How much do Google Ads Cost

Now let’s understand how adwords determines the quality score and maximum CPC bid of your ad. So, Google determine the maximum CPC bid using Ad rank, with the formula,  

Cost Per Click (CPC) = (Rank of Ad below your Ad ÷ Quality Score) + 0.01$ 

To determine quality score, three things are measured which are relevance (meaning how closely your ads relate to user intent), CTR or Click through Rate (percentage of users who watched the ad and take action) and landing page quality (when user clicks an ad then what was the quality of that page). 

Google measures quality score from a 1 to 10 scale, in which 1 is the lowest score while 10 is the highest score. Hence, every keyword in your Google Ads account has a quality score assigned by Google. 

Higher quality score means your ad and landing page is relevant to the target audience which can help your ad get better ad position and lower costs. If your competitors are bidding more than your ad will automatically rank higher. For example, your maximum bid for a specific keyword is 3$ while quality score 9 so, your Ad rank would be 3$ × 9 = 21. A person having the highest ad rank would win the top advertising place. 

To find CPC we would continue with the previous example. So now let consider your competitor has quality score of 12 with maximum CPC of 7$; let’s apply this value in the CPC formula:

CPC = (12 ÷ 9) + 0.01$ = 1.34$

There is no perfectly fit answer for this specific question of how much will Google Ad costs to your business or vice versa but we determine some factors that impact Google Ads pricing. The Google advertising cost depends on your industry, current trends, Google Ads account management, quality score, keywords, bid and customer lifecycle. etc. Let’s explore each

1. Industry:

Google Ads pricing is majorly influenced by your industry. Some industries have more competitions on search results and queries than other industries. The higher people search a specific query, the more businesses try to rank their pages, the harder it will be to rank your ad and the more expensive it would be.  

For instance, legal, accounting, real estate etc are the most competitive in Google Ads meaning it is difficult and costly to rank your ad on such businesses. This is because the type of industry as only one client can give $1,000 to $10,000 so a CPC of $10 is nothing in comparison to that price. While, businesses in real estate or arts and entertainment have lower CPCs as they have to reach more customers to cover up $1,000 to $10,000. 

It doesn’t only depend on the type of industry, it also depends on the number of competitors. The more people try to get a higher rank, the more competitive it would be. So, let’s explore this as well. 

2. Trends

The cost of Google Ads also depends on current market trends. If one specific thing is in trend and more people are searching for it, the more competitive it would become. 

For example, there was a trend of “spinners” and people were continually buying that product but as time passed people minimized its use and hence it does not remain trendy. If you run an ad at that time, your ad cost would be high but if you run an ad now, it would be low. Google ads pricing also depends upon some other factors which are given below:

• Increase in CTR:

Many industries encounter CTR increase but this does not mean lower costs. This is because of high user engagement and as engagement increases, competition also increases which ultimately means more advertisements or ad placements, leading to increase in CTR.

• Increase in CPC:

Increase in CPC is also seen in some industries. This is because advertisers bid on the same keywords which increase the competition. So, you need high budgets to compete with your competitors and maintain visibility.

• Increase in CPL:

CPL is cost per lead which rises in almost every industry as acquiring leads is becoming more expensive. Customizing your ad strategies and making your ad more relevant can help in lower CPL.

3. Ads Type:

Google Ad costs depend on ad type, meaning what type of ad you are publishing on Google also impacts the google ads prices. There are 5 different types of Google ads that are generally used:

• Google Display Ads:

Whenever you move into a website or open an app, you must have seen different ads which are the example of Google Display Ads (GDN). Google Display Ads are shown to the users based on their interests, content they view or demographics.  

• Google Search Ads:

These are the ads that you saw on Google’s search engine results pages. Whenever users search something with a specific keyword, these ads are shown to the user with the tag of “sponsored”. These ads help you to connect with your potential customers who are searching the market for what you offer.

• Google Shopping Ads:

Google shopping ads display products in search results with price details and user ratings. These ads provide a quick look at the product features to users. Google show these ads in different positions of SERP. Most of them appear on top of the page or on the right side of the page.

• Bidding Strategy:

Your bidding strategy can impact your Google Ads cost by identifying how much you would pay for clicks and conversions. Google ads bidding involves setting up the maximum amount you will pay per click or some other interactions. Your bidding means you have entered into an ad auction which will compete with others. 

Bidding is divided into two categories: manual bidding and automated bidding. Manual bidding helps you set the max google advertising cost you are willing to pay. It is helpful if you already know which keyword can give you more clicks and conversions. Automated bidding helps you to set bids depending upon your ad’s clicks and conversions. In automated bidding, machine learning is utilized to optimize for conversions that align bids as per your campaign goals.