How Much Should Google Ads Cost?

With pay-per-click advertising such an important cornerstone of your online marketing efforts, it can be difficult to know how to set a budget that gets the job done, but doesn’t break the bank. There’s a lot (and we really mean a lot) that goes into setting the perfect Google Ads budget, and it will need to be tested with time and performance, but here’s a basic guide from the Zebra 360 Digital Marketing Agency team to help you know how much is too much for PPC advertising. 

What Impacts Pricing?

Firstly, it’s important to realize that every campaign and every advert is different. There is no one-size-fits-all answer. Many factors come together to impact Google Ad pricing, and here’s a few to consider:

  • Industry: The more competitive the industry, the higher the cost-per-click (CPC) will be. This means ‘business services’ like real estate and legal will pay more than most industries. Arts and entertainment typically pay the least, but need to reach more people to convert to ROI.
  • Customer Lifecycle: The bigger the thought process before entering the sales funnel, and the more steps involved in conversion, the more you will need to pay to get them there, but the less you’ll pay per click in the process
  • Trends: If something is trendy, it’s going to be pricey, too. You are facing more interest, more competitors, and thus higher costs. 
  • Engagement: For once we mean your engagement, not customers! Well managed Google Ads platforms are always testing and trying what works best. Optimize, update keywords, use analytics to tweak deliverables, and keep your account structure healthy to get the best from the platform.

Diving Into the Google Mind

Everything we’ve listed so far depends on you. How does Google take your ad, however, and determine your CPC? Remember that, while it’s often presented as an auction-like format, the prime spot doesn’t always go to the highest bidder, and you won’t always pay your maximum bid. Here’s some factors that influence internal pricing. 

  1. Quality Score: Determined by your keywords and relevance to the end user’s search query, this also bears in mind your landing page experience, historic performance, and click-through rate.
  2. Ad Rank: With the quality score in place, Google ranks your ad against other competitors. Quality score multiplied by maximum bid gives you your ad rank.
  3. CPC: Remember that you only pay if you get the click. In the end, you’ll pay a bid based on the ad rank below yours divided by your quality score, plus 1c. This helps keep smaller budgets competitive with big spenders and makes it a little fairer. So ad quality and background research really does count.

Of course, these aren’t the only factors that matter. Other variables, from the time involved in the ‘auction’ to the device, its location, other bidding methods and ad formats, and the user experience and landing page quality impact the price you pay.

Keeping Google Ads Under Control

Given that you can never be quite sure what you will pay, how do you manage your ad spend without burning through the budget in a day? Let’s take a look.

Firstly, set daily average budgets. You won’t necessarily meet max every day, but that keeps ad spend both under control and spread out. Be aware that there is room for Google to overspend your budget (up to 100%) if you’re getting clicks and conversions, so it’s important to set a hard stop point, too, known as your spending limit. This will never be exceeded.

We advise dividing your monthly budget by 30.4 when setting the average daily budget. Remember to factor in the average CPC for keywords you’re using, how important an individual campaign is in your marketing efforts, and your overall intended spend. This can get very technical, so we won’t dive in too deep in this blog. You want to keep bids competitive- you can even do this at the keyword level if you wish- and set maximum bid limits on automated bidding. 

How Do I Refine My Google Ad Spend?

There’s a few key things that influence how the budget gets spent within the larger Google Ads hub.

  • Dayparting: Ad scheduling allows you to control when you want your ads displayed.
  • Geotargeting: This influences where your ads are displayed, stopping you paying for ad hits outside your geographic area
  • Device targeting: Likewise, you can control how your ads are accessed to keep them relevant.

The Single Biggest Google Ad Cost Driver: Keywords

At the end of the day, the true power and the biggest cost driver for Google Ads is your chosen keywords. This is why choosing high-quality, relevant keywords is the biggest way to achieve Google Ads success. While it’s highly dependent on a host of factors, some of which we’ve looked at today, the average CPC in Google Ads for non-premium industries is R6-R20 per click, which can still add up fast, and they can soar up to R80 per click, so it is critical to do your homework and make each click count.

Keen to start your Google Ads journey, but need a little help? The Zebra 360 Digital Marketing Agency gurus know how to get your ads to the right eyes, so why not give us a try today?