With almost $240 billion in revenue, Google is the biggest player in digital ads. Over 80% of companies utilize Google Ads for their PPC campaigns.
We can hear you asking, “What’s the price tag on Google Ads?”
This is a very valid question since marketing budgets are not unlimited, and ROI counts.
Knowing how to navigate the Google Ads ecosystem and lowering Google Ads costs is the key.
Are you curious to uncover the intricacies of Google Ads pricing? Do you want to unlock strategies for optimizing your ad spend?
This guide will break down Google Ads costs in 2024 and show you how to get the most out of your advertising budget.
Here’s what we’ll cover:
What are Google Ads?
Google Ads is an online advertising platform developed by Google. It was launched in 2000 and considered a remarkable idea then. Now, slightly altered versions of it have been adopted by Bing and Meta.
Over the past 25 years, Google Ads has been honed into a sleek marketing machine that allows you to target millions at very little cost.
Google Ads allows businesses of all sizes to create and run ads to reach their target audience.
Users who click on an ad are taken to the advertiser’s website. The advertiser is charged for that click based on the cost-per-click (CPC) bid.
This is known as a pay-per-click (PPC) model. In PPC, advertisers only pay when users click on their ads.
Google’s PPC model allows advertisers to target specific audiences with their ads, control their advertising costs, and track the effectiveness of their campaigns through detailed analytics.
Here is some data about Google’s PPC model that would make you rethink your present advertising strategy:
- Google Ads costs vary widely, with CPC ranging from $2.50 to $45 based on keywords, bid strategies, and ad quality.
- Popular keywords often cost $5 to $60 per click due to high competition.
- Effective bid strategies and ad optimization can reduce CPC to $2 or increase it to $50.
- Factors like device targeting, location, and ad formats influence CPC, typically between $3 and $40.
- Regular monitoring and adjustments based on data analysis are crucial for cost savings of up to 20% or more.
However, there are many nuances you must be aware of before you start bidding.
What are those, and how do they affect the cost of Google Ads? The following sections describe them.
First, let’s understand the different types of ads you can use via Google.
Types of Google Ads
There are several types of Google Ads you can choose from. Each is suited for different advertising needs.
Here are the key types of Google Ads:
Search Network ads
The average CPC for Search Network ads is between $2 and $3. When users enter relevant keywords, these text-based ads appear on search engine results pages (SERPs). They target users who are actively looking for what you offer.
Google Display Network ads
The CPC on Google Display Network ads averages to less than $1. These ads appear on partner websites and apps. These visual ads (images, text, or video) reach a broad audience based on demographics, interests, and browsing habits.
Shopping ads
These product-focused ads appear on Google Shopping and other partner sites. They showcase product information, such as titles, prices, and images, to promote specific items.
Video ads
Video ads are displayed on YouTube, websites, and apps. Various video ad formats exist, such as skippable and non-skippable in-stream ads and in-feed ads.
App ads
Designed to drive app installs and engagement, these ads appear on Google Play.
Local Services ads
Managed on a separate platform, this option connects you with potential customers searching for local services like plumbers, electricians, or hair stylists.
Smart campaigns
Aimed at beginners, this simpler Google Ad campaign requires less setup to create and manage.
The best Google Ad type for you depends on your specific marketing goals. With so many types of ads, Google Ads lets businesses target the right audience at the right budget. Whether your goal is brand awareness, website traffic, or leads, Google Ads can get you there.
How the Google pay-per-click model works
Google Ads is a top-performing marketing channel. It boasts an impressive average return on investment (ROI) of $2 for every $1 spent.
Wondering what makes it so effective? Let’s focus on how Google PPC (pay-per-click) operates.
- Keywords: Advertisers select relevant keywords related to their products or services.
- Bidding: They bid on these keywords by specifying the maximum amount they will pay for each click.
- Ad Rank Auction: Google continuously runs auctions to determine which ads will appear and in what order, based on bid amount and ad quality.
- Pay for Clicks: Advertisers only pay when someone clicks on their ad after winning the auction.
Let us look at the process more closely.
Google Ads cost explained.
What does Google Ads cost? This question is at the forefront of every business owner’s thoughts.
To know what it costs you have to first understand how it works.
The Google Ads process revolves around a dynamic auction system. It is this mechanism that determines the placement of your ad and cost.
Here’s a breakdown:
- Auction Trigger: The auction process is triggered every time there is a Google search.
- Keyword Match: The system checks if the search query has any keywords advertisers have chosen to target.
- Ad Auction: If there’s a match, eligible ads enter a real-time auction.
- Ad Rank & Bidding: Google Ads assigns each ad an Ad Rank score based on factors like bid amount and ad quality.
- Cost & Placement: The ad auction determines the cost-per-click (CPC) and an ad’s placement on the search results page. The winner of the auction gets the most prominent ad position.
This brings us to the next question.
What is the Ad Rank score?
Here’s a simplified formula for Ad Rank score:
Ad Rank = Max Bid x Quality Score
Remember:
- Ad Rank is a dynamic score. This means it can fluctuate for each auction based on real-time factors.
- A higher Ad Rank generally translates to a better chance of your ad securing a better position on the search results page.
- While a higher maximum bid can increase your Ad Rank, you can also try to optimize your Quality Score.
Focusing on both strategic bidding and creating high-quality ads influences your Ad Rank and improves your ad’s visibility.
What is an Ad Quality Score?
In Google Ads, Ad’s Quality Score is a diagnostic tool. It estimates how relevant and useful your ad and landing page are to users searching for your targeted keywords.
AQS is measured on a scale of 1 to 10.
It depends on relevance (of your ad vis-à-vis the targeted keywords) and user experience (of your landing page).
Relevance
High AQS indicates your ad aligns with the user’s search intent based on the chosen keywords. The ad text should communicate what users can expect from clicking on it.
User Experience
AQS also considers the user experience once they click your ad. The landing page’s relevance to the ad is essential. A well-designed landing page will contribute to a higher Quality Score.
Therefore, Ad Rank considers your maximum bid and your ad’s Quality Score.
A higher bid can increase your chances. However, a strong quality score can help you win a good position without necessarily having the highest bid.
Google has set the system up in such a way that no one can game it.
You can solely influence Google Ad rank by creating the most effective ad and bidding the highest amount within your budget.
An example would make it simpler to understand.
We take a look at two rival online shampoo brands, American Naturals and Pure Essence.
Both brands cater to health-conscious consumers in the US. Their ideal clientele is women aged 25 and above who use natural and organic products.
They are competing for keywords related to “organic shampoo” and “natural haircare” to attract customers seeking premium hair care solutions.
This is their Google Ads copy:
American Naturals
Headline: “Discover Your Hair’s True Potential with American Naturals Organic Shampoo”
Description: “Experience the purity of nature with our premium organic shampoo. Specially formulated with natural ingredients like aloe vera, coconut oil, and argan oil to nourish and revitalize your hair. Say goodbye to harsh chemicals and hello to healthier, more vibrant locks! Try it today and unleash your hair’s natural beauty.”
Display URL: www.AmericanNaturals.com/Organic-Shampoo
Call to Action: “Shop Now”
Pure Essence
Headline: “Unlock Your Hair’s Potential with Pure Essence Natural Shampoo”
Description: “Experience the essence of nature with our luxurious natural shampoo. Infused with pure botanical extracts like lavender, chamomile, and rosemary to cleanse and nourish your hair from root to tip. Elevate your hair care routine with our organic formula. Use it today and rediscover your hair’s true radiance!”
Display URL: www.PureEssenceHair.com/Natural-Shampoo
Call to Action: “Buy Now”
Both ads are excellent and follow best practices for creating Google Ads.
- The ad from American Naturals has a quality score of 8
- The ad from Pure Essence gets a score of 7
American Naturals has bid $0.6 between 9 PM to 12 AM and Pure Essence bids $0.8 for the same slot.
During the day both bid $0.3
Their target clientele is online in late evening and that is the slot that matters.
We know Ad Rank = Max Bid x Quality Score
- American Natural: 8 x 0.6 = 4.8
- Pure Essence: 7 x 0.8 = 5.6
From 9 PM to 12 AM, Pure Essence would be at the top of Google Ads on the search page.
The rest of the day, American Naturals would be higher since they both bid the same, but American Naturals has a higher quality score.
Google Ads costs – CPC and monthly budget
By now, you understand how Google Ads’ cost is determined.
But what will be the ad spend?
Let’s uncover the cost behind advertising on the world’s largest search engine.
The cost of Google Ads varies based on several key factors:
1. Search network vs. Display network
Google Ads operates across two primary networks. They are the Search Network and the Display Network.
- Search network: Ads within search engine results typically average between $1 and $2 per click. But it might reach as high as $50. More on that later.
- Display Network: Ads on external websites have an average cost per click of under $1. It is a more economical option.
2. Keyword cost disparities
The price of Google Ads can vary greatly depending on keyword competitiveness.
Due to high competition, certain industries have keywords costing $25 – $50 per click.
This table shows how keywords can cost upwards of $50.
Insurance, loans, and mortgages have high CPC values due to fierce competition for ad placements within these sectors.
| Keyword | Average CPC ($) |
| Insurance | $52 |
| Loans | $41 |
| Mortgage | $50 |
| Software | $38 |
| Recovery | $39 |
| Transfer | $33 |
3. Budget spectrum
Investments in Google Ads vary hugely. From Microsoft to the startup bootstrapped by two broke kids from college are all trying to get leads through Google Ads. Thus, a vast spectrum is to be expected accommodating both large corporations and small businesses.
B2B companies dedicate a smaller portion of their revenue to marketing, ranging from 2% to 5%.
In contrast, B2C companies often allocate a higher percentage of their revenue, between 5% to 10%, towards marketing.
- Corporate behemoths may allocate up to several million dollars annually for Google Ads campaigns.
- Small to Midsize Businesses (SMBs) typically spend between $500 and $8,000 per month on Google-paid search, totaling $6,000 to $100,000 annually.
Understanding the nuances of Google Ads cost and keyword pricing is crucial for advertisers on a tight budget.
Studying keyword competitiveness is vital. It would be best if you discovered keywords that work yet don’t cost a fortune.
Google Ads performance benchmarks
Understanding how your Google Ads campaigns perform compared to others in your industry is crucial for optimization.
Here’s a look at the key metrics:
1. Click-Through Rate (CTR)
- This metric shows the percentage of people who see and click on your ad.
- Search Ads generally have a higher CTR (around 3.4%) than Display Ads (around 0.49%) because users actively search for something with Search Ads.
- A higher CTR generally indicates your ad and keywords are relevant to your target audience.
2. Cost-per-Click (CPC)
- This is the average amount you pay each time someone clicks your ad.
- Search Ads typically have a higher CPC (around $2.11) than Display Ads (around $0.71). This reflects the higher intent of users searching for something specific.
3. Conversion Rate
- This metric shows the percentage of visitors who take a desired action on your website after clicking your ad (e.g., purchasing).
- E-commerce conversion rates tend to be higher for Search Ads (around 2.6%) than for Display Ads (around 0.55%) due to the more targeted audiences.
4. Cost-per-Acquisition (CPA)
- This metric shows the average cost you incur for each conversion (e.g., sale) generated through your ads.
- E-commerce businesses typically see a lower CPA for Search Ads (around $47) compared to Display Ads (around $64) due to the more qualified leads from search.
5. Industry-Specific Benchmarks: Search Ads
Here’s a deeper analysis of benchmarks for Search Ads across different industries:
| Industry | Average CTR (Search Network) | Average CTR (Display Networf) |
| Dating & Personals | 5.45% | 0.65% |
| Travel & Hospitality | 4.21% | 0.42% |
| Advocacy | 3.97% | 0.53% |
| Auto | 3.60% | 0.54% |
| Education | 3.40% | 0.48% |
| Real Estate | 3.34% | 0.97% |
| Health & Medical | 2.94% | 0.53% |
| Legal | 2.64% | 0.53% |
| Finance & Insurance | 2.62% | 0.47% |
| E-Commerce | 2.42% | 0.46% |
| Industrial Services | 2.35% | 0.45% |
| Home Goods | 2.20% | 0.44% |
| Employment Services | 2.18% | 0.53% |
| B2B | 2.17% | 0.41% |
| Consumer Services | 2.17% | 0.46% |
| Technology | 1.88% | 0.35% |
Remember that these numbers are averages. Your actual performance will vary depending on your specific campaigns and goals.
Use these benchmarks to identify areas for improvement and optimize your Google Ads strategy for better results.
Factors influencing the cost of Google Ads
According to experts, the average CPC on Google is between $1 and $2. But “Online business degree programs” cost a whopping $110! But that was not the highest. “Trucking accident lawyers” went for $320.
Why is there such a wide variation in Google Ads cost? These are a few factors that influence the cost of Google Ads:
- Keywords
- Bid strategy
- Quality score
- Ad relevance
- Ad format
- Ad position
- Device targeting
- Location targeting
- Time and day
- Campaign settings
Are Google Ads worth it in 2024?
The short answer is that it depends on how your ROAS from Google Ads compares to ROAS from other channels, such as Meta Ads or email marketing.
First, let’s understand why Google Ads is a relevant option for most marketers.
Massive reach
Google handles approximately 8.5 billion searches daily, about 99,000 searches per second. It is impossible to find another medium with this reach.
Remember, Google Ads also provides access to a billion viewers on YouTube and Google Display Network.
Instant results
SEO is good, but it takes a long time.
At its fastest, SEO would take at least six months to propel you from page six to page one of search. It takes an equal amount of time to climb from bottom of page one to its top.
Google Ads offers immediate visibility with the right bid. This benefits new businesses seeking to promote their services and compete in the market quickly.
Detailed analytics
Google Ads provides comprehensive analytics on campaign performance, and keyword effectiveness. Integration with Google Analytics offers even more data. This enables advertisers to optimize their campaigns easily.
With the average Google CPC at $2.4 to $3, it makes sense to invest in Google Ads. With a 2% conversion rate, you are paying $120 to $150 to acquire a buying customer.
That is far less expensive compared to traditional advertising.
Final Words
Google Ads can be a powerful tool to reach new customers. This particularly helps small businesses with limited ad spend.
But Google Ads is not magical. Just because you have placed an ad does not mean leads will start pouring in.
Remember, the numbers are against any advertiser. Only 1% to 4% will convert out of a hundred who click. Even for that to happen, you might have to offer a heavy discount.
If you want to generate leads, nurturing existing customer relationships through email marketing can be incredibly effective.
Email marketing offers the highest ROI. Some estimates state that the return is $42 for every dollar spent. Even if it is half, that is a staggering number.
You could also succeed with the extensive targeting capabilities of Facebook Ads (now known as Meta Ads). No matter your goals, we’re here to help. Schedule a free consultation to discuss your unique needs.