How Much Does Google Advertising Cost?

Cody Cromwell
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Google Advertising Cost Estimates

In terms of overall spend, Google’s biggest advertising spend is on display, but the majority of spend will be search, and so some advertisers will spend all their ad budgets through Google AdWords.

Google AdWords is the most important product for Google for two reasons. Here’s why:

  • First, search ads generates the largest portion of sales. Therefore, by placing more ads through search, it will increase its conversion rates.
  • And second, Google’s core business model is not a search-based business. This is the layer where it supplements its sale of search terms to the highest paying advertisers.

In 2014, Google’s AdWords generated 96% of its total revenues. And in 2015 it generated 97% of its revenues.

Generally speaking, this is not the entire picture because Google also reaches us through other avenues such as YouTube and social media. But the bulk of its revenue is still through search.

So clearly, a healthy advertising budget is required for any business that wants to advertise through Google.

Sample Keyword Research Data: Multidisciplinary Law Firm

Sample Keyword Research Data: Dental Practice

Let’s try it yourself:

Did you think Google AdWords was … free?

Okay okay, that’s not fair. Google AdWords is definitely cheap compared to some of the other Internet Marketing Companies (IMC…s) out there, but it is still ridiculously expensive.

If you do your homework and find a company that’s a good fit for you, Google AdWords can be very effective. Google AdWords is your way of advertising for free, using Google’s money, allowing your ads to appear next to Google’s search results.

The problem is, after you spend thousands of dollars on Google AdWords, the Google AdWords team manually approves your ads for display. This means, even if they approved your ad and you are getting conversions, they might still decide to reject your ads.

Frankly, Google AdWords is still a pain to manage and with the new changes to Google AdWords (collectively known as ‘Panda’ and ‘Penguin), it’s only going to get harder and harder to get your ads approved.

Sample Keyword Research Data: Travel Planner

Average Google Ads Costs & Industry Benchmarks

Google’s Adwords program has created a new way for advertisers to effectively spread their message. It gives you the opportunity to reach out to millions of people; spread the word about your product or service and get them to do something. When it comes to the average cost per click for Google Adwords, it’s helpful to look at advertisements on a cost per impression basis. Google also has separate Adwords accounts (one for each account). You can choose to print landing pages and set a unique URL for each ad on your own Adwords account. For this discussion, we will focus on the average cost per click (CPC) and Google’s Adwords landing pages. This information can help you to determine how your Adwords campaign should perform.

You have a 50/50 chance of landing in the first page of Google search results. As more people begin to use this tool, you will notice that your Adwords campaign performs exponentially better the more it is used. Although you may not receive a high click count from your campaign, you can at least attain higher ad rankings. An optimized Adwords campaign will move up the Google search results and keep your advertisements in front of your customers’ eyes, continually.

Average Google Ads Cost per Click (CPC)

The cost per click (CPC) is a Google advertising metric that is commonly used to measure cost effectiveness. CPC is defined as the amount of money advertisers are willing to pay per click on a search ad. CPC can also be referred to as "CPM" or "cost per thousand."

The CPC is one metric in determining the overall cost of placing a Google search ad. The CPC does not include the actual cost of the website where the advertisement appears; it’s just the cost of the time your ad will be on the search page as it is shown to the user.

Here’s how the CPC is calculated:

A marketer designs a search ad and determines how many clicks he is willing to pay for.

Google receives the ad and displays it on the search page. Google charges the advertiser what it considers an auction rate for each click.

Google generates a revenue from the clicks and shares that revenue with the search advertiser.

A minimum threshold is established at which the ad is deemed acceptable and the advertiser will be paid.

Higher bids mean the Google search engine will display an ad for a longer period of time.

When a keyword has been targeted, CPC includes the price difference between buying the keyword and not targeting the keyword.

Average Google Ads Cost per Acquisition (CPA)

Google’s Adwords CPA model allows different advertisers to bid on average CPC/CPM and CPL ads inventory using different campaigns, and different placements to optimize their ad campaigns cost per acquisition.

One of the key factors that will determine the success of your AdWords campaign is your average Google CPC/CPM cost and the other important factor is how much you can afford. If you have a small budget for your AdWords ad campaign, try to limit the bid amount and maximize the ad position to get the highest amount of people to click your ads.

Let’s see what is the average cost per acquisition (CPA) for Google Adwords keywords in different categories.

Below is the average cost per acquisition (CPA) by industry, as of June 297. You can use it to calculate your estimated cost per acquisition (CPA) and goals from this or other informations.

In US Dollars Year to Year % Change

(annual % change)

(In US dollars) Marketing 169 89% (100) Online Media 65 86% (49) Ecommerce 52 91% (164) Online Travel 41 64% (101) Other Industries 50 81% (72) Publishing 30 70% (51)

Factors That Influence Google Advertising Cost

Google ad prices fluctuate based on various factors. In this post, I will share with you some of the most important factors that usually influence the Google PPC advertising cost. For example, the type of keywords you bid on is a very significant factor that determines the cost of your Ads. Google PPC Related Questions are discussed below.

Quality Score

How Much Does Google Pay?

Quality score is the marketing term used to describe the general ranking of a web page within the search results of a particular Google search query.

A page with a high quality score (typically a ‘1’) will tend to be ranked higher in search results pages than one with a low quality score (typically a ‘2’ ’ or ‘3’).

Specifically, the quality score affects the probability that Google will select a particular page for one of its own featured snippets. And for this reason it is very important to have a high quality score for Google advertising purposes as well.

The reason for a high quality score is because the higher the quality, the less likely it will be that the advertising campaign will cause click-throughs to less-desired websites that usually generate irrelevant, low quality traffic for advertisers.

The above material in the study clearly shows that the quality score of keyword has a direct and significant relationship to the click through rate of Google Adwords search engine advertising campaigns. It also enables that SEO campaigns are paid as well.

So what does that mean for internet marketing business models and if having a lower quality score is ‘bad’ for your business?


Vs. Keyphrases

One of the most frequently asked questions by new and experienced AdWords advertisers is "how much does Google AdWords cost?" Those who have been in the industry for some time know that there is really no direct way to answer this question. Google AdWords costs depends on what level of service you’d like to offer.

If you or your business is brand new to Google AdWords, the cost also depends on how much you’re willing to spend on advertising. But first, let’s take a closer look at the two terms that everyone always seems to get confused about: keywords and keyphrases.

Google AdWords Keyword Tool

To find out how much does Google AdWords cost, you can use the Google AdWords Keyword Tool. This is the tool where you enter your keywords and get an estimate of the monthly cost of using AdWords. The problem with the Keyword Tool is that it doesn’t always give you the most accurate information.

The stated purpose of the Google AdWords Keyword Tool is "to calculate the approximate average monthly unique cost of advertising for a keyword phrase according to Google AdWords."

Ad Placement Options

There are several different ways to advertise in Google. Depending on your business and goals, you’ll want to choose the kind of advertising that’s right for you.

Display Advertising

The most basic form of advertising is display advertising. In this type of advertising, you’re given a certain number of advertising slots to fill on your Google page.

This is the most common option for local businesses with no website of their own. Instead, they depend on Google to put their ads on their current website without needing to create a new Google page.

The ads are typically banners connected to the website and vary in size according to how many slots are available to fill.

Google Real Estate

If your business is located on Google’s network of sites, you can opt for Google Real Estate. You can choose from a number of different options, including:

  • Google Maps
  • Google+
  • Google Shopping

Ultimately, Google Real Estate allows you to put your ads right on top of the most popular Google pages.

The paid ads that you choose to have displayed will appear at the top of the search results with the highest CPC (cost per click) for that query.

The CPC is essentially the cost per click for ads on Google.

Account Settings

  • Search Advertising
  • … Purchase and Billing … … Keywords and Targeting

Market Competition

For the purpose of setting Google’s effective CPCs and CPMs, when one competes against another, the other represents a competitor in the market.

For example, if we are analyzing a particular keyword with 3 other advertisers bidding on that keyword in the same auction, that competitor will be representing the market. For the purpose of our analysis, the competitor is the market.

Another way that we determine what competitors are there in the market is based on BID and ASK statistics on our Keyword Tool. When comparing one advertisement to a negative one, the positive one has at least one advertiser that is bidding more on the Keyword Tool than the negative one. If no one has bid on the keyword in a week on the Keyword Tool, that means there is no advertiser competing against our keyword.

In this way, when we perform a pricing analysis on a particular keyword, we can say that there is no competition because no one is bidding on that keyword on the Keyword Tool.

Even in that situation, the keyword can still be a very competitive keyword because 1 ad out of 30 is so competitive that Google may change it to a negative keyword, meaning that ads will not show.

Ways to Reduce AdWords Costs

When choosing an advertising channel for your B2B company it should be simple to do and should provide you with a return on your investment (ROI). Many companies find it difficult to reduce the costs, but there are a number of ways that you can do it with a combination of you effort and a little know-how.

These methods will help you to reduce the cost of paid search so that you can have a better ROI and scale your paid search budget and spend accordingly. I am not a paid search expert but I do have years of search engine marketing experience and I am very familiar with the web to help companies reach the target audience.

Lower Cost Per Click (CPC)

Search engine