16/05/2023 • Ryan Hakeney
What does it Cost to Advertise with Google Ads?
PPC Article
TL;DR:
Google Ads is a cost-per-click (CPC) advertising platform, which means that you only pay when someone clicks on your ad. The amount you pay per click is determined by a number of factors, including the competition for the keyword, the quality of your ad, and your maximum bid.
There are a few things you can do to budget effectively for Google Ads:
- Set a daily or monthly budget
- Choose the right keywords to bid on
- Write effective ad copy
- Use negative keywords
- Track your results
- Use data insights to take action to optimise your account
By following these tips, you can create a budget that works for your business and get the most out of your Google Ads investment.
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The cost of Google Ads
Google Ads is one of the most popular and effective ways to reach new customers online. But with so many businesses using Google Ads, it can be tough to stand out from the crowd. One of the most important factors in determining your success with Google Ads is your budget.
Whilst some giant retailers can spend mind-boggling millions on Google Ads, some small businesses have more modest accounts spending anywhere from £200 to £2,000 a month. Getting the most out of your investment is important - especially for a small business.
In this blog post, we'll take a look at the cost of running Google Ads campaigns. We'll discuss how Google Ads determines whether to serve your ad, which dictates your Cost per Click (CPC), how CPC differs across industries, which factors influence someone’s likelihood to click, how to track your spending, and how to get the most out of your investment.
Google Ads Cost-Per-Click Model
Google Ads uses a cost-per-click (CPC) model. This means that you only pay when someone clicks on your ad. The amount you pay per click is determined by a number of factors, including the competition for the keyword you're bidding on, the quality of your ad, and your maximum bid.
How Google decides whether to show your ad
Google Ads works on an auction system, but it's not just about who has the highest bid. There are other factors that determine which ads come out on top of each auction, and how much you eventually pay for each click.
Step 1: Quality Score
Google assigns each ad a Quality Score, which is a number from 1 to 10. The Quality Score is based on three factors:
- Relevance: How relevant is your ad to the keyword that someone is searching for?
- Expected click-through rate (CTR): How likely is someone to click on your ad (based on historic performance)?
- Landing page experience: How is the experience when someone clicks on your ad and visits your website?
Step 2: Ad Rank
Google then calculates each ad's Ad Rank, which is a number that determines where your ad will be shown in the search results. Ad Rank is calculated by multiplying your Quality Score by your maximum bid.
The highest Ad Rank in the auction does not always serve at the top of a Google Ads auction as it is a complex algorithm that organises the ads that are displayed.
Step 3: Cost per click
If your ad is shown, you only pay if someone clicks on it. But the amount you pay per click is not always your maximum bid. It's actually determined by the Ad Rank of the ad below yours, divided by your Quality Score, plus one penny.
So what does this all mean?
It means that you can compete with big spenders on Google Ads, even if you have a small budget. If you have a high Quality Score, you can pay less per click and still get your ad shown in a prominent position.
Tips for improving your Google Ads Quality Score:
- Write clear and concise ad copy that is relevant to the keywords you're bidding on.
- Use keywords in your ad title and description.
- Make sure your landing page is relevant to the keywords you're bidding on and provides a good user experience.
By following these tips, you can improve your Quality Score and get more out of your Google Ads investment.
Average Cost Per Clicks
The average CPC for Google Ads varies depending on the industry and the keyword. In general, more competitive keywords will have a higher CPC. For example, the CPC for the keyword "insurance" is much higher than the CPC for the keyword "dog food."
A recent study found that the average CPC for Google Ads in the UK varies from industry to industry. The highest CPCs were found in the following industries:
- Insurance: £7.11
- Legal: £6.25
- Finance: £5.75
- Telecommunications: £5.25
- Travel: £4.75
The lowest CPCs were found in the following industries:
- Pharmaceuticals: £0.25
- Home & Garden: £0.38
- Food & Beverage: £0.42
- Education: £0.46
- Technology: £0.50
It's important to note that these are just averages, and the actual CPC for your campaign will vary depending on the factors mentioned above. If you're interested in running a Google Ads campaign, it's important to do your research to determine the best keywords to bid on and to create effective ads that will attract clicks.
How to Improve your Click Through Rate
Google Ads is a popular online advertising platform that allows businesses to display their ads on Google's search engine results pages (SERPs), as well as on other websites and apps. The cost of running a Google Ads campaign is determined by the cost per click (CPC), which is the amount you pay each time someone clicks on your ad.
There are a number of factors that influence someone's likelihood to click on a Google Ads ad, including:
- Relevance: The ad should be relevant to the user's search query or browsing activity
- Clarity: The ad should be clear and easy to understand
- Credibility: The ad should make the user feel confident that the business is legitimate and trustworthy
- Urgency: The ad should create a sense of urgency, such as by offering a limited-time discount or promotion
- Visual appeal: The ad should be visually appealing and eye-catching.
In addition to these factors, the CPC for a Google Ads ad can also be influenced by the following:
- The competition for the keyword: The more competitive the keyword, the higher the CPC will be
- The quality of the ad: A high-quality ad will have a lower CPC than a low-quality ad
- The location of the ad: Ads that are placed at the top of the SERPs will have a higher CPC than ads that are placed lower down
- The time of day: Ads that are displayed during peak times will have a higher CPC than ads that are displayed during off-peak times.
By understanding the factors that influence someone's likelihood to click on a Google Ads ad, businesses can create more effective campaigns that achieve their desired results.
Google Ads is a powerful tool that can help businesses reach new customers and grow their business. By understanding the factors that influence someone's likelihood to click on a Google Ads ad, businesses can create more effective campaigns that achieve their desired results.
Budgeting for Google Ads
Whilst Google Ads is a powerful tool that can help businesses perform at scale, it can also be expensive. That's why it's important to budget for your Google Ads campaign carefully as you elevate your business.
In this section, we'll discuss how to budget for Google Ads, how to calculate the number of clicks you can expect, and how to improve your CPC.
When budgeting for Google Ads, it's important to consider the following factors:
- Your goals: Do you want to increase brand awareness, generate leads, or drive sales?
- Your target audience: Who are you trying to reach with your Google Ads campaign? Where do they spend their time online?
- Your budget: How much money is at your disposal?
Once you've considered these factors, you can start to develop a budget for your Google Ads campaign. There are a few different ways to budget for Google Ads, including:
- Set a daily budget: This means that you'll only spend up to a certain amount each day
- Set a monthly budget: This means that you'll only spend up to a certain amount each month
- Set a maximum CPC: This means that you'll never pay more than a certain amount per click
The best way to budget for Google Ads will depend on your specific goals and objectives. If you're just starting out, it's a good idea to start with a small budget and gradually increase it as you get more familiar with Google Ads.
How to forecast the number of clicks for your budget
Once you've set a budget for your Google Ads campaign, you can start to calculate the number of clicks you can expect. To do this, you'll need to know the following:
Your industry's average CPC: You can find this information by using a tool like Google Ads Keyword Planner.
Your daily or monthly budget: This is the amount of money you're willing to spend on your Google Ads campaign.
To calculate the number of clicks you can expect, simply divide your budget by your industry's average CPC. For example, if your industry's average CPC is £2 and your daily budget is £10, you can expect to receive 5 clicks per day.
From this you can them use your expected conversion rate and average order value to forecast your sales and revenue.
Ways you can improve your CPC
There are a few things you can do to improve your CPC and cheapen on the industry average:
- Choose the right keywords: When choosing keywords to bid on, it's important to choose keywords that are relevant to your target audience and that have a low CPC.
- Write effective ad copy: your ad copy should be clear, concise, and relevant to your target audience. It should also be persuasive and encourage users to click on your ad.
- Use negative keywords: negative keywords are words or phrases that you don't want your ad to show up for. For example, if you sell shoes, you might want to add the negative keyword "free" to your campaign so that your ad doesn't show up for searches like "free shoes".
- Use ad extensions: Ad extensions are additional pieces of information that you can add to your ad, such as your phone number, address, or website. Ad extensions can help to improve your ad's click-through rate (CTR).
- Track your results: It's important to track the results of your Google Ads campaign so that you can see what's working and what's not. Use the tools and reports that Google Ads provides to track your spending, clicks, impressions, and conversions.
- Sometimes your initial campaign builds are based on assumptions you make about your audience. You can use data insights once you get the ball rolling to optimise the account and lower your CPC over time.
By following these tips, you can improve your CPC and cheapen on the industry average. And by cheapening your CPC, you are getting the most out of your investment in Google Ads.
Key takeaways
To conclude, let’s go over the key takeaways:
- Google Ads is a powerful tool that can help businesses reach new customers and grow their business.
- The cost of running a Google Ads campaign is determined by the cost per click (CPC), which is the amount you pay each time someone clicks on your ad.
- There are a number of factors that influence someone's likelihood to click on a Google Ads ad, including relevance, clarity, credibility, urgency, and visual appeal.
- Google Ads has built-in tools to keep tight control over your budget.
- Businesses can improve their CPC by choosing the right keywords, writing effective ad copy, using negative keywords, and using ad extensions.
- There are many data insights to take from a Google Ads campaign to see what's working and what's not, and to elevate the account and scale spend, or use spend more efficiently.
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