The PPC (pay-per-click) industry is rapidly growing with more and more businesses spending huge amounts with a goal to reach their potential customers and convert them into paying customers. When it comes to spending money on an online advertisement platform then Google Ads always ranks on the top due to its active monthly searches and users. But the question is How Much Does Google Ads Cost?
Many newly started businesses and new beginners wonder how much they need to put in to get started with Google advertisement. If you are scrolling the internet for the same, then you have landed on the right article where we are going to highlight some of the important points on how Google Adwords and every small detail about Google Ads cost.
Table Of Content:
- An Overview of Google Ads (Formerly known as Google Ad words)
- Why Advertise on Google?
- How does Google Ads work?
- How much does Google Ads Cost?
- 7 ways you can lower your CPC cost in Google Ads
- Frequently Asked Questions
An Overview of Google Ads (Formerly known as Google Ad words)
Google is one of the leading search engines with more than 259 unique visitors and more than 5 billion daily searches. Google ad was introduced in the year 2000 as “Google Adwords” and in the year 2018 it was renamed as “Google Ads”. With billions of daily interactions, the possibility of your potential customer searching for your products and services is very high.
That is the reason why most of the small and large businesses prefer to use google ads because it offers a magnificent return (ROI) of $3 for every $1 spent on the ads. So with higher reach chances of your web pages getting discovered by your potential customer are high and you will be able to generate good revenue when it comes to ROI.
If you are new to google ad then you might be having a lot of questions about it’s working the money you need to put in and more. Well if these questions are troubling you then don’t worry we are here to help you with every small answer you need related to Google ads.
In this article, we are going to give every small detail about how Google ads work, various tips that you can use to optimize your google ad campaign, and most importantly the Google Ads cost. So make sure you stick till the last to discover every small detail about Google ads.
Why Advertise on Google?
As mentioned earlier Google is one of the most widely used search engines that receive more than 5 billion search queries every day. Not only that but the platform was made available to the user in the 90’s making it the oldest paid advertising platform. Nowadays Google is becoming a source for finding answers or solving problems. Whenever a user comes across any small query or problem the first thing that pops up in their mind is to use Google to find the answer.
In search results, the users are represented with a mixture of paid advertisement and organic results so if you think your potential customers are not searching for business or product or service as a solution then you must reconsider your thinking. Google is being used to find answers for every small question and also to make purchases.
Many advertisers claim that they make $8 for every $1 they spend on google ads. Apart from that, your competitors are also making use of google ads to drive traffic on their website, generate leads, sell products, increase brand awareness, and more. There are hundreds and thousands of businesses and brands that are using google ads to promote their business and product/services.
That means even if your web pages are ranking organically on the search engine result page there are chances that your competitors might be ranking above your web pages and driving potential customers on their web pages. So if your business and company are already using paid advertising then make sure Google ads are part of your paid strategy.
Remember we are not saying that ranking organically is not a good option because organic ranking can offer you more value in a cost-effective way. But running PPC ads help you to generate more leads and acquire more customers.
How does Google Ads work?
Most of the new beginner and newly started businesses wonder how google ads work so before we identify the cost lest understand how it works. Understanding how google ads work will give you a brief idea of how the auction process world will be beneficial when it comes to creating the budget for your campaign.
Businesses and individuals that are not aware of google ads often think that the advertiser and market with more money have more influence and get better results. Undoubtedly the more budget you have the longer you will survive in the race but businesses should think about the return. If you are spending $1000 to get 500 new clicks but your competitor spends $1500 or more to get 500 customers then your ad is performing much better than your competitors.
Google ads are all about how smart you are able to select the right keyword and able to rank for that keyword on the top in SERP with less bidding amount. So let’s take a look at a few factors that determine how the ad works
Google Ads Auction
The google ad auction functioning is very much related to the normal auction. So this auction begins, whenever a user types a keyword or query in the search box and hits the enter button google records the term user is using to look for their answer. Next google matches the query with the keyword advertisers and markets are bidding on. So if the user query matches the keyword used by advertisers, then the auction begins because google or any other search engine does show ads for every keyword until and unless they determine that the query is already being used by the user.
In the auction, ad placement and CPC (cost per click) is determined by an AD Rank. The ad rank is depending on two important factors: the maximum bid for the keyword you are targeting and the ad quality score. So let’s understand what is Ad rank?
From the term, you can analyze that ad rank refers to the position that your ad gets for a particular keyword on the search result page. If your ad is getting shown up in the second position or in the third position then your ad rank is 2 and 3 respectively. So before assigning the rank in the paid result section google calculates each ad’s “Ad rank”. So the Ad rank is totally dependent on two factors: the maximum bid and quality score.
The maximum bid is the amount advertiser and marketer are willing to pay for each click. So when a user searches for a particular term and if your ad is getting displayed on the search engine result page then you pay some amount to google whenever a user clicks on your ads. The maximum CPC bid amount can either be assigned to the group of keywords or to an individual keyword. Remember the maximum bid amount matters when it comes to Ad rank.
Quality Score is the metric that helps Google to determine the quality and relevancy of your ad copy and landing page in relation to the keyword you are trying to target. It is also used to calculate the CPC and the ad rank for the particular keyword. The higher your quality score the better you rank for the particular keyword and pay less for each click.
So it’s not only the maximum bid that determines the google ad rank but the quality score also plays a crucial role when it comes to ranking mainly it has a major effect on the CPC. By now you might have a good idea about what is the maximum bid and quality score. So here is how Ad rank is calculated:
Ad Rank = CPC BID X Quality Score
We personally feel the quality and relevancy of the ad play an important role in assigning the rank. Here is how the formula works if your maximum CPC bid for a particular keyword is $5 and your ad quality score is 9 then your ad rank is 45. On the other hand, if your competitor1 Max CPC bid is $6 and the ad quality is 6 then ad rank is 36. So the highest ad rank always wins the auction and gets the top advertising spot.
So once the ad rank is calculated next it’s time to identify how much you are going to pay for each click. Google uses the below formula to determine how much the advertisers have to pay every time a user clicks on their ad that is ranking on the top in the search result page.
Your Actual CPC = The ad rank of the advertiser below you / your quality score + $0.01
That means if the competitor ranking below you have the ad rank of 36 then the price you need to pay is 36/9+$0.01 = $4.01. SO this way you are paying less than the other advertisers just because your quality score was good. By now you might have a good idea about how the rank and the CPC is determined.
How much does Google Ads Cost?
By now you might have a clear idea about how google Adwords next take a look into how much does Google Ads cost? So in PPC, the ad cost is very much dependent on various factors like the format of the ads, the objective, the keyword you are trying to target, and many. Many companies create various campaigns and the quality of the ad and the money you’re putting in plays a crucial role in determining your ad rank.
If you are targeting high keywords with commercial intent then the CPC cost will automatically start raising but it’s not only about CPC the return you get is also higher. So, let’s take a look at the average CPC in Google Ads.
Average CPC (cost per click)
If we consider the average CPC on google ads then it ranges between $1 to $2 for the google search network. On the google display network, the average CPC is considered to be $1(the click is cheaper than the search network). These costs are the estimated average and for competitive keywords and industry, the clicks can get much higher. The average small business has an ad spend of $1500 or $3000+ per month. On the other hand and mid-cap business has an average budget of $7000 to $15000. So let’s take a look at CPC by industry, keyword, country, and more.
Average CPC by industry
The CPC of a keyword is very much dependent on the potential value of the customer. So the industry you are working in may influence the CPC cost. Mainly the Industries that are having higher customer lifetime value and short sales processes can offer more value to the advertiser which encourages more and more businesses to advertise on the platform making the industry extremely competitive. Here is the average CPC by industry (source adespresso):
- Insurance ($18.57 average CPC)
- Online education ($14.04 average CPC)
- Marketing and advertising (7.4 average CPC)
- Legal (6.97 average CPC)
- Internet and telecom ($5.94 average CPC)
- Online banking ($5.08 average CPC)
- Car dealership ($2.47 average CPC)
- Home and Garden ($2.09 average CPC)
- Fitness and health ($1.98 average CPC)
- Travel ($1.86 average CPC)
- Beauty and skincare ($1.7 average CPC)
- Real estate ($1.6 average CPC)
- Jewelry ($1.31 average CPC)
- Pharmaceuticals ($1.24 average CPC)
- Fashion retail ($1.19 average CPC)
- Electronics ($0.83 average CPC)
So the above CPC data is gathered from display ads and youtube data, you can see that insurance is the industry that tends to have a high CPC whereas for fashion retail and electronics the CPC is the lowest. Next, let’s figure out the CPC based on Country.
Average CPC by Country
As we have mentioned earlier the average CPC can also vary depending on the country you are targeting. Countries that are high general living expenses may have a higher CPC. Mainly countries like Switzerland, Norway, United Kingdom, Sweden, and more are among the countries that always come on the top in the list whose average CPC varies from $0.8 and $0.62 per click.
Whereas countries like Spain, France, Italy, Poland, and more have comparatively low average CPC ranging from $0.1 to $0.4. There are also chances that the CPC may differ depending on the region, cities, and sometimes radius as well in the same country.
Average CPC by device
According to adexpresso, Compared to desktop mobile clicks are cheaper as in 2019 the average mobile CPC for digital ads was $0.42on the average CPC for desktop click was $0.73. But as you dive in deeper there are chances that you may discover new CPC costs as users are shifting more to mobile devices.
All the above-mentioned averages are not the exact cost that you should use to calculate your campaign cost. There are chances that your ad campaign might be showing high CPC so it’s recommended to do proper reach and run a few ads to understand the exact CPC cost. Below we are also listing some tips that you can consider to lower your CPC cost.
7 ways you can lower CPC cost in Google Ads
Cost per Click is the price every advertiser and business look to reduce when it comes to advertising on Google ads. Because it not only reduces the cost but also helps you to run the same ad for a longer duration. With high competition winning an auction and getting the top AD rank has become crucial for websites that are looking to drive great results from Google ads.
But for each click, the advertiser has to pay some amount (cost-per-click) and sometimes businesses with tight budgets fail to run their ads for a long duration. That is the reason why we are going to highlight some important tips that can help advertisers to lower their CPC
1. Make Use of Negative Keywords
When it comes to lowering the CPC cost then negative keywords can help you in many ways. With a number of different search queries of the same intent, it’s possible that your ad may appear for irrelevant search queries that increase your CPC but lower your CTR. That’s the reason why every advertiser should identify and include the negative keyword
When it comes to running ads on google it’s important for an advertiser to keep their CTR healthy because of a lower CTR and affects your ad quality score which may result in a higher CPC. By inserting negative keywords you are ensuring that your ads are visible to people who are actually interested in taking action or looking for your product and services.
Not only that but adding a negative keyword also helps you to improve the click-through rate and overall score of your ad account. So if you are looking to improve your CTR make sure you make a list of all the negative keywords and include them in your ad campaign to improve your QS and lower your ad CPC.
2. Target Keywords with low bids
It is not a strategy that you should follow every time you plan to ruin your ad on Google ads but in the beginning, we recommend you to target keywords with low bids. Find out all the keywords that have comparatively low bid then keywords that are highly competitive and have higher bid.
The cost of the CPC is very much dependent on the keyword you are targeting. Some of the keywords are very competitive compared and have higher CPC as compared to the less competitive keywords. Sometimes these low competitive keywords offer the same value as the high competitive keyword in terms of CTR but to identify the right keyword you might have to run multiple ads.
Once you are able to identify the high and low competitive keywords for your campaign then you can automatically lower your CPC and run ads for a longer time. Competitive keywords can give you results but if you start your campaign with a limited budget then you may soon run out of cash.
3. Make Use of long-tail keywords
When it comes to lowering your CPC cost we recommend using long-tail keywords instead of using short keywords. One interesting fact is that people use long-tail keywords more than short-tail keywords. The traffic you will generate from a long tail keyword is considered to be highly relevant to the ad and can offer you more CTR.
Remember when exploring keyword research tools you will find long-tail keywords to have low search volume that is the reason why most of the advertisers go with short-tail keywords. But in reality, long-tail keywords are specific keywords that mean the chances of getting irrelevant clicks on your ads are very less, hence the CPC is less and you don’t have to spend money for unwanted clicks.
If you are reading this article from the beginning then you might have come across the word relevancy multiple times. Undoubtedly when it comes to running a PPC campaign the relevance matters the most ranging from the keyword to the ad to the landing page everything counts when it comes to relevance. When the relevance is high then your CPC automatically starts reducing.
Most of the successful PPC campaigns try to target only one keyword per ad group (but the advertiser is allowed to target multiple keywords) that makes the ad very relevant to the keyword. Instead of driving on the website or their product/service page, they target a specific landing page for the keyword on the landing page is already optimized with the keyword. By doing this the advertising is aiming to receive high-quality traffic and have less CPC bid.
If you are starting new then instead of targeting multiple keywords try to be more specific. If those keywords are working out for you then you can start adding more to it.
5. Try to get a minimum of 3rd or 4th position
Earlier we have mentioned that Google uses an auction system to assign the per-click cost (CPC) and rank to every ad. Being an advertiser and marketer you should always aim to achieve a minimum of 3rd or 4th position in the search results.
Depending on the rank of your ad in the auction your search engine ad position is decided so make sure your quality score and maximum bid help you to get a good ranking in the auction. The higher the Ad rank the more chances is that your ad will get in the top 3. If your ad copy position in the auction is second then your ad will appear in the second position.
We have mentioned earlier that Google determines the ad rank based on the quality score and the maximum bid (CPC). The bid you assign is not the final cost you have to pay for each click your ad receives, if your quality score and maximum CPC bid helps you make it to the top then your final CPC can get lower. So focus on improving your ad rank by optimizing your quality score.
This is how it works: higher the ad position means higher the quality score and higher the quality score lowers your final CPC. Remember If your ad is not able to make it in the first 4 positions then it will be hard for you to get the desired results.
6. Adjust Your Bid regularly
Bids are an important aspect of Google ads that help google to determine how much you are willing to pay to position your ad for a keyword that you are bidding on. Making adjustments in the bid can help you to improve your underperforming campaigns overnight. So before you start making adjustments to your bid make sure you have a clear idea about the cost per conversion or the return on the Ad spend that your campaign or business is aiming to achieve.
Depending on that if you visit your campaign dashboard you will be able to identify and compare the ads that are underperforming and the ads that are performing well. Google ads offer an option called bid modifier. Using a bid modifier you can make bid adjustments for specific criteria and in the several elements of your campaign and ad group without harming the ad group or the targeting of your ongoing campaign.
By making adjustments in the Device bid (adjust bid depending on the device performance), Geolocation (making adjustment based on location performance), Day/Time (adjust bid depending on the hours and day of the week). Making these small adjustments can benefit your campaign in many ways.
7. Increase Your Quality Score
As we have explained earlier how important it is for advertisers to improve their quality score as it helps Google to determine the quality and relevancy of your ad copy and landing page in relation to the keyword you are trying to target. The higher your quality ads are the lower your ad cost will be with a better position. In short, the quality score of your ad has a lot to do with how much you are going to pay for each click.
So focus on improving your quality score as the score is ranked between 1 and 10. 1 is considered to be the lowest and 10 is the highest. One of the keys to getting a higher quality score is making your ad relevant by targeting the right set of audiences that are actually interested in your product or service. Not only that but make your ad relevant to search queries.
If you didn’t start to plan your PPC advertising strategy then you might be losing lots of customers. Google Ad has the full potential to connect your brand. product/services with your potential customer. Because of its reach and authority, google ads should be part of every advertising campaign. Apart from that, there is nothing like google ad doesn’t work. It’s all about how you are optimizing your campaign depending on your target audience, keywords, objective, and more. If you need further help related to PPC campaign optimization then you can always reach out to our marketing experts.
Frequently Asked Question:
1. How can I improve my Google ad rank?
Most of the marketer and advertiser frequently ask how they can improve google ad rank? Below we are going to highlight some important tips that can help you to improve your ad rank ‘
- Optimize the quality score
- Select the keyword that matches the search term
- Focus on improving your Ad relevance
- Make use of keyword tool to find different variations of keywords
- Focus on improving your website
- Make sure your website meta tag contains the keyword that you are targeting
2. What is a good quality score?
In Google Ads, a good quality score totally depends on the keyword you are trying to target. For branded keywords, the quality score can range between 8 to 10. On the other hand, if you are using a high intent commercial keyword then the good quality score can range between 7 to 90. For low intent keywords, the quality score can go up to 7.
3. How much budget should I have for google ads?
Marketers and advertisers who are getting started with Google ads often ask how much budget they should have to run ads on Google. The monthly budget of your ad is dependent on various factors like the keyword you are trying to target, your industry, objective, the location you are targeting, and many more. Mainly the objective and keyword competition will determine the CPC and total amount you are spending each day. But if you are looking to know the estimate then the monthly budget can range between $1000 and can go up to $100000.
4. Why is my CPC so high in Google Ads?
Marketers and advertisers who are getting high CPC for their ads often fail to identify the right reason for what they are getting high CPC. Well, there are factors that can help you to improve and lower your CPC bid. Is it important to understand what causes High CPC?
- High competition: One of the most common factors that influence high CPC is competition. If more advertisers are trying to rank thet ad for the same keyword that’s when CPC starts to rise.
- Industry: Apart from competition the industry you are working in also influences higher CPC. A keyword planner can offer you detailed information about the expected CPC for the keyword in your industry.
- Quality Score: Undoubtedly the quality score is everywhere if your CPC is high then it’s because of quality score and one thing that can help you to lower your CPC is quality score. It helps Google to determine how relevant your ad and landing page is to the keyword you are targeting. Not only that but it combines your previous CTR to determine and overall relevance to determine your quality score. If your quality score is low then the CPC will automatically start raising.
5. What is the average CPC in google ads?
The average CPC (cost per click) depends on various factors like the keyword, industry, location, and more. The average CPC for search networks ranges between $1 and $2 and for display networks, the average CPC is considered to be $1. It is calculated by the total cost of clicks by the total number of clicks.