What Is Google Ads
Google Ads, formerly known as Google AdWords, helps promote your business on Google. Ads appear on top of the search engine results page (SERP) which is great for new websites that can’t move up organically just yet. But, paid ads always have a green sign that says “Ad” next to them to avoid confusing the audience.
In addition to search results, ads are displayed on millions of sites which are members of Google Adsense, a contextual advertising network. Google Ads offers different payment options, but the most frequently used one is Google Ads’ pay-per-click model (PPC). In this case, Google charges advertisers for each click on their ads. Thus, Google Ads pricing varies a lot for each campaign.
How Does Google Ads Work
When users perform a search on Google, the search engine defines keywords and matches them with the words advertisers are currently bidding on. Then, the ads themselves come into play. However, what’s left is to determine which advertisement will be shown in which place. Simply put, the ad that beats the rest of the ads in a simple auction is shown.
Ad rank is calculated on the basis of the keyword maximum price specified by you and the quality score determining the relevance of your ad to users. Ad rank helps Google decide how much you will need to pay for every click brought to your ad. The formula looks like this: The ad rank of the person below you/your quality score + $0.01. These are the essential components, but there might be other variables depending on the situation.
How Much Does Google Adwords Cost per Click
How much are you charged for a click on your AdWords ad? The average CPC on Google AdWords depends mostly on the keywords and competition. Keyword prices vary a lot and are subject to current trends and niche competitiveness. The average price in the US is around $1-2 per click for many niches, while the most expensive keywords are in the insurance niche. The cost of an ad on Google is $55 on average.
Note: Usually, the more competition, the more expensive one click is. But, more expensive doesn’t always mean better and more efficient. For instance, long-tail keywords are way cheaper but can still contribute significantly to the commercial intents of the advertisers. So it is very important to do the proper keyword research.
How to Know the Cost of a Click in Advance
There is an official tool called Google Keyword Planner that can help you calculate the price in advance.
Choose the “Discover new keywords” section:
Type the keywords you would like to bid on:
Keyword Planner will show you the search volume and approximate prices.
Google Keyword Planner is not the only tool, naturally, there are many other alternatives that you can explore.
How Much Do Businesses Spend on Google Ads
How much does Google cost for advertisers? Well, there is no single answer. However, it is possible to summarize some of the components to bring a general answer to the table. Listed below are the most expensive keyword categories in Google Ads:
| Category | Average CPC (USD) |
| Insurance | 54.91 |
| Mortgage | 47.12 |
| Attorney | 47.07 |
| Claim | 45.51 |
| Loans | 44.28 |
| Law | 42.51 |
| Recovery | 42.03 |
| Degree | 40.61 |
As you may have seen above, the insurance industry owns the most expensive keywords, while the financial and legal services are runner-ups. Google Ads costs might be $40-50 million a year for companies in these areas. As for small businesses, Google AdWords pricing may vary from $1,000 to $30,000 on average.
You should also consider some additional spending, like agency costs, if you want them or different PPC management software to handle your PPC routine for you to make your job easier.
How to Set Up Your Budget With Google Ads
How much do Google Ads cost in your case? While setting up your campaign budget, you’ll be able to establish the maximum bid and thus control your expenses. Try to explore your own niche and keywords you can bid on. The thing is, you can cut your losses if you find the right way.
Remember that specific long-tail keywords may serve you well here. Such tactics perhaps will not bring you lots of leads, but the leads that they do provide will convert much better.
Google Ads and Affiliate Marketing
You can also use Google Ads to succeed in affiliate marketing by driving traffic to your website or the advertiser’s page in case it’s allowed by rules. This method is only cost-efficient if you can buy traffic cheaper and “sell” higher. This business model is called traffic arbitration.
However, it’s essential to remember that not all the affiliate programs accept traffic from contextual networks. That’s why we advise that you carefully read the terms and conditions of every affiliate program you want to take part in.
How Much Do Google Ads Cost
With the Google Keyword Planner, you could calculate approximately how much Google Ads cost. Be careful though – this tool only shows the approximate prices and your final costs may vary a lot from the estimated cost. But such programs can definitely help you make a plan for the budget.