Google Ads Campaign Cost: What Should You Expect?

Here you’ll find:

• How to use Google Ads for marketing your products and services
• Cost considerations
• How to analyze if Google Ads are a worthy investment
• The role of a digital marketing agency in enhancing your ad strategy 

How much does a Google Ads campaign cost? Well, the answer is more complicated than you might think.

Google reports that Google Ads (formerly Google AdWords) deliver an average 200% return on investment (ROI). 

The bad news? This cost doesn’t factor in other critical cost considerations, such as:

• Cost to manage Google Ads
• Tools and software prices
• Creation of assets

In other words, Google’s blanket ROI only factors in ad spend for its pay-per-click (PPC) platform. And when you consider everything that goes into a PPC campaign, what’s the true ROI?

If you’re wondering how much it costs to run a Google Ads campaign, this article will dig into every expense to help you understand if this advertising platform is the most economically viable decision to advertise your products/services.

Google reports that Google Ads (formerly Google AdWords) deliver an average 200% return on investment (ROI).

Why use Google Ads for marketing products and services?

You may not get a 200% dollar-for-dollar ROI on Google Ads, but there are several other benefits of running a Google Ads campaign, including:

1. Improved visibility

The aim of any digital marketing campaign is to get in front of potential customers. Due to Google’s massive reach, you reap the benefit of advertising to a large audience. Plus, since your ad copy usually ranks before organic results, they’re the first thing your prospects see — and click. This is a huge advantage and an excellent way to win new customers.

2. You only target interested customers

With PPC ads, you only target qualified users who have the intention to buy. You also only pay if they interact with your ads. 

You may not get a 200% dollar-for-dollar ROI on Google Ads, but there are several other benefits of running a Google Ads campaign. (Image: Unsplash)

3. It’s extremely flexible

You decide your ad spend, how long you want to run your ads, who you want to target, what type of ad you want (e.g., video, shopping, display, search, local, or discovery), and what type of pricing model you want (e.g., PPC, CPM, CPV, or CPA). 

4. The results come in quickly

Compared to traditional channels like SEO, which take a couple of months to show results, Google Ads work instantly. Sure, you’ll see better results if you work on both strategies together, but regardless if you have an SEO strategy or not, Google Ads will still make your product or service visible in front of your prospects at the right moment. 

5. You get actionable insights

Advertisers can see how their target audience interacts with their ads and get analytics on which specific keywords get the most interest, what ad copy gets the most impressions and interactions, and learn more about the target demographic that clicks on their ads. 

How much do Google Ads cost?

Now that we’ve talked about some of the additional benefits, let’s dive in deeper into Google Ads campaign cost considerations. To make it simple, we can divide Google Ads pricing into four categories:

• Ad spend
• Costs to manage it 
• Creation of assets
• Tools and software needed

Ad spend

On average, businesses spend $9,000-$10,000 on Google Ads. According to Amalia Fowler, a search marketing strategist, “For small businesses who operate in a local service area with minimal competition, $1000 a month could be enough (for ad spend, before service fees).”

To truly understand how much an individual business may spend on Google Ads, you’ll need to take several factors into consideration. (Image: Adobe)

“For bigger businesses, it’s hard to say without knowing the information listed above. I have large clients who do well with $5000 and large clients who are only competitive at the $40,000 a month mark due to competition and [average cost per click (CPC),]” says Fowler.

“The best way to find out is to do keyword research, structure your campaigns, and figure out how much 100-200 clicks for those campaigns would cost you on average per month. That’s a lower volume minimum.”

However, to truly understand how much an individual business may spend on Google Ads, you’ll need to take several factors into consideration, including:

1. Your industry

The industry you belong to is a huge consideration in the pricing of your ads because different industries have different CPC costs. 

For example, if you opt for ads on the Google Search Network, then you might pay $3.33 per click if you’re in the B2B space, $1.16 per click if you’re in the e-commerce space, and $6.75 if you belong to the legal industry. 

If you choose to leverage ads on the Google Display Network, your CPC might be lower, even within the same industry. 

2. Specific keywords you target

For any kind of search engine ads you run, you’re targeting either one of the four search intents:

• Informational
• Navigational
• Commercial investigation
• Transactional 

The first two search intents might not result in any conversions. However, the last two search intents will mostly result in an action, as these users are looking to investigate a product or service or complete a purchase. 

Due to search intentions being different, the audience that sees certain ads will also differ. So, you might need to target these prospects with different keywords. 

(Image: Adobe)

Even if you belong to the same industry, the type of keyword and intent you bid on will directly impact the price you pay — e.g., if you’re in the legal industry, the keyword “truck accident lawyer Dallas” will have a CPC of $425, but “offshore accident lawyer” will have a CPC of $815. 

In a similar way, if you belong to the real estate space, then the keyword “sell house fast Austin” will have a CPC of $95, but “worst month to sell a house” will have a CPC of $60.

3. Your Quality Score

Your ad’s Quality Score has a direct correlation to your CPC (and your ad rank!). The better your Quality Score, the lower your CPC and the better your ad placement.

It’s recommended that your Quality Score be at least 5. If it’s lower than 5, your CPC increases, but if it’s higher than 5, your CPC decreases. 

For example, with a Quality Score of 1 (which is the lowest it can go), your CPC will be 400% higher, but if your Quality Score is 10 (which is the highest it can go), your CPC will be 50% lesser. 

Your Quality Score depends on how well your ad copy addresses search intent, your past history with Google Ads, the quality of your landing page, your CTR (click through rates), and the relevance of keyword(s) vis-a-vis audience intent. 

There are also other considerations on what affects ad spend cost to factor into the equation, including:

1. Where do you want to advertise with Google Ads?

Google has various channels for online advertising, and where you advertise will change your Google Ads campaign cost. For example, you can advertise with either search, display, video, shopping, app, discovery, local, or app ads—all of these have different prices.

Display ads might cost less than search ads. For example, search ads have an average CPC between $1 – $2, and display ads have an average CPC of less than a dollar.

2. What bidding model do you want?

Although Google Ads allows you to set average daily budgets and monthly budgets, what you pay per lead will also depend on the type of bidding model you opt for. 

Depending on the search intent you are targeting, you can opt for either model, such as CPM (cost per impression), CPC, CPV (cost per view), or CPA (cost per action).

Google also allows users to run Google Ads on a commission model, where customers only pay when their leads purchase something from their store (e.g., when customers book hotel rooms).

3. Who do you want to target?

Turns out, the more targeted you get with your ads (e.g., timing, geo-targeting, targeting based on long tail keywords, only targeting customers who pass certain criteria, etc.), the more expensive your CPC is going to get. For example, targeting an audience from a small town in Wyoming would (usually) cost less than targeting an audience in a more urban area—like New York City.

Google Ads campaign cost to manage 

To ensure you get your Google Ads campaign right, hire an expert or a digital marketing agency (hello, us!). Here are the three types of pricing models any agency or expert will offer:

1. Flat fee

As the name suggests, the flat fee model is a monthly expense that remains the name no matter how small or large your ad spend budget is. However, some experts may also opt for a tiered flat-fee model. 

For example, if your monthly budget for Google Ads is $5000, they would charge you $500 to manage it. But if your budget is $10,000, then the fee may be $1000 — this is mainly because the effort put into managing $5000 ad spend is different from the effort put into managing $10,000.

2. Performance-based fee

The performance-based fee model is only available with a few digital marketing agencies. 

With this model, clients only pay for the leads they get. So, factors like monthly budget, maximum bid, maximum CPC, ROAS, metrics, bidding strategy, conversion rate, etc. don’t come into play (for the client). 

Some clients might care about these factors but, for the most part, what really matters to them is the number of leads they get per month, the quality of leads, and how much they pay per lead.

3. Percentage of ad spend