How Much Do Google Ads Really Cost?

How Much Do Google Ads Really Cost?

Photo by: Myriam Jessier

How much do Google Ads cost?

 In short, the average small to medium-sized business spends on average $9,813 per month on Google's Pay-per-Click advertising, according to WordStream.

This ranges from the smallest mom-and-pop shops that spend around $1000 a month to mid-sized operations that spend closer to $30,000 a month.

This leaves a massive window for interpretation when trying to figure out where your business fits in. When figuring out how much to budget for Google Ads, there are several factors you will have to keep in mind that will allow for a more accurate result.

 

What factors affect the cost of Google Ads?

 Many factors determine Google Ads pricing model, some are more static, like what industry you work in, and some are more dynamic like keyword bidding. It's ok though, we'll talk about each factor and give you some answers, so you can better understand how to set your budget.

Factors that affect Google Ads price:

  • keywords
  • industry 
  • customer lifecycle
  • quality score
  • current trends
  • advanced targeting options

How do keywords affect Google Ad cost?

 Keywords are the single most influential factor when it comes to Google Ads pricing. In traditional media, you'd expect to spend more on a full-page advertisement in a nationally circulated newspaper than a half-page ad in the local one. You expect to pay more because there will be more eyes on that national paper, and more people would potentially see your ad. The process isn't as straightforward in digital marketing. In digital marketing, the intent of your ad and the competitiveness of the keywords you bid on significantly affect the price you'll pay. The more likely a keyword is to be searched, the higher the bidding competition, which means the higher the price. 

How does industry affect Google Ad cost?

 Industry plays a vital role in Google Ads cost because industry directly affects the competitiveness of keywords which we know affects the price. So what are the most competitive sectors for keywords?

According to Statistica, the top 10 industries with the highest average monthly cost-per-click 2019 are as followed: 

  1. Insurance
  2. Online Education
  3. Marketing and advertising
  4. Legal
  5. Internet and telecom
  6. Online banking
  7. Automobile dealership
  8. Home and garden
  9. Fitness and health 
  10. Cryptocurrency

These are the most expensive keyword categories in Google Ads by cost-per-lick (WordStream):

  1. Insurance - $54.91
  2. Loans - $44.28
  3. Mortgage - $47.12
  4. Attorney - $47.07
  5. Credit - $36.06
  6. Lawyer - $42.51
  7. Donate - $42.02
  8. Degree - $40.61
  9. Hosting - $31.91
  10. Claim - $45.51
  11. Conference call - $42.05
  12. Trading - $33.19
  13. Software - $35.29
  14. Recovery - $42.03
  15. Transfer - $29.86
  16. Gas/Electricity - $54.62
  17. Classes - $35.04
  18. Rehab - $33.59
  19. Treatment - $37.18
  20. Cord blood - $27.80

What does all of this mean? Advertising through Google Ads in these industries will cost you more money.

How does customer lifecycle affect Google Ad cost?

 Another essential factor to keep in mind is the customer life cycle. Some action funnels take longer and require multiple visits to a site, downloading content, or joining an event- before prospective customers take the final step. Other industries, like retail, have shorter customer journeys with potential customers seeing an item they like, visit the site, and purchase the item. Longer customer lifecycles usually mean a higher Google Ads price tag; however, industries with shorter customer journeys can be more competitive, so it's essential to keep this in mind.

How does quality score affect cost?

 Price isn't the sole factor when talking about keyword ad rank (or ad placement). Quality score may not be as crucial in determining price as other factors, but you can significantly reduce the price you'll have to pay to get your advertisement seen if your ads have a high-quality score.

Google uses a simple multiplier system to determine Ad Rank.

Max Bid x Quality score = Ad Rank

For example: 

Advertiser 1 has a max bid of $2.00 and a quality score of 10.

Advertiser 2 has a max bid of $4.00 and a quality score of 4.

Advertiser 3 has a max bid of $6.00 and a quality score of 2.

Advertiser 4 has a max bid of $8.00 and a quality score of 1.

Advertising 1 pays the least but still has the higher than Advertiser 4, who pays the most. 

 

Quality matters!

How do current trends affect Google Ad cost?

 Advertising isn't performed in a vacuum. You are marketing to real people who are experiencing real issues and have to adjust to current events and trends. Some recent examples of this are COVID-19, and the Black Lives Matter movement. Both current events changed how we as a society operated and viewed things. This caused marketers to take a step back and adjust their approach to the times. 

How does advanced targeting affect Google Ad cost?

 Many factors influence your cost per click price on Google Ads that you do have direct control of. Advance options are handy when targeting specific niches or locations on Google Ads.

Dayparting (Ad Scheduling): 

 This is the act of specifying when you want prospective customers to see your ads. This is useful for local businesses that have brick-and-mortar shops and want to attract customers during opening hours. Having your advertisements appearing during a particular window of time can place your adverts in a more competitive environment, so plan accordingly.

Geotargeting:

 Geotargeting is the act of targeting your ads by location. Similar to dayparting, this is great for local physical areas looking to increase foot traffic.

Device Targeting:

 Device targeting is the targeting of potential customers on specific devices. This allows you to target prospective customers based on the device they are using. While this might of seemed unnecessary 15 years ago, mobile smartphones are continuing to grow in popularity and usage, with 75% of Australians expected to own a smart-phone by 2022.

While these are all fantastic options, be aware that all of them can affect your Google Advertising spend.

So is Google Ads for you? Yes! Google Ads is for all businesses, large and small. Both brands with small budgets and big budgets can use Google Ads effectively and facilitate future business by including it in their advertising plan.

 

Need advertising guidance? Reach out to our community of experienced advertisers and business owners who write articles daily and are happy to answer your questions.

Or are you looking for advertising experts near you? Click here to get free quotes and hire the right pros.


Justin Gil

Content Writer at SavvySME

Howdy! I'm a content writer here at SavvySME. I'm originally from Miami, Florida, USA. After college and pursuing a professional baseball career in the States, I traveled abroad as an import baseball player, getting the most out of the tail end of my sport's career. Baseball allowed me to traveled across Australia and Europe over the years, and for that, I'm thankful! During my career, off the field, I gained experience as a part-time Digital Marketer and Content Writer for a local Miami firm. When my sports career ended, I decided to shift my focus entirely towards the writing aspect of business! I love Australia and currently call Perth home! I'm happy to chat if you have any questions or would like to reach out! :)


Comments (1)
User
Eloah Paes Ramalho

Eloah Paes Ramalho, Community Manager at SavvySME

I have felt overwhealmed by all these considerations and stopped on my tracks when using Google Ads! Anyone else?

Thanks for getting this conversation started, @Justin Gil ! @Lisa Ormenyessy, you are an expert in spending Marketing dollars! What would you emphasize here for entrepreneurs considering whether or how to use Google ads best?