“I know Google Ads are great, but I hear they’re pretty costly.”
Or.
“What if I end up paying more than I can afford?”
Or.
“How much money do you need to advertise on Google Ads?”
You get the point. We’ve heard many questions about how much Google Ads cost, and we’ve heard them in all shapes and sizes. The answer, however, isn’t exactly straightforward. Figuring out how much the search engine will charge to run your AdWords campaigns ultimately depends on a lot of different variables. But we’ll try to help you get to that final figure.
Google Ads Essentials: The Auction
The best way to understand how Google will charge you (and how much you’ll have to pay) is to look at its ad auction process. It begins whenever a user types in the keywords you bid on.
Now, Google Ads isn’t that difficult to understand: create the ad, choose a keyword, choose a sum you’re willing to pay for each click. This is called the “maximum bid.” The problem is, a lot of your competitors are most likely bidding on the same keywords, which is why the ad auction phase begins.
At this time, Google will look at all the ads that may be activated for a user query, and assign them a quality score. There are a lot of different things that may go into this score, such as landing page optimization, ad relevance, or ad quality. Once all the eligible ads are ranked, then the best ones with the highest quality scores get included. The best of the best even get a top ad position.
And you should strive for a high-quality score, because it may have a lower cost per each click than the maximum bid you submitted. Contrary to popular belief, just bidding more on keywords won’t necessarily improve the ad rank or inclusion. If the ad isn’t ranked properly, then it may be left aside.
The Budget Is Under Your Control
A big misconception of Google Ads is that advertisers have little to no control over how much they have to spend on your ads campaigns. We don’t know how this idea started, because the reality paints a drastically different picture.
You ultimately control the final amount you pay for the ads through the budget options. If you go through your account, you will see that you can choose how much money you are willing to pay for one ad, and ad set, or even an ad campaign. Google will never charge you extra. When the money runs out, the campaign or ads will no longer get activated until you add more money to your daily budget if you want to.
A more reasonable scenario that Google charging you extra is simply running out of the budget funds a lot faster than you expect. You can think the budget you’ve set will last you for an entire month, and then see that after two weeks the ads aren’t active anymore. This doesn’t mean Google is taking your money because it feels like it. Instead, it may mean that you probably need to brush up on some Google Ads budgeting aspects.
The Typical Click
A lot of people ask us this famous question: “But what does a typical click cost?” This mystical typical click does not actually exist.
In Google ads, you have to bid on a keyword of your choosing, one that’s relevant to your ad and business. When a user types in something like your keyword, the ad the shown. The problem is, you’re not the only one with that keyword, right? And the more people are using the same keyword, the higher its average cost per click (that’s why we always recommend targeting long tail keywords.)
We could tell you the average pay per click is around $1 or 2$. While that’s true for a lot of industries, if you operate in a particularly competitive one, you can look at keywords as expensive as $10 or $15. The “insurance” keyword can be as high as $54 on average. And things aren’t that different on Bing Ads either, where the same keyword has a maximum CPC of roughly $53.
The cost tends to be higher on the Search Network, which is where ads show up on Google SERPs. When it comes to the Display network, on the other hand, you can expect to pay a bit less than on Google search.
How Much Should You Spend on Google Ads?
We get that it can be difficult to know how much money to give to your Google Ads efforts. Since you can control the budget, you can also figure out how much money your small business can afford to spend on PPC ads. Some companies like Amazon can have large digital marketing budgets, spending even 50 millions dollars a year just on Google Ads, but this is generally because the stakes are higher for them, not because they found that spending more money gets better results.
You don’t have to break the bank for Google Ads just yet. Even with a budget of just a few hundred dollars a month you could potentially still get good results that can have a positive impact on your business.
Some Tips on Optimizing Spending
- Go for the Daily Budget Option
If you don’t have a lot of experience with Google Ads or PPCs in general, you can start by establishing a daily budget for your ads. This will help you keep track of how much you’re spending. The average CPC of the ad may vary from auction to auction, but if you set a daily budget you’ll be more in control of how much you spend.
- Select the Automated Bidding Option
It’s understandable if you don’t know how much to bid for a keyword. That sum should be established after a little bit of research on keyword relevancy and usage. However, you can also use the automated bidding option. If you also have a daily budget, then Google Ads will adjust the bids to get the most possible clicks for your budget.
- Choose a Bidding Strategy Based on Your Goals
In order to place your ads in the auction, you’ll have to select how you’d like to bid. It’s important to choose an option that’s best for what you want to achieve.
Here are the options:
- Pay per click is the most popular options, yet not the only one as some might believe. It’s the best one if your goal is to drive traffic to your website;
- Pay per impressions will only charge you after the ad was displayed 1000 times. It’s a good bidding strategy if you want to increase brand awareness;
- Cost per acquisition – sometimes, getting people to visit your website is only one step to achieve your goal. If you want to increase conversion, then choose a CPA bidding model to pay only when a user performs a specific action on your website, like making a purchase, downloading a file, or signing up for the newsletter.
Other Costs
While not Google Ads costs per se, many businesses also use agencies or PPC management software for their online marketing needs, which is something you should definitely also keep in mind.
Both can greatly increase the results your Google Ads will get. The agency brings in an experienced team, while the PPC management software can help you keep your campaigns under control, and avoid any costly mistakes. These are the perks, and they are compelling, but know that if you want to go this route, you will have to increase the money you were initially planning on spending for the Google Ads efforts.
Signing off
If you could sum it up in just a few words, anyone could understand Google Ads and what it does. But the deeper you dig into the subject, new layers appear, and some are understandably difficult to grasp at first.
But the secret here is to just try. If you start small and give yourself room to learn (and to make mistakes) you’ll get a hang of Google Ads and can start growing your business.
And if the subject is still fuzzy, we’re always up for a chat. Contact Australian Internet Advertising now and let’s see what Google Ads can do for your business. We can make sure that only the right people click on your ad, limiting your ad spend to only what’s necessary.
