How much does it really cost to advertise on Google? Before you dive head first into trying Google Ads, having an understanding of Google Ads costs, deciding on the right Google Ads budget for your business, and figuring out your expectations for a return on your investment in Google Ads campaigns can make all the difference for how well Google Advertising works for your business.
The truth is Google CPC costs vary a lot. As a Google Ads specialist, I’ve seen clients spend under a dollar when someone clicks their ads while other clients spend as much as $300 for a single click!
If you’re thinking about trying ads for the first time, however, the “it depends” kind of anwer isn’t super helpful to figure out if Google Ads is right for your business and how much Google ads will cost.
Let’s dig into how Google Ads costs work, what you can expect, and how to actually figure out what you should be spending on Google Ads.
How Do Google Advertising Costs Work?
To understand how much you can expect to pay for Google Adwords costs, you need to understand how Google Ads fees work in the first place. Advertising on Google isn’t as straightforward as more traditional advertising, like print ads or billboards.
There are a number of different ways Google Ads charges for advertising, depending on what kind of campaign you’re running and your bidding strategy.
For the most part, Google is pay-per-click advertising, meaning that you’ll only be charged when someone clicks your ad. By using cost-per-click, Google only charges your business when someone actually clicks on your ad, not just when your ad appears. Unlike most Facebook ads where you pay for impressions, Google Ads charges are centered on actual clicks instead.
But there’s a big misconception about Google Ads charges: Google isn’t only a CPC platform. Google also has impression-based bidding, which means you can pay for views of your ad instead of paying for clicks on your ad for certain types of campaigns.
Knowing what your business goals are first helps you know which kind of bidding strategy to use and if you want to pay based on clicks, impressions, or views. Google breaks down business goals into different bidding strategies but it can be really confusing if you’re not familiar with Google’s ad platform.
You can apply for an initial Google Ads consultation with me to talk through your goals and figure out which bidding strategies and campaign types are right for your business.
How Much Does Google Ads Cost?
As I mentioned above, Google advertising costs can vary a lot. So what goes into how much you pay for Google Adwords?
While it’s true that highly competitive niches cost more for Google Ads than less competitive ones, what your business will pay for each click is more complicated than a simple bid. It’s because unlike paying for advertising space like a billboard, when you advertise on Google, you’re competing in real-time with other advertisers for your ads to show in an auction.
To understand how much Google Ads cost, you have to understand a bit more about how Google Ad auctions work.
How Google Auctions Affect Google Ads Costs
In the simplest explanation, when someone does a search on Google, Google Ads creates an auction for available ad slots. If your ad is triggered by a relevant keyword you’ve selected to advertise for, your ad will enter the auction.
Keep in mind, Google doesn’t just look at how much you’re willing to pay for a click. Instead, they look at a number of factors to produce a better searching experience for Google users. They want the best ad to win, not just the highest bidder!
Google created a special auction ranking system that combines bidding with relevancy and quality factors, called Ad Rank. Ad Rank is based on your bid, the quality of your ad experience, relevancy of your extensions that are eligible to run, as well as relevancy to the search and searcher.
Google looks at Ad Rank of all the potential ads that could show to determine each ad’s position and how much the click would cost. The highest Ad Rank gets the first ad slot, second highest gets the second ad slot, and so on until all slots are filled. If your Ad Rank isn’t high enough, your ads won’t win a slot and won’t show.
At the end of the day, your Ad Rank is what truly determines how much Google Ads is going to cost. How much you pay for your Google ad is whatever it takes for your ad to remain ranking just above your competitor in the ad slot just below yours. So while your maximum bid is $2, if it only takes $1.56 for your ad to have a higher Ad Rank than the ad in the slot below yours, you’ll only pay $1.56 if your ad is clicked.
For more information about how Google Ads auctions work, watch this video from Google:
How to Pay Less for Google Ads
How much it costs to advertise on Google and Adwords rates comes down to a handful of factors that affect your Ad Rank:
- Competitor Bids
- Ad Quality Score
- Account Setup
While you can’t control what your competitors are bidding, you can reduce how much you pay for advertising on Google significantly by focusing on your Quality Score and Account Setup, both of which influence your Ad Rank. If those two factors are higher, your bid can be lower to achieve the same results!
Unlike some other platforms, one thing Google rewards is high quality user experiences with cheaper PPC prices. If you have a better experience for people who click your ads than your competitors, you’ll end up paying less per click and usually winning more clicks and customers in the process.
Account structure and Quality Score are keys to successful Google Ads campaigns and are one of my main focuses when I work with clients. Improving your quality score can have a huge impact on how effective your campaigns are and how much Google Adwords costs for your business.
How Much Do I Need to Spend to See Results from Google Ads?
While you can make Google Ads cheaper by improving non-bid Ad Rank factors, there is usually a minimum threshold you’ll have to spend for your ads to show up at all. Even if your non-bid Ad Rank factors are stellar, if your bid is too low your ads just won’t show.
How much you need to spend to see results from Google Ads varies based on what keywords you’re targeting. When I’m estimating Google Ads costs for clients, I usually ask the following questions to figure out a Google Ads budget:
- How many clicks could ads potentially capture with a maximized budget?
- What percentage of those clicks would turn into a sale?
- What is the value of that sale versus the costs of advertising?
Google Ads doesn’t make financial sense for every business. Sometimes there just isn’t enough interest from searchers. Other times, the costs are so high that the Google campaign would have a negative return on investment (ROI) and your Google Ads just might not work well.
Thinking about the ROI in your Google Ads campaigns is the key to figuring out how much you should spend. For example, if capturing a single sale is worth $50,000 to you, 1 out of 5 people who contact you become a sale, and if you could get 5 people a month to contact you with a $5,000 budget, you’d 10X your investment in Google Ads costs. However, if that same sale was worth $1,000 instead in the same scenario, you’d be losing $4,000 a month on Google Ads costs.
Knowing what a sale is worth to you and how many people need to contact you or visit your site to produce a sale, also known as your conversion rate, are the two most important factors to know when figuring out your Google Ads budget.
To figure out Google Adwords prices in your niche, you can use the Google Keyword Planner tool to see average cost-per-click for your selected keywords. When used correctly, Keyword Planner can tell you how much a keyword costs on Google, how many clicks a campaign could produce, and even how many estimated conversions you may see per month.
Keyword Planner can be a tricky tool to use if you’ve never used Google Ads before. If you’d like to get projections for Google Ads costs for your Google Ads account, be sure to request an initial consultation where I can run estimates for Google Ads costs for your particular goals and make recommendations on a Google Ads budget.
What Are The Total Costs Of A Google Ads Campaign?
When you’re figuring out what Google Ads pricing you can afford, you also need to think about the management costs of hiring someone to manage your Google Ads campaigns for you as the total campaign costs.
Different Google Ads experts and agencies charge different rates, as well as charge differently for how they manage campaigns.
Most often, you’ll find Google Ads specialists that charge a percentage, usually 10-15%, of your ad spend. Be careful of these kinds of arrangements, however, because that means the Google Ads manager is incentivized for you to spend more to get the same results! This can mean they’re less focused on optimizing your costs-per-click as much as other Google Ads pricing models.
Other Google experts charge based on how many conversions or leads they get your business in a pay-per-performance or pay-per-lead model. Keep in mind, however, if you have a hands-on sales process, you’ll typically be paying for leads not sales and will usually have very little input on how campaigns are run. These are the most complex agreements, typically, and often require multiple-year contracts, equity in your company, or profit-sharing agreements with lengthy legal negotiations. Pay-per-performance tends to not be a good option for new companies or those new to Google Ads.
Less often, you’ll find Google Ads specialists like me that charge a flat fee based on the complexity of your account. I believe that clients should have a predictable cost based on the work that goes into managing your Google Ads account—and that spending more on Google Ads doesn’t necessarily mean it’s harder or more time intensive to manage. Instead of being incentivized to increase ads costs or to do things against your brand standards to get leads, flat-fee Google Ads management is more focused on our relationship working together and getting great results while preserving your brand and improving conversions.
No matter who you choose to manage your Google Ads campaigns, you’ll want to figure management costs into the overall costs of your Google Ads campaigns so you know how much it’s going to cost. In my experience working with clients, most businesses see a higher return on their investment in Google Ads when it’s managed by an experienced Google Ads specialist.
Get Google Ads Costs Estimates & Insight
The cost of Google Ads varies a lot, as you can see from the above article, so speaking with an experienced Google Ad Specialist can help you better understand how much it costs to be on Google Ads.
If you’re curious how much it costs to advertise on Google, the easiest thing to do is contact me for a free initial consultation where I can run cost projections. In an initial consultation, I’ll ask questions about your business goals, look at Google Ads if you’ve run campaigns already, and run cost estimates to see what Google Ads could produce for your business.
Get in touch today and request a free initial consultation to learn more about Google Ads costs, what Google Ads could do for your business, and what working with me is like to run Google Ads campaigns.