How Much Does Google Ads Cost in 2024?

17/09/2024
By Matthew Limbert
Wondering ‘how much does Google Ads cost’ in 2024? Look no further. Whether you’re a small business owner or a digital marketing professional, the cost of Google Ads can range from a few pennies to several pounds per click, influenced by factors like bidding strategies, industry competitiveness, and keyword selection. In this article, we unpack […]

Wondering ‘how much does Google Ads cost’ in 2024? Look no further. Whether you’re a small business owner or a digital marketing professional, the cost of Google Ads can range from a few pennies to several pounds per click, influenced by factors like bidding strategies, industry competitiveness, and keyword selection. In this article, we unpack these factors, offer insights into current pricing trends, and help you forecast your budget for efficient Google Ads campaigns.

 

Key Takeaways

  • Google Ads cost varies based on factors like industry competitiveness, keyword selection, Quality Score, and bidding strategies, with no fixed cost for all advertisers.

  • According to Wordstream, average CPC across industries in Google Ads is £3.53 in 2024, but specific industries like legal and consumer services experience much higher CPCs.

  • Future Google Ads pricing is expected to be influenced by advancements in AI, changes in Google’s advertising policies like the deprecation of third-party cookies, and increased mobile advertising.

 

Understanding Google Ads Costs

Understanding the cost of Google Ads can feel like navigating a maze. Numerous factors come into play, such as Ad Rank, Quality Score, and bidding strategies, which can influence the overall Google Ads costs. These factors are part of the complex Google Ads auction process that determines the cost of advertising on the Google Ads platform.

Evidently, there’s no one-size-fits-all answer to the question, ‘how much does Google Ads cost?’ The costs can vary widely based on several variables. Competition for ad space and your target audience’s behaviours can substantially affect the cost. Hence, running an effective Google Ads campaign requires an understanding of your target audience, meticulous budgeting, and analysis of the competition.

 

Industry Influence

The industry your business operates in can have a significant impact on your Google Ads cost. The average cost per click (CPC) in Google Ads can vary greatly across different industries due to factors such as industry competitiveness and potential returns on investment.

For instance, industries such as legal services and consumer services often show high average CPCs. On the other end of the spectrum, advocacy and nonprofit groups tend to enjoy comparatively lower CPCs. This variance in Google Ads pricing across different industries calls for a strategic approach in budget allocation to maximize ROI.

 

Keyword Selection

Keyword selection is a crucial element that can substantially influence your Google Ads expenditure. Selecting the right keywords can lead to higher or lower CPC based on the industry and competitiveness of the keyword. Hence, choosing the right keywords is vital for a successful Google Ads campaign.

Long-tail keywords, which are often significantly cheaper than shorter keyword-rich queries, can still drive commercial intent just as effectively. These longer, more specific search terms can lead to valuable customer conversions. To select the most effective keywords, think from a customer’s perspective, aim for specificity without over-limiting reach, and consider the competitiveness of general keywords. Remember, keyword research is integral to understanding user behavior and competition, and the choice of keyword match types has distinct cost implications.

 

Bidding Strategies

The costs associated with Google Ads are largely determined by your bidding strategy. It influences the amount paid for user interactions, thereby impacting costs and the overall effectiveness of the ad. One such strategy is setting a maximum cost per click (CPC) bid. This bid is the upper limit set for the cost of a click on an advertisement, and it affects your ad’s competitiveness and visibility.

A higher maximum CPC bid may increase an ad’s visibility. However, it can also lead to increased advertising costs. On the other hand, Enhanced CPC (ECPC) is a bidding strategy that modifies manual bids with smart adjustments based on the likelihood of conversion, optimizing for conversion value. Hence, adopting a bidding strategy that matches your campaign objectives and budget is important.

Breaking Down Google Ads Pricing

Google Ads provides several pricing models, with pay-per-click (PPC) being the main one, and its pricing varies based on several factors. Under the PPC model, advertisers incur costs only when a user clicks on their ad. So, how much do these clicks cost? The average CPC costs on the Google Search Network and Google Display Network typically range from £0.10 upwards. However, this can extend up to £50 and higher for highly competitive keywords.

Beyond the PPC model, Google Ads offers other pricing models. For instance, the average cost per thousand impressions (CPM) is about £0.51 – £1.00, while cost-per-view (CPV) and other formats have varied pricing. Comprehending these pricing models and their influencing factors is crucial for crafting an economical Google Ads strategy.

 

CPC Factors

Several factors influence the cost per click (CPC) in Google Ads. One of the most significant factors is the Ad Rank. Ad Rank in Google Ads is determined by the multiplication of Quality Score and the maximum bid, significantly influencing CPC. Interestingly, a higher Ad Rank leads to a lower actual CPC. The actual CPC is calculated as the Ad Rank of the ad below yours divided by your Quality Score, plus one cent.

Another critical factor influencing CPC is the Quality Score. The Quality Score improves with factors such as Click-Through-Rate (CTR), ad relevance to the search query, and the quality of the landing page. Historical search performance also impacts Ad Rank, as Google considers past relevance and performance of advertisements, which in turn affects the current CPC.

Lastly, keyword competition increases CPC. For keywords with high commercial intent, more advertisers bidding on the same keywords drive up the costs.

 

CPM Factors

The cost per thousand impressions (CPM) is another pricing model under Google Ads, applicable to campaigns on YouTube or the Google Display Network. With CPM, advertisers pay for the number of times their ads are shown. The platform offers Target CPM (tCPM) that enables advertisers to set an average CPM bid, working to maximize reach while keeping costs within budget. Furthermore, Viewable CPM (vCPM) focuses on paying for viewable ad impressions, prioritizing ad visibility over clicks or traffic.

Several factors affect CPM. Some of these factors include:

  • The size and specificity of the target audience, which can influence the cost. More narrow targeting generally increases costs.

  • Geotargeting, which shows ads only in selected geographical areas, can also alter ad budget allocation.

  • Different social platforms can have varying CPM costs, affecting the choice of advertising platforms.

Lastly, campaign objectives aligned with different stages of the marketing funnel can influence CPM, with awareness stages typically incurring lower costs.

 

CPV Factors

Cost per view (CPV) is another pricing model used for video ads on Google Ads. With CPV, advertisers pay for video views and other video interactions, such as clicks on calls-to-action, cards, and companion banners. Advertisers set a maximum CPV bid, which is the highest price they are willing to pay for a view. The actual CPV paid is often less than this maximum due to auction dynamics. This dynamic also determines ad ranking and the position among other ads, particularly for in-feed video ads on YouTube search results.

CPV bidding is available under campaign objectives including Product and Brand Consideration and Brand Awareness and Reach. It’s applicable for all subtypes of the former and only the Ad sequence subtype of the latter. In CPV campaigns on the Display Network and YouTube, all negative keywords are treated as exact match, influencing the visibility and targeting effectiveness of the ads.

 

Budgeting for Google Ads

Budgeting for Google Ads combines both art and science. To set a Google Ads budget, you need to determine a daily budget amount that reflects the maximum you’re comfortable spending per day on a campaign. This daily budget is multiplied by 30.4, the average number of days in a month, to get your campaign’s monthly budget. Google suggests a budget at the last step of setting up a campaign, with a daily average budget providing an average spend over 30.4 days.

Google Ads offers several features to help you manage your google ads account budget effectively:

  • The ‘View recommended budget’ feature suggests adjustments based on the past 15 days of campaign performance.

  • The platform ensures that any overdelivery of ad distribution does not exceed your set daily budget multiplied by 30.4 for the month.

  • Shared budgets allow for the reallocation of unused funds from one campaign to another, optimizing overall performance.

  • The Google Ads budget report provides visibility into daily spending.

  • Experimenting with daily budget adjustments can offer insight into the impact on monthly spend.

These features can help you make informed decisions and maximize the effectiveness of your advertising budget.

 

Setting Daily and Monthly Budgets

Strategic planning is required when setting daily and monthly budgets for Google Ads campaigns. To establish a Google Ads budget, determine an average amount that’s comfortable for daily spending on a campaign. Once the comfortable daily spend rate is known, this daily budget establishes the limit Google Ads can charge.

The monthly budget for a campaign is the daily budget multiplied by the average number of days in a month, which is 30.4. It’s important to note that Google Ads may occasionally spend more than the daily budget. However, the overdelivery system ensures that monthly charges won’t exceed the daily budget multiplied by 30.4. Understanding overdelivery is crucial as it allows for higher spend on days with more traffic while keeping the monthly spend within the set limit.

 

Monitoring and Adjusting Budgets

The process of monitoring and adjusting your Google Ads budget is ongoing. To do this effectively, set up and monitor conversion tracking, which can measure actions such as website purchases, phone calls, and newsletter sign-ups. The ‘Conversions’ column in Google Ads reports shows the number of conversions and can be customized to track specific conversion actions and attribution models, aiding in measuring Return on Investment (ROI).

Bid adjustments can be set to control ad display based on conditions like device type and location, while budget recommendations based on past data help optimize ad spend. It’s recommended to monitor campaigns daily after budget adjustments and to analyze performance over time with the ‘View recommended budget’ feature and search terms reports.

 

Optimizing Google Ads Campaigns

The arrival of AI and machine learning has significantly transformed Google Ads optimization, improving efficiency but also potentially escalating competition and costs due to improved capabilities. Regular updates to ad content, such as revising ad copy for clarity and relevance, can also lead to higher Quality Scores and better ad performances.

Effective ad campaigns are often structured by grouping similar keywords into ad groups, allowing ads to be more relevant and preventing them from being shown to unrelated customers. In addition, A/B testing of ad variants helps to identify the most compelling messaging and designs, leading to optimized conversion rates and a higher return on investment.

 

Enhancing Quality Score

Quality Score is a metric that reflects the relevance of ads, keywords, and landing pages, influencing ad costs and positioning. Tightly themed ad groups with relevant keywords lead to more targeted ads, thus improving Quality Score. Ad relevance can be further enhanced by closely matching ad copy to the keywords in the ad group. Ads with a history of higher Click-Through Rates (CTR) contribute positively to the Quality Score.

The landing page experience, including load times and content relevance, is important for Quality Score. Implementing a granular campaign structure and regularly updating ad copy improves Quality Score. Using relevant ad extensions, such as seller ratings, can increase CTR, aiding in the Quality Score improvement. Additionally, negative keywords help in matching user queries more accurately, thereby enhancing campaign performance and Quality Score.

 

Utilizing Ad Extensions

Ad formats and extensions can significantly impact ad visibility and appeal, leading to higher engagement rates. Some examples of ad extensions include:

  • Sitelink extensions, which provide additional links to specific pages on your website

  • Callout extensions, which highlight key information or offers

  • Structured snippet extensions, which showcase specific aspects of your products or services

  • Price extensions, which display pricing information for different products or services

  • Image extensions, which add visual elements to your ads

These extensions can enrich ads with specific benefits and features, making them more informative and compelling to potential customers.

Extensions like call and location extensions directly facilitate customer interaction and physical store visits. Similarly, promotion, app, and lead form extensions offer direct interaction opportunities, such as highlighting promotions, app downloads, or customer information gathering. Utilizing relevant ad extensions makes ads more effective by increasing visibility and providing more information to users, enhancing user interaction.

 

Leveraging Negative Keywords

Negative keywords are words or phrases that prevent ads from appearing in irrelevant searches, thereby improving ad relevance and conserving budget. Advertisers can identify negative keywords by analyzing search terms reports and using filters in the Google Ads interface to highlight queries that should be excluded.

Negative keywords can be broad, phrase, or exact match types, allowing advertisers to refine how their ads are filtered out from certain searches, ensuring precision in targeting. Ongoing maintenance and refinement of negative keyword lists are crucial, involving regular reviews and updates to ensure campaigns remain relevant and cost-effective.

Comparing Google Ads Costs Across Industries

By 2024, the average cost per click (CPC) in average Google Ads has reached £2.04 for search and £0.48 for display. These figures represent the average across all industries. Meanwhile, the average cost per action (CPA) in Google Ads across all industries is £37.06 for search and £57.15 for display. However, these costs can vary significantly across industries.

On the other hand, the autos industry enjoys the lowest CPA across industries at just £25 per action. Conversely, B2B, real estate, and technology companies encounter average CPAs over £100, making them some of the industries facing the highest costs per action.

Interestingly, the dating & personals industry boasts significantly higher search conversion rates on average, exceeding 9%. This shows how Google Ads costs can fluctuate based on industry-specific factors and how Google Ads determine the costs accordingly.

 

Small Business Spending on Google Ads

Small businesses need to assess their break-even ROI, accounting for all advertising expenditures and fees, to determine a Google Ads budget. Typically, small businesses spend between £1,000 to £10,000 monthly on Google Ads, with an average monthly spend of about £6,800. Local businesses often spend between £2,500 to £7,500 monthly. So, how much Google Ads budget should you allocate? It depends on your specific business needs and goals.

Effective Google Ads campaigning for small businesses involves:

  • Strategic budget allocation

  • Considering larger budgets for granular campaigns

  • Testing budgets over short periods for quick decision-making

  • Not underfunding campaigns to avoid inefficiencies

New small business advertisers on Google Ads may face higher initial costs due to a lack of historical data for optimization. Therefore, they must consider various factors such as industry trends and customer lifecycle in setting their budgets.

 

Balancing Google Ads with Other Marketing Channels

Google Ads, with Google’s global search market share at 91.54%, is an essential component of any comprehensive marketing strategy. Nevertheless, balancing Google Ads with other marketing channels is important for an effective marketing strategy. Businesses are recommended to research their current leads, conduct testing across different platforms, and analyze their marketing results to identify the most impactful advertising channels, including running Google Ads.

Alongside Google Ads, other viable platforms for advertising include Facebook Ads and LinkedIn ads. For rapid website positioning at the top of search results, Google Ads is more effective than SEO. In fact, PPC advertising, such as Google Adwords, can generate twice the visitors compared to SEO, illustrating its potential for immediate traffic growth.

 

Future Trends in Google Ads Pricing

Future trends in Google Ads pricing are mostly driven by continuous innovation in the PPC industry, powered by AI advancements. Potential changes in Google’s advertising policies and pricing strategies, such as the deprecation of third-party cookies, underline the need for businesses to pivot towards a robust first-party data strategy. Businesses may face the need to rapidly adapt their digital advertising strategies in response to sudden changes in Google Ads policies and pricing.

Updates to Google’s algorithms have the potential to alter CPC by modifying the criteria for ad relevance and Quality Score. Mobile advertising is poised to surge in significance as an increasing number of users access the internet through mobile devices, necessitating advertisers to create mobile-friendly landing pages and run mobile-specific campaigns.

 

Summary

In this comprehensive exploration of Google Ads costs, we’ve covered everything from understanding the costs and budgeting to optimizing campaigns and balancing Google Ads with other marketing channels. We’ve also examined the influence of factors like industry, keyword selection, and bidding strategies on Google Ads costs. Moreover, we’ve explored the different pricing models, including CPC, CPM, and CPV, and their determining factors.

We’ve touched upon the importance of regular monitoring and adjustments of budgets, and discussed strategies for enhancing Quality Score, utilizing ad extensions, and leveraging negative keywords. We’ve compared Google Ads costs across industries, discussed typical spending ranges for small businesses, and looked at potential future trends in Google Ads pricing. With this knowledge, you’re now equipped to navigate the complex landscape of Google Ads and make informed decisions that maximize your ROI.

 

Frequently Asked Questions

How much does it cost to run an ad on Google?

Running an ad on Google can cost anywhere from £1 to £20 per click, depending on factors such as industry and ad quality. Additional costs can vary, with businesses often paying between £100 to £10,000 per month.

Is there a monthly charge for Google Ads?

Yes, there is a monthly charge for Google Ads, which will be automatically deducted from your account balance on the 1st of each month or when your balance reaches the payment threshold.

Is it worth paying for Google Ads?

Yes, it is worth using Google Ads as it can bring in a lot of traffic and conversions for your brand with the right campaign. It’s essential to focus on creating the right campaign to maximize its effectiveness.

Why does the cost of Google Ads vary across different industries?

The cost of Google Ads varies across different industries due to factors such as industry competitiveness, potential returns on investment, and specific industry conditions. These factors influence the pricing and competition within each industry.

How does keyword selection influence Google Ads costs?

The choice of relevant and specific keywords can lead to higher or lower cost per click (CPC) based on the industry and competitiveness of the keyword.