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Unlocking Google Advertising Costs and What to Expect During Growth

Key takeaways:

  • Google Advertising costs and pricing structure incorporates Quality Score, Bid, industry, customer lifecycle, market trends, and targeting settings.
  • You control most of the pricing structure except your competitors’ bid amount.
  • Google Ads offers a robust marketing platform with exceptional ROI for your business. If you want to optimize your paid search and ad campaigns on Google Ads, you need to have compelling offers, tested ads, and a sound budget.
  • Big brands spend up to $50 million annually on paid search marketing.
  • The average CPC on the Google Search Network is $1-$2 per click.

If you want to sell your products and services, advertising on Google is a super smart way to do it. Companies like yours can leverage the “pay to play” approach using Google Ads to increase their market awareness and revenue.

In the current landscape, small to mid-sized companies spend about $9,000 to $10,000 per month on Google Ads and large companies often spend in the millions. With shifting trends in advertising, you may find your CPC rising more than you’d like. Our partners and clients often ask us, "What is the cost of advertising on Google?”

Unfortunately, though it would be nice if it was black and white, it depends on several factors. Google advertising costs depend on things like Quality Score, the industry you’re in, and your campaign and ad settings. Businesses can expect costs on ad spend, CPC, PPC management tools, and other aspects of a campaign.

You need clear insights into how Google Ads works if you want to learn more about Google business advertising costs. Read on to learn what to expect with the cost of advertising on Google and how to optimize your digital advertising budget.

Cost-per-click (CPC) and Average CPC

Google Ads dominates the internet marketing sphere because people are usually more intent on buying when they use the massive search engine.

Multiple factors including but not limited to industry, Google Auction, and campaign settings, affect a company’s cost-per-click (CPC) when they buy ad space with Google Ads. CPC is the amount an advertiser pays (i.e. your business) when a potential customer clicks on an ad. The CPC is essential to optimizing PPC strategies, the ad budget, and your quarterly bonus, too.

The average CPC across various industries in 2022 is $1 to $2 for the Google Search Network, which is a group of search-related websites and apps where your ads can show up, and less than $1 for the Google Display Network, which displays campaigns. However, some industries have higher costs, with keyword categories like “insurance” running up to $54 per click. Big brands in lucrative industries spend about $40 to $50 million per year on Google to advertise, while small to medium-sized companies spend about $9,000 to $10,000 monthly.

So, now that we’ve defined CPC and the variation in its averages, what determines a Google business advertising cost? Let’s look at the big factors.

Coke’s brand awareness on a lemonade stand budget

As previously stated, there is no clear-cut answer to the specific figure you will pay for Google Ads. But, knowing Google’s pricing model for ads will help you to get the most bang for your buck. Many businesses are looking for Coke’s brand awareness with the budget of a lemonade stand. Let's break down common factors that influence the CPC and Google Advertising costs as a whole.

1. What You Do

The price you’ll pay on Google Ads highly depends on your industry. Competitive industries with better conversion rates and lower click-through rates generally have higher CPCs than industries with less competitive verticals. In 2022, Attorneys and Legal Services had the most expensive CPC rate, north of $8.

2. What the People Are Searching For

Ad Rank is your ad's position on Google's networks, such as Google Display. Every time a user enters a search query, Google conducts an auction if the query contains the keywords paid for by competitors. The better your Ad Rank, the higher your ad will display, and the Quality Score, which is how relevant and valuable your content is, means that you will spend less and still have a higher placement.

3. Enticing Them to Buy

Customers spend time on one website assessing and reassessing their options before committing. On such sites, the CPC is higher compared to websites with smaller ticket offerings.

4. Catching Them at the Right Time

Geo-targeting, geofencing, day targeting, and device targeting are not new concepts to the seasoned digital marketer. Targeting settings focus on the potential customer's behavior, i.e., their intent to purchase at specific times on specific devices in specific locations. Today, according to Statista, there are over 3.8 billion smartphone users. Therefore, it would make sense for retailers to target smartphone users and allocate a more significant budget to paid searches on mobile devices.

There is no one-size-fits-all answer to how much Google Ads will cost your business. The factors above, though, are huge indicators that impact Google Ads pricing. Now, let’s talk about how Google Ads spends your budget.

Hey Google, This Is My Budget

When businesses discover that their monthly paid search budget has been depleted in days or hours, they might understandably be confused and angry. They might write off Google Ads as too expensive, not realizing how lucrative it can be.

A recent study by Google showed that Google Ads’ average ROI is 800%, with $8 earned for every $1 spent. That’s kind of amazing, right? Granted, your mileage may vary; the only way to know for sure is to get into the market and run some test campaigns.

Google Ads works on a daily budget cap, meaning that you set your budget cap daily. Google won’t charge you more than your budget but might charge you less. To put this into perspective, imagine that you are in the education industry (where the average CPC is $2.40) and you’re aiming for at least ten clicks per day.

You will set up a daily spending limit of $24. Slight caveat – it’s not as black and white as it seems. If your competitors outbid you or have better Quality Scores, your CPC will rise, meaning that you’ll get fewer clicks and your budget will be depleted faster. It’s like competing in a marathon; you’ve got to have the right speed, agility, and perseverance to win the race.

You will never spend more than the daily budget you set, though. You can use the Performance Planner and the Google Keyword Planner to calculate your budget.

Understanding Google Advertising Costs & A Perfect Google Ads Budget

So, what’s a perfect Google Ads budget? Don’t start banging your head against the wall but there’s no straightforward answer! Sorry, we’re like a broken record with this response.

An ideal benchmark goal could be 2,000 clicks per day, but your budget should be relative to your own revenue goals for the year tracked back to the expected success of your advertising campaign. You can use the Google Ad Cost Calculator to allocate your daily budget effectively.

With a comprehensive PPC management service, you’ll get the best ROI with Google Ads. Your Google Advertising costs and budget will fluctuate from time to time, but you will have control over the paid search, which ultimately improves your bottom line.

If you are having a tough time managing your PPC campaigns, consider a reliable PPC partner. As Ashtan Moore, co-founder & partner of Model B, an award-winning, AI-powered advertising agency points out, prioritize “high-value products" in your ad budget to help your spend go further. The ideal budget will vary from company to company and the industry.

Google Advertising Costs - Get the Most Out of Google Ads

Wondering how much Google Advertising costs is a reasonable question when debating if you’ll use the service to digitally advertise. It can truly pay dividends, though, if you decide to use it and the right PPC partner will help you get the highest ROI with a healthy budget.

At Model B, we make customers’ lives easier, better, and more awesome by combining expert marketing analysis and creative development to dramatically increase a client’s ROI on their advertising investment. We help marketers improve their advertising effectiveness, enhance their ability to see and respond to market changes, and ultimately deliver more revenue.

If you would like to know more about how we can help you set up a personalized, dynamic Google Ads campaign, contact us today.