“How much does a Google Ad campaign cost? “: This is a question we hear all the time. When you want to get into CPC advertising to promote your products and services on the web, it is essential to have very clear ideas on the issue. The problem is that the answers are given very often boil down to the traditional “it depends.” We will try to go further!
We will try to answer the question in the simplest and most precise way possible so that you can decide whether or not to advertise Ads for your business. The cost of an Ad campaign depends on many variables. We will detail them one by one. But before, it is necessary to recall some essential elements on the functioning of Google Ads.
- 1 How does Google Ads work?
- 2 How is the Google Ads budget spent?
- 3 How to optimize the cost of your Google Ads campaigns?
- 4 What is the average CPC on Google Ad?
- 5 How much do businesses spend on average on Google Ads?
- 6 Advertising on Google Ads: Additional Costs
How does Google Ads work?
Before talking about “cost,” it is essential to understand how Google Ads works, how it works. One of the big mistakes is to think that the company with the most budget is the one that has the most influence on Ads, that the impact and success of Ads campaign only depend on the size of your wallet. We will see, by quickly studying the functioning of Google Ads, that all these conceptions are false.
Google Ad is an auction system
Google Ads works based on an auction system. If it is very expensive to advertise Ads on the “find lawyer Paris” request, it is because many companies want to position themselves on this highly strategic request. It is not Google that sets the cost of advertisements, but the platform’s customers. The more a query contains requested keywords, the more expensive it is to advertise them.
Google uses an indicator – Ad Rank – to determine the ranking of advertisers and the position of ads in Google result pages. The Ad Rank score is calculated from two variables:
- The amount of the bid, i.e., the maximum CPC that the advertiser (= you) is willing to spend to appear in the SERP on the target request.
- The “Quality Score” or quality score, which assesses the quality of the advertisements. Google values relevant, well-designed, and attractive ads. Google also takes into account the quality of landing pages, that is to say, web pages on which the Internet users who click on your ad are sent.
This helps to realize one thing: the amount of the bid is not the only element taken into account by Google to rank the ads. The quality of the ads is a criterion that plays equally and even as much.
Ad Rank is used to calculate the actual CPC
To learn more about Ad Rank, we refer you to the official support offered by Google. Ad Rank is used by Google to determine your actual CPC, which is the money you will spend each time someone clicks on your ad.
The advertiser who has a poor quality score will have a CPC that will approach or be equal to the maximum bid he has set. The higher the quality score, the lower the CPC. Here, in summary, is how Ads works. This is schematic since there are several auction methods available and also several ad formats. We refer you, on this subject, to the articles which we already published on Ads.
How is the Google Ads budget spent?
Advertisers who are new to Google Ads are often surprised by one thing: their budget is spent faster than they thought. At first, it can shock, especially when you have put a substantial budget on the table (which is a mistake: when you start on Ads, you must first test on small budgets). This kind of unpleasant surprise is what leads many advertisers to think that Ads is expensive. We will see that this is not the case and that this error is due to a poor understanding of how an Ad budget works.
Google Ads budget: the basics
Each campaign must have its daily budget. If you are managing multiple campaigns at the same time, you need to determine which is the priority campaign. You must prioritize your campaigns. For example, a campaign that promotes your flagship product may be prioritized over another of your campaigns designed to promote content to your prospects. You must have a sense of priorities, which means defining your objectives well in advance.
Important – If you are planning a monthly budget for your CPC campaigns, all you need to do is calculate the daily budget allocation between your different campaigns and allocate the budgets according to the priority level of each campaign.
How is the daily budget spent?
Suppose you have an ad with a CPC of $ 0.25 and want to receive 300 clicks per day. These two parameters allow you to calculate an estimate of the daily budget: 0.25 x 300 = 75 euros. In this example, $ 0.25 is the maximum CPC you’re willing to spend per click. The actual CPC, the one that Google charges you, may vary depending on the variables related to the auction system. But keep this in mind: if you have set a maximum CPC of € 0.25, you will never pay more than $ 0.25 per click. Conversely, there is quite a chance that you pay less. It is quite easy to understand.
How to optimize the cost of your Google Ads campaigns?
Now let’s take a look at the different parameters that influence how your Ads budget is spent, and therefore the cost of your campaigns. The first of these is the calendar.
The schedule for announcing
The ad schedule is a feature of Google Ads that allows you to specify the times (time slots and days) when you want your ad to appear.
This feature is very useful for optimizing the way you spend your budget. If you are a storekeeper with a storefront – a baker, for example – and the objective of your advertisements is to bring new customers into the store, you can decide to stop displaying the advertisements after 8 p.m. closure of your point of sale). You can, conversely, make your ads appear at all hours of the day and night but allocate a larger share of your daily budget on strategic hours.
If you can allocate more budget on certain hours than on certain others, you can also allocate more budget on certain geographical areas. This is called “geotargeting” or geographic targeting.
Geographic targeting allows you to prioritize the display of your ads on queries from specific geographic areas. These geographic areas can be countries, regions, departments, cities, or even specific neighborhoods.
Let’s take the example of earlier: you are a baker and want to attract new people to your point of sale thanks to Ad. In this case, it is in your best interest to tighten your geographic targeting as much as possible.
If you are based in Caen, it has a priori no interest to show your ads on the screens of internet users located in Marseille. Again, geographic targeting helps optimize your advertising budget.
Long gone are the days when only the computer allowed you to go online. Consumers today use several different devices to search the internet. Take an interest in the devices used by your visitors, and those used by your most interesting customers or leads.
Let’s say you want your ads to appear on your computer as well as on your mobile, but the most valuable traffic is mobile traffic. You have indeed observed that the conversion rates of your traffic were higher on mobile. In this case, it’s in your best interest to allocate more budget on the mobile part of your traffic. You can even go further on Ads and configure the display of ads according to the type of device or operating system.
All this to say that you actually have a lot of control over how your budget is spent. Fine-tuning display conditions can help you save big and improve your campaign performance.
Now you know how Google Ads works in a broad outline and how an Ads budget works. The next question you might ask yourself is, “What is the average cost of a display? How high is an average CPC on Ads? “. Not easy to answer this question, because we observe very large CPC differences according to targeted queries and competition on keywords.
What is the average CPC on Google Ad?
CPC advertising works the same way as print advertising. It is much more expensive to display an advertisement in a national magazine read by hundreds of thousands of readers than in an obscure local newspaper with a very small audience. It’s the same on the internet. The cost of displaying an ad depends on the popularity of the queries. Or more precisely, as we saw at the beginning, the importance of competition between advertisers.
But it comes to the same thing because there is a direct cause and effect link: the more popular a Google query, the more advertisers wanting to position themselves on it. The average CPC on Google Ads is between 1 euro and 2 euros. We are talking only about ads that appear on the Display Network, that is, in search results.
The CPC of ads displayed on the Display network is lower overall (less than 1 euro per click). This is only a general average. Still a strong one, we observe very large differences in CPC.
The most expensive keywords on Google Ads
Specifically, these are the most expensive keyword categories. Financial services ads have an average CPC of $ 60. We are very far from the average (between 1 and 2 euros). This infographic shows that in a fairly large number of sectors, the CPC is in the tens of euros. Note that there are even more impressive figures on Bing Ads, with CPCs over 100 euros in certain categories!
If these numbers can impress, you should never forget to think in terms of ROI. If in the financial sector, the CPC is very high, the lifetime value of the customers is also very high.
Also Read – Budget Projection In Google Ads
The long-tail keywords
Some people like to highlight intimidating keyword categories (like insurance or financial services) to demonstrate the very high cost of a CPC campaign. Except that these categories represent only a very small portion of web traffic. Most of the traffic is generated on long-tail keywords.
The common point of long-tail queries is that they always have a fairly high number of keywords: 4, 5, 6 keywords, or even more. For example, “how to write a press article” or “difference between inbound marketing and outbound marketing.” These are queries that correspond to very specific searches. The CPC of long-tail requests is lower on average.
For example, it is much more expensive to position oneself on the request “insectizer” than on the request “insect wasp house” or the request “how to disinfect my kitchen of ants.” Smart digital advertising also means identifying these long-tail requests, which are cheaper than general requests but which can generate good quality leads. Moreover,
How much do businesses spend on average on Google Ads?
In general, when someone asks how much the average CPC is, they are quick to ask how much a “normal” business spends on Google Ads. Unfortunately, this question, again, does not admit of an easy answer. But that does not mean that no answer is possible. We will try to bring you some answers by examining to begin by indicating the amounts spent by sector of activity.
We can see a fairly strong link between the amounts spent and the amount of the CPC. In a sense, it is logical that it is in the finance and insurance sector that Ads advertising spending is the highest because it is also in this sector that the CPC reaches records. In this sector, it is not uncommon to see companies spending up to 40 million euros per year on Ads campaigns. Amazon, which belongs to everyone in the retail sector, spends, for example, $ 50 million a year.
This little sector overview is interesting in itself but is not very useful for someone who wants to know how much a “normal” business spends on Google Ads in general.
How much do small businesses spend on Google Ads?
The best way to get interesting answers to this question is to listen to what the professionals who work on the Ads platform say every day. For Erin Sagin, for example, who works at WordStream, the amount is, of course, very variable. Some companies spend around $ 1,000 a month; others spend around $ 30,000 a month. For Eric Sagin, the average customer’s budget (= imply: the average WordStream customer) is a little below $ 10,000 per month.
In an Ads budget, a large part of the money you invest goes into Google’s pockets. But not only. When you advertise at the CPC, there are sometimes additional costs that you have to anticipate.
Advertising on Google Ads: Additional Costs
The cost of a Google Ads campaign is, first and foremost, the cost of displaying ads, calculated by multiplying the average CPC by the number of clicks. The bulk of your Google Ads budget goes into Google’s pockets. But there are other additional costs that can add to your advertising budget in the narrow sense of the term.
The cost of the Ads agency
Quite often, due to lack of time and/or in-house skills, SMEs delegate the design and management of Ads campaigns to specialized agencies. This approach has several advantages. Using the services of an agency allows you to benefit from the experience and skills of experts from the Ads platform, and to save time. Example agency offering support on Google Ads:
But it comes at a cost. The agency rates are, on average, quite high, even when it comes to small agencies. To our knowledge, very few agencies charge for the performance. In any case, performance invoicing, when there is, never represents more than a small part of the amounts invoiced. To give you an idea, the cost of the agency represents, on average, 10% of the Ads budget. If you have 3,000 euros in Ads budgets, count 300 euros in agency costs.
It is in the interest of the agency to offer its clients excellent returns on investment. But still, even if your ads convert very poorly, you have to pay the agency. If you decide to outsource the management of your Ads campaigns, use the feedback and reputation of the agencies to make your choice. You can also, if your budget is tight enough, hire a freelance.
The cost of the PPC Management solution
Google Ads is an ultra-comprehensive platform. It offers advertisers a very high level of control and offers a very large number of variables for setting up campaigns. The problem is that complete often rhymes with complex. Google Ads is an intimidating platform when you are a neophyte. Some companies prefer to opt for a PPC Management solution, which allows them to design and manage their Ads campaigns from other software, which is easier to use. Most of this software is offered by digital agencies specializing in Google Ads.
There are several factors, several variables which influence, often significantly, the cost of an advertising campaign on Google Ads. But keep this in mind: all businesses can find their way around and make money with Ads.