How Much Do Google Ads Cost in 2022?
- What Are Google Ads and How Do They Work?
- Predicting How Much Your Google Ads Will Cost
- Breaking Down Google Ads Spending
- The Cost of a Typical Click in AdWords
- Top Factors That Impact the Cost of Google Ads
- Will You Need PPC Management Services or Software?
- So… How Much Should You Spend on Google Ads?
- The Benefits of Advertising With Google Ads
- The Wrap Up
In today’s competitive e-commerce landscape, it takes effort to stand out among the competition – and money. Our Foxxr team is consistently asked about the cost of Google Ads and, more importantly, how much a small to mid-size business should spend.
Statistics show that organic reach on social media is declining in 2022. If your SMB wants to stand a chance against bigger, more lucrative companies, you’ll need to pay for a helping hand – likely in the form of Google Ads.
There’s no one-size-fits-all formula for paid search marketing. That’s why we can’t just tell you what Google Ads will cost your business – it all depends.
This blog post will explain how to create a competitive AdWords budget, what you need to know about Google Ads and the variables that will affect your spending.
What Are Google Ads and How Do They Work?
First things first: let’s make sure you have a solid understanding of Google Ads (formerly known as Google AdWords).
Google Ads is an online advertising platform that allows users to promote their goods/services on Google Search, YouTube, and other related websites. Advertisers can choose their specific goals, including their custom budgets and the keywords they want to target.
Furthermore, Google Ads also allows advertisers to target specific geographic regions where they want their ads to be shown – as small as specific cities or as large as states or countries. Advertisers can then craft their ad “budget” and set a monthly cap to avoid spending more than they intended to.
Arguably the best part of Google Ads is that you only pay when a user clicks on your ad. It doesn’t matter how many times your ad was displayed or how many users saw it – your team is only charged when a user clicks on the ad and visits your website.
Predicting How Much Your Google Ads Will Cost
Speaking of going over your budget, let’s touch on the numbers. Businesses can easily invest tens of thousands of dollars into Google Ads, but not every company chooses to spend the same amount on their paid advertising.
Predicting how much Google Ads will cost for your business depends heavily on your industry and unique goals. Some industries, such as legal services, have higher cost-per-click prices than others, such as travel or hospitality. This automatically increases their average Google Ad spending and makes it difficult to provide an overarching estimate for all businesses.
The good news is that Google Ads allows you to set a highly specific budget for your campaigns. Even if you’re in an industry with high CPC keywords, you’re ultimately in control of your total ad spend.
Breaking Down Google Ads Spending
If you’re like many advertisers we talk to, you may have had a poor experience with Google Ads in the past. Some marketers make the mistake of allowing their budget to burn up within a matter of days – and that can make Google Ads seem unnecessarily expensive.
In reality, Google Ads has features to help you control, time, and stretch your spending as you deem fit. There are four budgeting categories to learn about right from the start:
- Your budget (how much you’re able to spend in total)
- Your bid (how much you’re willing to pay per keyword/click)
- Your spend (how much you’re willing to contribute to ad auctions)
- Your cost (what you actually end up paying for a click)
This might sound a little overwhelming if you’ve never dabbled in Google advertising before. Let’s dive deeper into your spending elements to help you understand how much Google Ads can cost your business.
(1) Average Daily Budgets
The first thing you’ll want to do is understand your total budget and how that breaks down into a daily budget. Google Ads will ask you how much you want to spend per day, and that’s typically a smart way to begin your advertising strategy – especially if you aren’t sure exactly what works for your business yet.
Setting a daily budget doesn’t mean Google will spend that exact amount each day. You’re simply giving the platform an idea of what you’d like to spend on an average day, which will prevent your budget from burning up before you can see any real results.
How to determine your average daily budget
The easiest way to figure out your daily budget is to take your total campaign budget for the month, then divide it by 30. However, that’s a pretty basic strategy. You may also want to think about the specific keywords you’re bidding on, how this campaign will work with others, and where your money is best used.
(2) Spending Limits
Next, let’s talk about setting a spending limit with Google Ads. A spending limit might seem like the same thing as a daily budget, but it isn’t. Just like you might set a budget for food spending but go over your goal on certain days, Google wants some wiggle room.
Let’s say you’ve set a daily budget of $50 for your campaign, but Google sees an opportunity to increase your clicks and conversions by spending a little more. The platform has the ability to double your daily budget as necessary until you reach your spending limit.
Right at the beginning of your campaign, you’ll designate a monthly spend limit in your account. This ensures that even if you do go over your budget on multiple days, your spending will be capped at an appropriate amount by the end of the month.
Of course, these numbers aren’t set in stone. Feel free to experiment with different daily budgets to understand how that affects your monthly spending and total ROI.
Now we get to the slightly more complicated part: bidding. Google Ads gives users multiple ways to bid for their ads, depending on their businesses and goals. Typically, advertisers focus on clicks, impressions, conversions, or views for video ads.
Cost Per Click
Let’s talk about costs per click. To set your spending goal, you need to understand what you’re willing to pay for a single click on your ad.
If your main goal is to have people visit your website, you’ll likely want to start by paying for individual clicks. With cost-per-click (CPC) bidding, you’ll only pay when a searcher clicks on your ad and visits your site.
Although this might sound simple, CPC bid amounts can vary significantly from place to place, campaign to campaign. To determine what to bid on (and how much to spend), you’ll need to assess:
- What kind of campaign you’re running.
- Where you are placing the ad.
- How expensive the keywords are.
- The expected success of these keywords.
Let’s look at an example. Say you own an online bookstore, and you make an average of $10 every time someone places an order. Based on your current sales stats, you know that you usually earn a sale in 1 out of every 10 online visits.
Your CPC bid needs to be less than $1.000/click in this scenario. Otherwise, you’re going to break even rather than make money with your advertising.
Of course, CPCs aren’t the only thing to think about. Advertisers can also work to get their brand names to the top of search engine result pages via Google Ads. Using the Target Impression Share feature, Google Ads will automatically set up the user’s bids to achieve their “Impression Share” goal.
For example: Say you choose an Impression Share target of 70% at the top of the page. Google Ads will then set your bids to help show your ads 70% of the possible amount of times they could show, thereby meeting your impression goal.
You can also choose to simply pay by the number of times your ad is viewable shown. This is known as cost-per-thousand viewable impressions (vCPM) bidding – you pay for every 1,000 times your ad is viewable by users. This is a strong strategy if your main prerogative is to get your name or logo in front of as many people as possible.
Conversions (for Search and Display Ads)
Another option is to bid on costs per action (CPAs). In other words, you can tell Google that you’re willing to pay per conversion – sometimes referred to as acquisitions.
Usually, conversions refer to completed sales, but that’s not always the case. For your brand, a conversion might occur when a visitor signs up for an email list or shares something on social media. Regardless, you can have Google Ads set your bid to try to get as many conversions as possible rather than clicks or impressions.
Note: To use CPA bidding, make sure you have conversion tracking turned on. You may need to speak with a PPC specialist to learn the detailed ins and outs of conversion bidding.
Lastly, you can also bid per view on your video content, known as CPV bidding. Advertisers have the opportunity to pay for view views, as well as video interactions such as clicks on:
- Call-to-action overlays
- Video cards
- Companion banners
To set your cost-per-view bid, enter the highest price you want to pay for a single view in your TrueView campaign. This is your “max CPV,” and it applies at the campaign level.
The Cost of a Typical Click in AdWords
You’re probably thinking, “This is all well and good, but what does an average click even cost?” To give you a starting point for thinking about your Google Ads spending, we’ll share some stats on CPCs.
In the United States, most CPCs are between $1 and $2 on the search network across all types of businesses and keywords. If you’re looking on the Google Display Network (not in search results), you can generally find CPC averages under $1. The only field with CPCs priced at more than a dollar is the Dating & Personals industry.
When it comes to the Google Search Network, legal services have some of the highest CPCs among all Google ads. In fact, the words “lawyer” and “attorney” make the top 10 most expensive keywords on Google, and average CPCs in the legal industry are over $6.
On the other hand, advocacy and nonprofit groups tend to have costs per click under $2. This is likely due to the $2 max CPC bid Google Grant advertisers have to set on their relevant keywords.
Top Factors That Impact the Cost of Google Ads
Your budget isn’t the only thing you need to consider as you plan your Google Ads campaign. A handful of factors can dramatically impact the cost of your ads – and how much you’re willing or expected to spend to reap strong results.
As we mentioned earlier in this post, some industries simply have more expensive costs-per-clicks than others. We tend to see the highest CPCs in high-revenue fields such as legal, accounting, or real estate. Therefore, if you’re in one of these industries, you’ll need to accommodate the higher costs within your marketing budget.
On the other hand, if you’re in an industry with a lower CPC (such as the arts, travel, hospitality, or entertainment), you might have a great deal of flexibility in your budget. Rather than researching average Google Ad costs across the board, try diving into your specific field to learn what other similar businesses spend and what your CPCs will look like.
Things are always changing online, and that applies to Google Ads, too. CPCs for keywords can dramatically increase or decrease depending on real-world events.
For instance, think about when COVID-19 hit. CPCs in the apparel industry plummeted while those in the consumer goods categories skyrocketed as people panic-bought toiletries, foods, beverages, and other essentials.
This isn’t to say that you can really predict how your Google Ads costs will change. Still, it does help to pay attention to social changes and newsworthy events. This can help you prepare for and ride waves of change in your industry.
How You Manage the Account
If your marketing team wants to create a Google Ads campaign, then kick back and let it run its course, that’s fine. However, that’s not the way to keep your costs down and your revenue high.
At Foxxr, we always recommend a more hands-on approach to Google Ads. This involves:
- Checking your performance reports
- Making data-driven optimizations to your strategies
- Updating and maintaining your keyword lists
- Performing account audits
You may have heard Google estimate that businesses can make at least $2 per every $1 spent on Google Ads, resulting in an ROI of more than 100%. If you want to achieve such stellar results, you’ll need to get your hands on your account and play a more active role in making changes and adapting your budget.
Will You Need PPC Management Services or Software?
While we’re on the topic of managing your Google Ads account, consider whether you will be paying for pay-per-click advertising services or software. This could dramatically impact your overall spending – but it could also significantly improve your ROI if you play your cards correctly.
The Cost of Agency Services
The truth is that running a PPC program (like Google Ads) is difficult. There are countless complexities involved in a successful campaign, and overseeing them can consume hours of your team’s time every day.
That’s why many businesses that invest in PPC advertising also invest in a PPC management partner. Essentially, they’re paying a team of specialists to develop, launch, and manage their Google Ads campaigns. Not only does hiring a PPC partner free up your workload, but it also ensures you’re playing on the same field as your competitors (who also have PPC teams in their corners).
A great PPC management service will help drive clicks and leads to your website without overspending on your ad budget. They’ll ensure you’re keeping costs down while still yielding valuable results.
Of course, this service comes with its own price tag – and the cost can vary significantly between different service providers. We’ve seen costs range from $500 per month to well over $5,000, depending on the contract.
If you plan to outsource your PPC management to a partner, start doing your research now. You’ll need to know what kind of price you’re looking at for your industry, revenue goals, and PPC expectations.
The Cost of PPC Management Software
There is an alternative to working with a PPC management company: downloading a software tool to help create and manage your campaign.
You may have already heard about some of the most popular software, such as Wordstream or Captivise. These tools can help you evaluate your ads, optimize your bids, generate reporting, and more.
Although a software tool won’t provide the human touch needed for some elements of Google Ads strategizing, many businesses choose this option because of its affordability. PPC management software tends to cost between $50 and $1,000 a month, which is significantly less than what most PPC management companies charge.
So… How Much Should You Spend on Google Ads?
We get it: you want a number to start with, even if you understand that there’s not a set spending amount for every kind of business.
Most marketers will recommend a monthly minimum spend of $1,000 on Google Ads. The general rule of thumb is that spending less than a grand is a good way to overspend on advertising without generating enough sales to cover your costs. Of course, this number can vary depending on the keywords you’re targeting, your other marketing expenses, and your industry’s requirements.
What the Average SMB Spends on Google Ads
Creating an “average” Google Ads budget is challenging because of the wide spending range. Some enormous retailers spend tens of millions of dollars on Google Ads every year, which obviously throws a wrench in estimates for small to mid-size businesses.
The Benefits of Advertising With Google Ads
By this point, you’re probably wondering, “Is Google Ads worth it? Do I really need to spend thousands on paid advertising?”
Although we can’t make that decision for you, we can tell you that:
- 62% of all core search queries in the U.S. are generated by Google
- Google is the biggest provider of search advertising
- Over 70% of U.S. search ad spending goes to Google
The bottom line is that your competitors are likely (if not certainly) spending money on paid ads. Launching a Google Ads campaign is the best way to stake your claim in search results and garner the attention your business needs.
Some of the key benefits we’ve seen Google Ads users claim include:
(1) More Conversions + Traffic
Google Ads is continuously rolling out new ways to prioritize and optimize better conversion rates. For instance, the platform has added “conversion goals” in 2021 to help users manage their campaigns.
People who are clicking on Google Ads are on the hunt. In other words, they’re ready to buy – and that’s a valuable kind of customer to bring to your page. Placing Google Ads directly in search results (or on displays) is an excellent way to draw more traffic in, including the most coveted shoppers.
(2) Precise Audience Targeting
You don’t just want valuable customers – you want valuable customers for your business. That means targeting the right age group, location, and kind of shopper. Fortunately, Google Ads makes this easy with many ways to refine your audience targeting.
(3) Quick, Lucrative Results
The simple truth is that advertising with Google Ads offers a fast route to the top of the search results. Search engine optimization (SEO) is a powerful tool, but it requires lots of time and patience. In contrast, paid Google Ads can launch you to the forefront of searchers’ attention.
As a result, Google Ad campaigns tend to incur high ROIs. You don’t have to spend tens of thousands to reap a significant boost in traffic and conversions, and you only pay for your ads when someone clicks on them.
Although we cannot tell you how much you need to spend on Google Ads, we can tell you that some serious, high-paying benefits are associated with running an effective campaign. Now is the time to start learning about your earning potential through paid advertising – your competitors are already doing it.
The Wrap Up
The bottom line is there is no one answer to the question, “how much do Google Ads cost?”
So much goes into the overall price of Google Ads, from the CPCs to the management expenses. You’ll need to assess your business’s overarching goals to come up with a competitive AdWords budget that works for you. In most cases, you’ll need to go through a period of experimentation and reconfiguration to learn what a successful campaign looks like for your business.
If you’re struggling to come up with a Google Ads budget or simply not sure where to start with the whole process, it may be time to talk to a marketing company specializing in PPC. They’ll be happy to put you on the right path.
About PPC Management with Foxxr Digital Marketing
For years now, our Foxxr team has been helping small businesses tap into the power of paid search advertising. We specialize in Google Ads and garnering:
- Controlled ad budgets
- Quick advertising results
- Steady website traffic
- Prominent features for local businesses
- High-quality, valuable leads
We know how overwhelming and stressful PPC management can be. Allow us to take over your campaigns so that you can focus on what really matters: running your business. We use the latest marketing software to maximize lead generation, minimize costs, and simplify your life.