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The Details: How Much Google Ads Cost Your Business and Is it Worth it?

A question that we often get from our clients here at AMS is – how much will Google ads cost my business?

Do I need to spend a lot of money on it? Those are fair questions.

If you’re just starting to develop a pay-per-click advertising strategy, you’ll want to make sure that you have the money for running a Google ads campaign.

And that is before you start allocating part of your marketing budget to this tactic.

Unfortunately, there is no cut and dry, one size fits all answer to this question.

Google advertising costs will vary depending on a number of factors.

If you want to have a better understanding of how much it might cost your business to advertise through Google Ads…

…you’ll need to understand what these factors are and how they impact ad costs.

Below, we are going to cover some of the most important topics regarding the cost of Google Ads.

We’ll discuss the factors of the Google Ads auction system, how your Google Ads budget is spent, and other factors that can impact costs.

This will give you a general understanding of how much Google ads cost your business to help you determine if these ads are a good fit for your budget.

  • Google Ads works much like an auction, which means that different businesses are bidding on how much they’re willing to spend per ad click.

  • The price is based on the ad rank of the person below you divided by your quality score plus one cent.

  • The more competitive the market is for your keywords, the more that you will end up spending on your Google ads.


How Google Ads Works

Before we can even discuss how much placing ads on Google AdWords might cost your business, we’ve got to start with the basics.

It’s important that you understand how Google Ads works in order to understand the average Google ads cost.

There’s one main question that many people have before starting their advertising process, and that is “are Google Ads free?”

The simple answer is that no, Google Ads pricing is not free.

Google Ads works much like an auction, which means that different businesses are bidding on how much they’re willing to spend per ad click.

Let’s go over the process that determines who gets what ad placements, and how much these ad positions will cost.

Google Advertising Process

  • First, the search user types in a keyword or phrase into the search engine. This is called a search query.

  • Google then decides if the search query contains any keywords that advertisers may be bidding on with their PPC ads.

  • If more than one business is bidding on the same keywords or search terms that the user has searched for, then Google begins an auction. This auction will determine where the ad is positioned, otherwise known as the ad rank.

Ad rank is based on two different factors: the maximum bid and quality score.

The maximum bid refers to the maximum amount of money you have determined you will bid on the keyword.

The quality score depends on how relevant and useful your ad content is to the end-user (or person using the search engine).

Google will use all of this information to determine how much Google ads cost each time a user clicks on one.

The price is based on the ad rank of the person below you divided by your quality score plus one cent.

Here’s a visual representation of what that might look like:

This is a breakdown of how Google determines how much your business pays per click with your Google ads.

Note that contrary to popular belief, the business with the biggest ad spend or monthly budget does not necessarily have the greatest influence.

Though it doesn’t hurt to have more money allocated to Google ads…

…the auction system that Ads uses to determine which ads are displayed helps to level the playing field.

As you can see from the graphic above, the advertiser with the best cost per click (CPC) actually had the lowest max bid.

This is because their quality score was higher than those who were bidding for the same keywords.

This auction system is good news for smaller businesses that may not have the same budget as their larger counterparts.

With the Google auction process, these businesses can still see a significant benefit from Google PPC ads.

And, even compete with larger businesses that may be putting more money into Ads.

So while Google Advertising may not be free, the process on this advertising platform can still be very cost-efficient for businesses of all sizes. 

How PPC Budgets Work

Many businesses that are new to PPC advertising may think that Google ads cost too much.

This is because they find themselves spending their budget quicker than they expected.

For instance, a business might set an ad budget that they want to last for an entire month.

However, they soon find that the budget has been spent in just a few days.

Why does this happen? Well, it’s important to understand the basics of PPC budgeting if you want to get the most out of your Google Ad spend.

Just like any other type of budget, you’ll need to allocate a certain amount of funds to your PPC campaigns.

A popular way to handle budgeting on Google Ads is to create a “per campaign budget.”

Per campaign, budgeting is when you control your budget based on each independent Ads campaign you are running.

You can assign a daily budget to each campaign based on whatever your priorities are. For example,

if you have one product that has been selling well on your site, you might give more daily budget to the ads for this product.

And for products that may not be selling as well or are not a priority, you can allocate less daily spend.

When calculating your daily budget, you’ll need to keep your maximum CPC in mind.

Once you set your maximum CPC, this is the most that you will be charged.

However, the actual amount that Google charges you for each click varies.

This means that sometimes you will end up paying less than your maximum CPC.

When considering your budget, you will also have to think about ad scheduling.

Ad scheduling, or dayparting, is when you pick the days that you want your ads to show up in front of search engine users.

Note, that your ads will still have to go through Google’s ad auction process. But you do have a say in when you want Google to display these ads.

Dayparting can be a great tactic for small businesses that want to drive more traffic to their site during certain days of the week.

For instance, if a local business is only open on Monday through Friday, they might want to schedule their paid search ads during the business week.

This is to take advantage of weekly ad traffic.

Another great way to allocate your budget is based on location.

Geotargeting lets you spend more of your budget on ads displayed to certain geographic locations. You can also exclude certain locations.

The location that you choose will depend on the area that you want to reach.

You can go from as small as a two-block radius to as large as an entire state.

This budgeting traffic is great for local businesses that depend on foot traffic from nearby consumers.

For example, let’s say that a coffee shop in Berkshire, MA wants to bring in more coffee drinkers.

They might allocate more of their budget to reach search engine users in the Berkshire, MA area.

Yet another way that you can maximize your Google Ads budget is by budgeting based on device use.

You can allocate more or less of your budget to consumers on their mobile devices or desktop computers.

Your strategy for device targeting would depend on where the majority of your leads are coming from.

Let’s take the coffee shop example above.

When the shop looks at where their leads are coming from, they will most likely see a lot of mobile device users.

This makes sense because many people are looking to grab a cup of coffee while they’re on the go.

The coffee shop may want to allot more of their budget to reach these mobile consumers if their goal is to bring in more local foot traffic through Google ads.

All of these advanced targeting options can impact your Google ads cost.

It’s important to keep in mind what type of targeting you want to do and how you will allocate your budget based on your goals.

Since there are a lot of moving parts involved, it’s important to carefully consider your budgeting strategy before you start launching your Google ads.

Average Google Ads Cost Per Click

Now that you know how the Google Ads bidding system and PPC ad budgeting works…

…you may be wondering what the average cost per click is for the typical company’s Google ad.

Again, this is difficult to determine given that so many different factors can impact the final cost for your Google ads.

In general, how much Google ads cost will depend on the commercial intent of the keywords you’re bidding on.

If there are many other businesses bidding on these same popular keywords, then you will most likely end up paying more for your Google Ads CPC.

The more competitive the market is for your keywords, the more that you will end up spending on your Google ads.

That’s why it’s important to consider how competitive certain keywords and phrases are when you’re planning your budget and developing your Google ad strategy.

Having an effective keyword strategy is one of the major factors for having successful search campaigns.

You can use a variety of tools for this like Google Keyword Planner.

The average CPC is between $1 and $2 on the search network, while the average CPC is typically around $1 or less on the Google display network. 

But, remember, this is just a generalization.

If you are bidding on keywords in markets that are highly competitive, you’ll find that your average cost per click is much higher.

For example, on Google, the top keyword categories are Business Services, Bail Bonds, and Casino.

The CPC for keywords in these popular categories can get as high as $58.64, $58.48, and $55.48, respectively.

Companies in these competitive industries can often afford to pay higher costs per click.

This is because they experience a higher average lifetime value for each customer.

Basically, this means that their customers tend to spend more money on their services over time.

This impress the AdWords ROI, even though they are paying higher CPCs to start off with.

You should also note that just because your business may be in a competitive industry, this doesn’t mean that you will have to pay top dollar for your ad CPCs.

There are a few creative strategies that you can employ to reach your customers…

…without having to bid on these most expensive keywords that will take up more of your budget.

For instance, using long-tail keywords not only helps lower your CPC, but it can also help you bring in more relevant traffic.

Long-tail keywords tend to be less competitive than more generalized keywords. For this reason, they have lower costs per click.

Another benefit of long-tail keywords is that they often have a higher commercial intent.

For example, if someone searches a general term like “clothing store,” they will find a number of brands that sell clothing, both online and off.

However, if they search “women’s clothing store near me” or “women’s clothing store in Atlanta, GA,”…

…there is a good chance that they are looking for a nearby store where they can spend their money.

By using long-tail keywords, your business is able to get more out of your Ads budget.

Your business is able to take advantage of keywords and phrases with lower competition levels.

But you are also able to find more specific consumers that are more likely to be a good fit for your brand.

Doing so can help increase your click-through rate going to your landing page and eventually, boosting your conversion rate too.

In addition to that, did you know that according to recent figures, 1 out of 5 mobile queries was made through voice search?

That’s a decent number of search volumes that you should consider investing in.

And did you also know that almost 70% of those searches used conversational language?

That’s how it differs from typed queries. So here are a few points to keep in mind about voice search keywords:

  • They are typically longer consisting of 5-6 words.

  • They are often in question forms.

  • They have high local worth which means you should include keywords like “near me”.

Are Google Ads Right for Your Business?

Now that you understand how Google Ads works and which factors impact how much Google ads cost, you should have a stronger grasp on Google Ads costs.

If you’re still curious about how much you might need to spend, you can look at the average CPC for certain keywords that you would like to target.

You can also do some research to find out the average Ads spend for a business in your industry.

Though there is no way to say for sure how much money you need to put into your Google Ads budget, it does help to consider each of the factors mentioned above.

In addition to per campaign budgeting, you’ll also want to consider which tactics you plan to use when it comes to targeting.

All of this will impact your overall costs.

Is Google Advertising Worth It?

Yes! If you have the means to pursue Google Advertising, this strategy can help you generate higher engagement and overall return on investment.

You can find and convert a lot of new customers through Google Ads, and all at a cost that is efficient for your business. 

If you still need help determining whether or not your business has the budget for Google ads, you may want to consult an expert PPC management agency.

A PPC agency has experts on their team that understand the intricacies of PPC budgeting and know how to maximize your Google Ads spend.

Not only will they be able to help you determine how much of your marketing budget should go to your PPC ads.

But, they can also put together a strategy for helping you optimize your ads.

In the end, this is the best way to maximize your budget and get the highest return on investment.

If you want to learn more about what Google ads cost for your business, talk to us today.

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