If you’re wondering how much Ads costs, the answer is not as simple as you might think. Cost is not one-size-fits-all. In a nutshell, your industry and business model will point you to a strong cost estimate. And don’t worry: your efforts are worth it, with one study showing that a paid search visitor is 50% likelier to buy than an organic search visitor is.
By looking over some of the need-to-know insight in this article, you can have solid expectations, determine your budget, and strategize your first campaign.
Determining Your Budget: How Much Does Ads Cost?
Many businesses have asked this question as they consider the possibility of utilizing online ads, possibly overseen by a paid search services company. Even if numbers are imprecise estimates, cost information can be incredibly useful to companies that have never attempted PPC advertising and need a broad idea of affordability.
There is no single answer to the question of cost, though — because several factors will determine it. The industry you are in and your customer lifecycle impact Google Ads cost, among other factors.
This piece will explore each factor by discussing need-to-know tips – such as incorporating paid search services into any Ads budget – so that you are prepared for impressive success with Ads (technically now called Google Ads).
7 Tips to Help Determine Your Google Ads Budget
Tip #1. Know that two key metrics help to determine your cost.
To figure out your Google Ads or Google Ads cost, consider these two key metrics related to your business and what you’re specifically advertising:
a) Average deal size
Typically the higher your average deal size, the higher bids will cost you on Google Ads. What is the average deal size? It’s relatively simple to calculate. As its name suggests, you simply find the average dollar amount of a contract/sale. If you have a total of two closed contracts/sales at $40,000 and $50,000, your average deal size is $45,000.
b) Product margin
Like average deal size, your product margin will help determine your cost – with a higher margin correlating to higher cost. This factor illuminates the differences for business-to-business (B2B) and business-to-consumer (B2C) contexts:
|Margin||Traffic Bid Cost||Sales Cycle||Ad Budget|
Tip #2. Be aware that Ads cost differs by industry.
Recent market research has revealed the following average cost per click via Google Ads or Ads breaks down as follows by industry:
- E-commerce – $1.16 / $0.45
- Advocacy — $1.43 / $0.62
- Travel & Hospitality — $1.53 / $0.44
- Employment Services — $2.04 / $0.78
- Real Estate — $2.37 / $0.75
- Education — $2.40 / $0.47
- Automotive — $2.46 / $0.58
- Industrial Services — $2.56 / $0.54
- Health & Medical — $2.62 / $0.63
- Dating & Personals — $2.78 / $1.49
- Home Goods — $2.94 / $.060
- B2B — $3.33 / $0.79
- Finance & Insurance — $3.44 / $0.86
- Technology — $3.80 / $.051
- Consumer Services — $6.40 / $0.81
- Legal — $6.75 / $.072
As you can see, Google Ads costs vary greatly based on your field. The same report showed click-through rates (CTRs). Here are the average CTRs for the same industries/models:
- Ecommerce — 2.69% / 0.51%
- Advocacy — 4.41% / 0.59%
- Travel & Hospitality — 4.68%/0.47%
- Employment Services — 2.42% / 0.59%
- Real Estate — 3.71% / 1.08%
- Education — 3.78% / 0.53%
- Automotive — 4.00% / 0.60%
- Industrial Services — 2.61% / 0.50%
- Health & Medical — 3.27% / 0.59%
- Dating & Personals — 6.05% / 0.72%
- Home Goods — 2.44% / 0.49%
- B2B — 2.41% / 0.46%
- Finance & Insurance — 2.91% / 0.52%
- Technology — 2.09% / 0.39%
- Consumer Services — 2.41% / 0.51%
- Legal — 2.93% / 0.59%
Tip #3. Consider cost within a historical perspective.
Google Ads cost does change year by year (although typically not drastically). Here is a look at the average Ads cost-per-click for 2019 and 2020 (listed as search and display):
- 2019: $2.69 / $0.63
- 2020: $2.41 / $0.59
There are no solid statistics for 2021 yet. However, as you can see, the cost has been dropping. Some business owners may feel worried about the effectiveness of Ads. Rather than focus on buying initial traffic, many organizations choose to use Ads as a display channel for remarketing.
Tip #4. Know how Google Ads / Ads fits into your overall marketing plan.
Native ads are helping to reduce upper-funnel traffic. Marketing is increasingly about utilizing all channels. Expect to spend more on Ads and to utilize ancillary services, such as Measurement Marketing with Google Analytics (whether Universal Analytics or GA4).
Tip #5. Understand cost and traffic flow through a marketing funnel.
If you’re trying to determine how much Ads costs, it can help to look at a visual rather than just charts of numbers. Note that buying middle funnel is expensive and can cost even more additional money to convert.
Consider the different types of Ads prospects/targets in relation to the funnel (see the top, Awareness):
- Most Aware
- Remarketing / Cart Checkout
Tip #6. Plan and strategize before spending.
It’s critical to plan, knowledge-gather, and coordinate outside help – because spending more does not always mean you make more. Remember the two following common mistakes:
- Failing to measure leads to having to spend more money; and
- Failing to incorporate all channels to build prospects results in a wasted budget.
Tip #7. Invest in paid search services.
Google Ads can cost a lot more if you proceed without impeccable information, insight, and guidance. The final thing you want to do to make the most of Google Ads is to work with a paid search services company.
At Oyova, we work with various paid search platforms to get in front of eager buyers and accelerate growth. Discover how we can transform your business with our paid search services.