To understand Google Ads cost in 2024, you will need to go beyond its importance as a dominant force to reach targeted audiences and delve deeper into its workings. This is because the question of the cost of Google Ads does not have a definite answer as there are many factors influencing the final figure.
But don’t worry, in this post, we will break down the intricacies of Google Ads (formerly called Google AdWords) cost for you to understand in simple terms.
What is Google Ads?
Google Ads is a pay-per-click (PPC) platform provided by Google, allowing businesses to gain visibility across Google’s properties. It is an online advertising program designed to help businesses reach new customers and grow. Google Ads is a powerful tool for driving relevant, qualified traffic to websites and reaching potential customers at the right time and place.
Google Ads is an online advertising platform that allows businesses of all sizes to display targeted ads across Google’s vast network of properties, including:
1. Search Engine Results Pages (SERPs)
When someone searches for specific keywords related to an advertiser’s products or services, his ad can appear alongside the organic search results.
2. Display Network
Ads can be displayed on millions of websites and apps that partner with Google, reaching potential customers even when they’re not actively searching.
Advertisers can showcase their brand and products through video ads on YouTube, which is the world’s largest video platform.
4. Google Shopping
Advertisers can also promote their products with visually appealing listings, enticing users to browse and purchase directly.
5. Gmail & Discovery Network
With Gmail and Discovery Network, an advertiser can reach users with engaging ads while they’re checking their email or browsing relevant content.
Essentially, Google Ads provides a pay-per-click (PPC) advertising model, which means the advertiser only pays when someone interacts with his ad, such as clicking on it or viewing it for a specific duration.
Benefits of Using Google Ads
Below are some benefits of using Google Ads:
An advertiser gets his ads in front of potential customers who are already interested in what he offers. This is achieved through strategies such as targeted advertising, and creating relevant content to engage the intended audience.
You can set a budget that fits your needs and scale your campaigns as you see results. With PPC advertising, businesses can control their spending by setting daily or monthly limits, ensuring they don’t exhaust their budget too quickly.
You can track the performance of your ads and see how they’re impacting your business goals. By tracking these metrics, businesses can gain valuable insights into the performance of their ads and how they are impacting their business goals.
Variety of ad formats
A variety of ad formats in PPC advertising allows advertisers to choose from options such as text, image, video, and shopping ads, enabling them to tailor their campaigns to specific marketing objectives. These formats provide flexibility and cater to diverse audience preferences.
How Does Google Ads Work?
Google Ads, Google’s pay-per-click (PPC) platform, enables businesses to gain visibility across Google’s properties.
You start by selecting relevant keywords. These keywords represent the queries users might type on Google, triggering your ad’s potential appearance.
You create a compelling ad which must include a headline, description, and display URLs. The ad is designed to attract the attention of potential customers and encourage them to click.
When a user initiates a search containing your targeted keywords, Google hosts an auction to determine which ads will appear in the search results.
The auction takes into account the bid, ad relevance, and expected click-through rate.
But instead of bidding on products, you bid on the cost-per-click (CPC) you’re willing to pay for someone to click on your ad.
Bidding is not the only deciding factor. Google uses the Quality Score; which ranges from 1-10. It reflects the relevance of your ad, keywords, and landing page to the user’s search intent. Higher scores can get you lower CPCs and better ad placement.
When people type in relevant search terms or satisfy certain targeting requirements, the winning ad is shown on the search results page or on other Google properties (such as YouTube or partner websites inside the Google Display Network).
However, it is important to know that Google Ads is dynamic. What works today might not work tomorrow. So, continuous monitoring, A/B testing, and keyword refinement are crucial for optimizing your campaigns.
Factors that influence Google Ads Pricing
Different industries have varying average costs per click (CPC) due to competitiveness and potential customer value. For instance, the legal industry has a higher average CPC compared to business services.
Ad Type & Campaign Strategy
The type of ad and campaign strategy employed also impact the cost. Google Search ads and Google Display ads have different average CPCs, with the former generally having a higher CPC.
CPC can vary significantly by location, with different countries and regions having distinct average costs per click.
The choice of keywords influences the cost. Long-tail keywords are significantly cheaper and effective in capturing commercial intent.
How Google AdWords Determines CPC
You must be wondering, how does Google translate relevant keywords into real-life costs? It uses the following to calculate the cost-per-click (CPC):
Google employs a sophisticated algorithm to determine the CPC for each ad based on the relevant keywords that advertisers compete for.
Google uses the Quality Score to assess the relevance of your ad, keywords, and landing page to the user’s search intent.
Google’s algorithm uses Ad Rank to combine your bid with your Quality Score. This Ad Rank determines your ad’s position in the auction winners’ circle, with the highest rank securing the coveted top spot.
The competition for your chosen keywords significantly impacts CPC. Less competitive keywords can offer cost-effective opportunities.
How Google Ads Budgeting Works
If you understand Google Ads budgeting, you will empower yourself to maximize your campaign impact within your desired financial framework.
Unlike traditional advertising with fixed costs, Google Ads operates on a dynamic budgeting model. Instead of setting a rigid monthly spend, you establish an average daily budget, outlining the maximum amount you’re comfortable spending per day.
This allows for flexibility, ensuring you don’t overspend.
Competition & Goals
You need to gain a clear understanding of your competitive landscape and campaign goals. Research average CPCs for your industry and target keywords to estimate potential costs.
Google Ads offers two budgeting options: campaign budgets and shared budgets.
Campaign budgets allocate specific amounts to individual campaigns. This is ideal for fine-tuning spending based on your unique goals.
Shared budgets distribute funds across multiple campaigns which is useful for managing overall spending and ensuring efficient budget utilization.
Setting Bids for Google Ads
Setting bids in Google Ads goes beyond simply entering a number. It entails figuring the maximum amount you’re willing to pay for each click on your ad.
You need to understand different bidding strategies, leverage Quality Scores, and employ advanced techniques.
Google Ads offers a variety of strategies suited to different campaign goals aside from CPC which is the most common bidding option.
There is Manual CPC which grants you direct control over bids, ideal for fine-tuning costs for specific keywords.
There are also Automated strategies like Maximize Clicks or Target CPA which you can use to leverage Google’s algorithms to optimize bids towards your goal.
Competition & Averages
You must research average CPCs for your industry and target keywords on the chosen network (Search or Display).
Remember, high competition in your niche might necessitate higher bids to secure ad space.
Quality Score is Google’s assessment of your ad and keyword relevance. It plays a crucial role in bidding effectiveness.
Higher scores unlock lower CPCs, allowing you to compete effectively even with slightly lower bids. However, you must craft compelling ads and optimize your landing pages for relevance to boost your Quality Score.
You should also consider exploring advanced bidding techniques like Bid Adjustments and Location Targeting.
Adjusting bids by device, time of day, or location allows you to prioritize valuable audiences and potentially lower costs during less competitive times.
Furthermore, effective bidding is a continual process. Start with conservative bids and gradually increase them as you analyze campaign performance.
Utilize A/B testing to compare different bidding strategies and identify the most effective approach for your specific goals.
How to Optimize Your Google Advertising Campaign
Here’s where strategic optimization comes in:
Refine your keyword targeting
You should prioritize using relevant, long-tail keywords with lower competition. Regularly review your keyword performance, identifying terms with low search volume or irrelevant clicks. Utilize negative keywords to exclude irrelevant searches, ensuring your ads reach the most promising audience.
Craft compelling ad copy
High-quality, relevant ads can improve your Quality Score and lower CPCs. Use clear, concise, and keyword-relevant copy that resonates with your target audience.
Embrace A/B testing:
Experiment with different ad variations and landing pages to identify the most cost-effective options. A/B test different ad variations, and experiments with headlines, descriptions, and calls to action.
Improve Landing Page
Ensure seamless alignment between your ad and landing page. Optimize your landing page for clarity, relevance, and user experience. Offer a clear call to action and guide users towards conversion. Remember, a poorly optimized landing page can sabotage even the most compelling ad.
Utilize Google Ads conversion tracking tools to understand which keywords, ads, and campaigns are driving results. Analyze data to identify high-performing elements and areas for improvement. You must understand that what doesn’t get measured can’t be optimized.
How Much Do Small Businesses Spend on Google Ads?
According to EnterpriseAppToday, as of 2023, 80% of businesses around the world were using Google Ads, out of which 65% are small and medium businesses who use it to run PPC campaigns.
The same post also says 94% of small-scale business owners are planning to increase their spending on advertising in 2024.
But how much do small businesses spend on Google ads?
According to a research carried out by WebFX on 350 marketers to share how much they spend on Google Ads, 44% of businesses pay $100 – $10,000 per month on Google Ads.
While a definitive result for this topic will vary from industry to industry, the actual cost will depend on your specific campaign goals, strategies, and optimization efforts.
The average CPC across all industries is $1-$2 for Search Network and $0.67 for Display Network.
Small-to-medium businesses can expect to spend between $1,000-$10,000 monthly, with competitive industries potentially reaching $20,000+
Remember, the cost of Google Ads is dynamic and can change over time.
Why did Google Ads charge me $50?
Google may set your spending limit at $50 and keep that in hold to ensure your ability to make payments before you proceed with your advertising campaign. The hold will usually be released within a few days, once Google Ads has confirmed that you have a valid credit card.
How much should I spend on Google Ads per month?
The amount you should spend on Google Ads per month depends on your business goals, target audience, industry, and competition. The recommended budget for small and local businesses is $1500 to $8000/per month.
What is Cheaper than Google Ads?
Facebook ads tends to be cheaper than Google ads but it has a smaller reach. Facebook ad’s CPC seems to be also lower than Google Ads’ because supply is more than demand.