
2. Set a Monthly Spending Limit on your Account
While you provide a daily budget to Google, you can also set a cap on your spending by opting for a monthly spending limit on your account.
In 2017, Google announced that they can spend double your daily budget if you want more clicks or conversions.
In practical terms, if you set a daily budget of $25, your daily spending limit on Google Adwords will be $50. You will not have to pay more than your monthly and daily spending limits, depending on the parameters you have set.
3. Calculate the Average Daily Budget you need
Now comes the most important part: calculating your average daily budget. It is easy.
All you need to do is take your monthly budget for the campaign and divide it by 30.4. Once you do, you will have the average daily budget.
However, the monthly budget you set will depend on a few factors, which include the following:
- The priority you want to set for the campaign
- The average CPC for the keywords you are bidding on for the campaign
- Google Ads budget you have set for your marketing
Every campaign has a unique priority level. Setting a higher budget for campaigns with the top priority is natural.
You can also insert different budget numbers on the report to see how it impacts the monthly ad spend. Google Ads has budget reports that will provide insight into how much it spends daily.
4. Set your Bidding Strategy
You must set your bidding strategy when learning to budget for Google Adwords. The bidding amount is the maximum amount you will pay for an ad click.
It is not as simple as that, though. There are still a few things to keep in mind before you decide to set your bidding strategy:
- Manual bidding: When you opt for this, you can set one maximum CPC per ad campaign. You can also set unique bids for every keyword in that group.
- Automated Bidding: You can set a maximum limit to ensure clicks even with automated bidding. However, Google can spend more than your maximum CPC for better conversions.
- Competition: You must ensure you are bidding high enough to stay in the competition. Even with a high Quality Score, you can’t bid too low.
How Much Should You Bid?
Your bid will depend on the keywords and the type of Google ads campaign you want to run. The idea is to decide how much you think a click on your ad is worth to your business.
According to Google, you must start bidding with $1 as your maximum CPC if you are starting and don’t know what to do. Keeping the maximum bid lower than the breakeven is key to ensuring a good ROAS (return on ad spend).
Breakeven CPC is where the Google Ads cost equals the profit.
Breakeven CPC = Average Conversion Rate x Value per Conversion / Target return on investment
If you want to set a bid higher than the breakeven CPC, you can. But, it will mean that your ad spending will be more than the profit, which means a loss.
On the other hand, lowering the bid too much can also lead to no conversion and an adverse effect on your Google ad ranking. So, play smart and do the math before you decide your bidding strategy.
Other Google Ads Costs
Apart from these costs, there are also some other costs businesses can expect from Google Ads, which include the following:
|Ad spend per month||Anywhere between $9,500 and $25,000|
|CPC – Google Display Network||$1 or less for each click|
|CPC – Google Search Network||Between $1 and $2 for each click|
|PPC management tools||$15 and $800 per month|
|Professional Google Ads management agency||Between 12 and 30% of your monthly ad spend|
Many tools can help you streamline your Google Ads efforts. These tools can help you learn more about this strategy, and they can help you optimize your bids.
You don’t have to spend on these tools, but they can help you ensure seamless workflows. There are also free tools you can opt for.
Professional Google Ads Management Agency
While you might not have the budget for this initially, you can always opt for a professional PPC agency later on. These dedicated professionals will ensure successful Google Ads campaigns for your business.
The secret is doing homework and finding your region’s best Google Ads management agency. Once you do, you will see your business boom.
What to do Before Spending Money on Google Ads
Even if you are considering running a Google Ads campaign, you must do a few things before deciding to spend your money. Here are a few things to do before you create your campaigns:
- See what your competitors are doing
- Work on your landing pages for your product or service
- Do comprehensive keyword research by paying attention to what customers are clicking
- Create high-quality ads that grab the attention of users
Conducting this research before a Google Ads campaign will enable you to spend your ad budget wisely. It will also allow you to begin your campaign on the right foot and get conversions.
Google Ads Cost for Small Businesses
As a small business owner, you might wonder how much money you would want to spend on Google Ads. After all, you have a limited budget for your ad spend.
The average Google Ads cost will vary widely, depending on factors such as industry and other things. For example:
- Healthcare businesses can spend anywhere between $500 and $2,000 per month
- Home services can spend anywhere between $700 and $3,000 per month
- And real estate businesses can spend anywhere between $1,000 and $2,000 per month
However, if you are a medium-sized business, you can expect to spend between $7,000 and $30,000 monthly. Yes, it is a broad range, but only because so many variables go into creating Google Ads campaigns.
How to Optimize Your Small Business Google Ads Campaign
Finally, if you are willing to create a Google Ads campaign for your business, here are some practices you can follow to optimize it for effective results:
1. Utilize Ad Extensions
Leverage the power of ad extensions for your campaign to boost the information intent. For example, these extensions will help you add:
- Business information
- Phone number
- And more
Remember that the more extensions you add to your campaign, the more space it will take up on the Google page. Use them wisely, and offer relevant business information through them.
2. Optimize the Landing Pages
Customers come to landing pages when they click on your ads. The key is ensuring the messaging aligns with the keywords you use on the page.
Keep it simple, and reduce the number of clicks between customers seeing your ad and purchasing the product or service. When you do this, you will successfully convert the users from the Google Ads campaign.
3. Keep an Eye on the Metrics
Finally, it is important to set some metrics and monitor them. These can include CPC, conversion ratios, and more.
If the metrics are not where you want them to be, we recommend implementing some strategies to improve them. Creating and executing Google Ads campaigns is a trial and error-process; you will only learn through it.
How much do Google Ads cost?
The average CPC for Google Ads is $1 and under on the Display Network and between $2 and $4 on the Search Network.
How much are Google Ads in Canada?
On average, most ad campaigns in Canada will cost your business $2 for each click. However, this will depend on the type of business and industry.
Is Google Ads worth the money?
Google Ads are an affordable way for businesses to reach their target audience. These ads are flexible, so if you want value for money, you can set your budget accordingly.
How much budget do I need to start Google Ads?
Start small. Begin with an average daily budget between $10 and $50 for your ad needs. Then, you can check the Google Ads account and see how your daily budget and campaign is doing.
How much do Google ads cost per month?
The average small to medium-sized business can incur a cost of anywhere between $1,000 and $10,000 on their Google Ads campaigns.
What is the cost per conversion for Google Ads?
The average conversion rate for running Google Ads is 0.57% on the display network and 4.40% on the search network.
Final Verdict: Are Google Ads Worth The Investment?
Whether Google Ads cost is worth your money or not depends on what you want from the campaign. You can invest in paid search campaigns if you want more clicks and conversions.
While you can run these campaigns yourself, having experienced professionals is good. A PPC management company or professional will ensure you get high ROAS and have stellar campaigns that lead to higher conversions.