How much does it really cost to get started with Google Ads?

First up, what exactly are Google Ads?

Google Ads come in many forms. You can find them all over the internet. You’ve probably seen them in Google search results, Google images, Gmail, YouTube, third party websites and more.

Google Ads works on a bidding system. Essentially, you bid on particular keywords that relate to your product or service. When someone makes a search query that matches your keywords, Google shows them your ad. 

If your excellent ad copy and enticing imagery encourages the person to click on your ad, you pay a small fee for that click. If they don’t click on your ad, you don’t pay. Welcome to the world of Pay-Per-Click (PPC) advertising. 

How the Google Ads auction works

Keep in mind, your ads won’t show up at all if your competitors outbid you. Whether you sell novelty socks or a world-class cruise service, it’s highly likely that many other advertisers are bidding on similar keywords to you. If that’s the case, an ad auction takes place. 

To determine whose ad shows up, Google ranks your ad based on two key factors: your maximum bid and your quality score. If you win the auction your ad will be shown, giving you the opportunity to pull in more customers and increase profits.

Need more info about Google Ads basics? Check out this guide to Google Ads and how they can change your business forever.

How much do Google Ads cost?

Setting up a Google Ads Campaign is a bit like a choose-your-own-adventure scenario. The amount of money you invest in it is completely up to you. 

You might be thinking: Doesn’t that mean that all the big advertisers with lots of money have this space clogged up? 

That’s not entirely true. Smaller players can still see big wins.

The Google Ads platform is actually more democratic than it might seem. That’s because Google assesses your ad’s quality score, not just your bidding price. 

Quality score is a measure of the quality of your ads compared to other advertisers. It takes into account things like how relevant your ad is, how user-friendly your landing page is and how likely it is that your ad will get clicked on.

You might not have too much flexibility with your budget, but thankfully there are lots of things you can do to boost your quality score. Check out our guide to creating highly effective Google Ads for ideas.

Let’s take a closer look at how much you’ll pay per click.

How does Google determine your cost per click?

When someone clicks on your ad, you pay. But how much?

In Australia, cost per click for Google Ads can range anywhere from $2 to $30 on average. Of course, this could vary quite a bit, depending on your industry, what keywords you're bidding on, what your quality score is like and how fierce the competition is. 

Google determines the exact amount you pay by looking at ad rank and quality score. 

Your ad rank is essentially what position your ad will show up. It’s determined by multiplying your quality score with your maximum bid (the maximum amount you’re willing to pay for a click).

But just because you’re willing to pay a certain amount for a click, it doesn’t mean that’s what you’ll be charged. You could be charged less.

The formula Google uses to figure out how much you pay looks something like this:

Ad rank of the person below you ÷ your quality score x $0.01

That’s why there’s no single price that you pay for Google Ads - it’s constantly changing and updating based on the market. 

You can pay half of what someone else paid for the same keyword but have a killer quality score and make the cut. That’s the beauty of Google Ads – they allow you to compete with the bigwigs.

How can I optimise my ad spend?

Many first-time users will find their budget is getting swallowed up quicker than expected. 

This can be a turn-off. But in most cases bad results are a symptom of accounts that aren’t optimised.

Optimising your budget means you can get the most out of your ad spend. You know, the biggest bang for your buck.

Here are a few pointers to get started:

1. Know your spend per campaign budget

This is the easiest and most obvious way to keep track of your spending. When you know what your budget is for each campaign, you can tweak campaign spending depending on what goes well and what doesn’t. 

2. Set your daily/monthly spend

On any campaign you can set the daily or monthly amount you want to spend on that campaign. Use this to keep Google Ads costs on budget. You can always review this later on when you’ve got more data to work with.

3. Allocate for the greatest return on ad spend (ROAS)

Don’t take the ‘spray-and-pray’ approach with your budget. Put your money where you’re going to get the biggest returns. A simple way of doing this is by identifying your highest selling product and ensuring it gets the most exposure. 

4. Bid on the right keywords

To get a good return on ad spend, you’re going to have to be smart about which keywords you choose. You can throw big money at broad keywords that will have little to no traction. Or… you can think carefully about your customer’s search intent and narrow down your selection from there. Reviewing keyword match types and periodically sieving through your search terms can help with this.

Get more helpful tips: Get the Most Out of Google Ads

How does my monthly budget get allocated?

Let’s say you’re bidding on a keyword at $0.30 and you’re hoping for around 200 clicks per day. With these numbers you can generate your estimated ad spend per day:

$0.30 x 250 = $60 per day. 

Keep in mind that $0.30 is your maximum cost. The actual amount may vary due to market factors, but you’ll never pay more than your maximum spend. In this example, it will only ever be $0.30 or less.

How can I drive down my CPC?

If you’re looking for ways to streamline your Google Ads cost or are working with a tight budget, lowering your cost-per-click (CPC) could help.

Here are 4 ways to lower your CPC:

1. Reduce your bids

If you’re already ranking quite high and getting good traffic through your ads, you might want to experiment with lowering your bid price for certain keywords.

2. Research alternative lower-cost keywords and long tail keywords

If you’re starting out and don’t have a big budget on tap, consider using more targeted keywords with more specific search intent. That way you can benefit from less competitive keywords that still relate to your business. 

3. Improve your quality score

Boosting your quality score can help you win more ad spots without raising your bid price. Work hard at optimising your landing page, making your ads more relevant to search intent and improving user experience on your site. 

4. Use scheduling, location and device selection tools

These tools can help you optimise when, where and how your ads are seen. For example, use the scheduling tool to stop showing your ad after your business is closed down for the day, or the geolocation tool to target groups in a specific area.

Other factors that influence the cost of Google Ads

It’s not just your quality score and bidding price that affect how much Google Ads costs. Here are some other big factors that play a role:

Industry

What type of business you run can have a major impact on how much you pay per click.

Keywords for industries like law, real estate and accounting are very competitive. That’s why they have a notoriously high cost per click. For example, the keyword category of “accounting software” has an average CPC cost of around $30. Businesses in these industries tend to have high returns and long customer lifetime, so investing more in attracting customers is worthwhile.

On the other hand, industries like the arts and entertainment have some of the lowest costs per click. Businesses in these industries usually need to reach a wider audience to get good financial results.

Want to know if Google Ads is right for your business? Check out our article on industry types that work best for Google Ads.

Current trends

Major events in the world, consumer trends and even seasonal changes can all have an impact on what’s happening in your industry. This in turn can impact the competition for keywords and the cost per click for ads.

Customer lifecycle

Consider how your customers arrive at the point of buying your product or signing up for your service. Depending on the nature of your business, it might be a quick impulse buy or an urgent essential purchase (like when they need a plumber to fix a burst pipe). 

In other cases, it might take a long time for you to convert a potential customer. They might need to see your ads several times to keep you front of mind. In other words, you might need to spend more or less on ads to get returns, depending on the lifecycle of your customers.

Account optimisation

Like all marketing efforts, you’ll get better returns if you know what you’re doing. (Not sure what your current return on investment is? Check out our guide to calculating ROI on a marketing campaign).

Even though it’s easy for anyone to get started with Google Ads, you’ll burn through your budget quickly if your ads aren’t optimised. 

If you’re new to Google Ads or don’t have the time to learn the ins and outs, investing in professional Google Ads management could help you get better results.

Can you make money from Google Ads?

Yes, you can. 

With proper campaign planning and management, you can see a positive ROI within a very short amount of time. 

Google Ads isn’t exactly a platform that you can set up once and leave running in the background. The ads require your ongoing attention and action when you notice inefficiencies in your campaign - you’ll want to rectify these pronto.