“How much does Google Ads cost?” This is the question I get from pretty much every prospective client or small business owner weighing whether or not they should make the plunge into online advertising.
Fortunately and unfortunately, the answer is always: it depends. Now, depending on who you are, that might be an alright answer, or it might drive you crazy. But unlike other ad venues like billboards or magazine placements, the listing costs for Google Ads aren’t straightforward. In this article, I’ll outline some data that speaks to Google Ads cost, detail what factors influence that cost, and share some actionable tips to help you keep your Google Ads costs low.
Table of contents
- How much does Google Ads cost?
- What factors influence Google Ads cost?
- How can you keep Google Ads cost low?
How much does Google Ads Cost?
In some industries and locations, you can spend as little as $5/day and come out golden. In others, you could spend $50,000/month and still not even scratch the surface of what’s possible. But that doesn’t mean that it can’t be profitable.
Here’s the thing, there’s lots of nitty-gritty information you could learn about the Google Ads auction and how pricing is determined. You can study about Quality Score and Ad Rank and how those impact your positioning, but that information is lots of book-smart topics that only help in theory.
The long and the short of those topics is that you always want to focus on choosing the most relevant keywords and writing highly relevant ad copy for your customers. While they might not play into the Quality Score algorithm 100%, these are going to be your best tools for making sure you’re putting yourself in the best position possible in that regard.
So here are a few posts you can review to better understand how to pay attention to those factors:
But for this post, I want to give you insight into the main areas that will impact and help control your costs with Google Ads in 2024. Let’s focus on the basic factors that determine pricing on Google Ads, some benchmarks to get started with, and the controls you can use to help curb costs in some areas.
Worried you’re wasting spend in Google Ads? Find out with a free, instant audit >> WordStream’s Google Ads Grader
What factors impact Google Ads cost?
Every time someone conducts a search on Google, a live auction goes on in the background to determine which ads show and how much it’ll cost if they are clicked on. Just like a regular auction, there are going to be two main sources of cost: the reserve and your competition.
The reserve, for the most part, is pretty minimal on Google Ads. Only recently have they been found to artificially inflate those numbers to meet certain revenue goals. Honestly, it’s a big problem that they’re doing this, but it’s likely only a small source of the ad spend you’re likely to incur.
The bigger portion of the cost, and the one you should focus on, is competition. That is, all of the other advertisers who want to show up on the same results page on Google that you do.
Several factors can determine how competitive your potential keywords will be.
The first and largest influence is going to be your given industry. Depending on how crowded your space is, your likely cost to be competitive on Google Ads will go up.
Let’s look at some benchmark data that can illustrate how each industry stacks up in 2024.
In the first column, we have average CPC or cost per click. This is the average price paid each time someone clicked on an ad in a given industry. Here, you can see Attorneys & Legal Services were by far the highest at $9.21 with the next closest being Dentists & Dental Services at $6.69. Both of these are certainly competitive industries and warrant high CPCs.
But that’s not the end of the story.
When we go further down the sales cycle, we see average cost per lead or CPL in the blue column. Despite its fairly low CPC at $3.78, Career & Employment wins this category for highest cost at $132.95. How is this possible?
If we take into account the other two columns, we can see that Career & Employment has an Average CTR, meaning the ads are clicked on at an average rate (costing the advertiser money), but the average conversion rate (CVR) is very low, causing the CPL to increase.
In the past, many benchmark reports noted only the average CPC for a given industry and then tried to help extrapolate costs for a given advertiser. This set of stats does a better job since it actually includes the conversion numbers as well.
Additionally, it’s important to note that these metrics are always changing over time. While Attorneys & Legal Services have always been expensive, they’ve actually gotten more expensive in the last year.
The same is true for Business Services and Home & Home Improvement. Both saw at least a 7% increase in Avg CPC year over year, meaning those industries are only getting more competitive.
But just because you find yourself in one of these fields doesn’t mean this is going to be your true cost of Google Ads. There are lots of factors outside of just competition that you can use to influence what your costs will end up being.
Download our latest Google Ads Benchmarks to get a full picture of Google Ads costs and performance benchmarks for your industry.
How to keep Google Ads cost low
Let’s go through some of the controls you can have on your Google Ads campaigns to work to mitigate costs and get as much as you can from your account.
Choose strong keywords
Your first line of defense is to choose keywords that are relevant to your business and avoid those that aren’t. That might sound simple, but it can have a huge impact on your Google Ads campaigns.
If you’re worried about cost with Google Ads, the best place to start is going to be with what’s called “long tail” keywords. These are terms that have more words in the keyword phrase.
For example: “local attorney” is a pretty broad keyword, but “divorce attorney in chicago illinois” is a much more specific keyword that’s long tail.
The benefit to this long tail keyword approach is that those terms tend to have lower competition because it takes more work to bid on them. It’s much easier to create the keyword “attorney” than it is to create the longer version, but that added work on the front end can save you quite a bit in click costs.
There are tons of tools you can use for keyword research. You can get started by learning how to do keyword research in our free guide or by using WordStream’s free keyword research tool. The main takeaway should be to start with long tail and only expand into shorter tail or head terms after you see success.
Use bidding to your advantage
Since this is an auction, you get to control how much you want to bid for each of these entrances to the market. The higher you bid, the more chance you have of showing up and incurring a charge since you’re only charged when someone actually clicks on your ad. But mastering the bidding strategies in Google Ads can help you be aggressive on the right terms and be less so when the circumstances aren’t quite right.
Refer to this article to get a rundown of each of the bidding strategies on Google Ads, but for the sake of an example, let’s talk about Target CPA.
In this bidding strategy, nearly all bidding choices are made for you by Google, but you have the ability to set a Target Cost Per Acquisition (or cost per conversion) for each user. Assuming you’ve set up your conversion tracking properly and you meet the minimum data requirements, you can be pretty secure in the fact that Google will bid whatever it needs to for the click knowing that it has a high likelihood of getting you conversions at an average cost you set in advance. Not too bad of a way to control costs, huh?
Use negative keywords
Negative keywords allow you to block your ads from showing for searches that include certain words or phrases. They can be set at nearly any level within the account and are a great way to save on ad costs and make your campaigns more efficient.
Use geotargeting
You get to choose where your ads are targeted on the Google Ads platform. This can be as broad as a country or as narrow as a neighborhood. Take some time and find out what the best way to reach your target audience is and make sure to only include the areas you can actually service.
Implement dayparting
Advertisers can control the timing of their ads down the 15-minute increments. You can customize the days and hours nearly to your heart’s content. This is a great strategy to avoid spending money when you’re not able to actually support a customer or to make sure you’re capturing search results space when all of your competitors have gone home for the night.
Use device targeting
Maybe you want to only generate phone calls to your business. It’s likely that you won’t see as strong of success from Desktops or Tablets, so maybe they get a low bid modifier or perhaps you exclude them altogether. There are many companies who only target users on specific devices. If you’re able to support everyone on any device, maybe now you’re eligible to show up where your competitors can’t be.
Use budget controls to keep things in line
Lastly, you can control your costs with your budget settings. For individual campaigns, you can set daily or lifetime budgets for Google Ads campaigns to keep things reigned in. This allows you to directly cap the amount of money you spend on Google Ads, even if there’s more inventory to reach into in the future.
Now, while this might sound perfect, note that Google can spend over your daily budget on any given day to help hit your performance targets, but will balance out the spend on a monthly basis.
Lastly, there are additional controls like Shared Budgets in Google Ads where you can have any number of campaigns share a single budget to help keep an eye on things. If that sounds interesting, you can read more about Shared Budgets in Google Ads here.
Take control of your Google Ads cost in 2024
Google Ads cost varies widely based on your industry, location, and more. You can use some of the tips we’ve included to keep your Google Ads cost as low as possible:
- Choose strong keywords
- Use bidding to your advantage
- Add negative keywords
- Target the right locations
- Implement dayparting
- Target by device
- Use budget controls to keep things in line
The post How Much Does Google Ads Cost in 2024? (+Tips to Lower Costs) appeared first on LocaliQ.
