How to Determine Your Google Ads Advertising Cost?


Google Ads (AdWords) is simply the most powerful advertising platform available for running PPC (pay per click) campaigns. Even when it can cost you more than other forms of online marketing methods, it does help generate results. Besides, the good thing about it is that you will be paying only when someone clicks on your ads. While these are some of the points which are known to almost everyone, things eventually come to one point – how much to spend on Google AdWords.

How to calculate the cost of Google Ads and find ways to get money for Google AdWords?

In this guide, you can find answers to the question.

Factors that Affect your Budget

Google AdWords budget will depend on many factors. It is unlike that of traditional advertising where the budget is based on how much your business can allocate. These factors can include:

  • Keyword intent
  • Location
  • Campaign type

At times, even audience type can be a factor.

Keywords & Intent

Keywords play a huge role in google advertising costs. The keyword combination for your campaign will have one thing in common – intent. Your average CPC can be increased or decreased based on that.

You should comprehend what your target audience is doing at different levels of research. At each different level, they will be using different types of keywords.

So you should understand the dynamics of the different sets of keywords when managing your Google AdWords campaigns:

  • Top Funnel Keywords: These keywords are high in the sales funnel and you should expect to spend more on them. These keywords are likely to generate a large volume of traffic with low-quality leads.
  • Mid-Funnel Keywords: These are relatively cheaper to bid on. They generate lower monthly traffic without being limited.
  • Low Funnel Keywords: These are long-tail key phrases and are used by people with the intent of converting. They feature 3 to 4 keywords and comprise of very low traffic.

While targeting low-funnel keywords may seem to be lucrative, but they are very less likely to sell. You should keep the following points in mind when targeting them:

  • They are cheaper
  • Very few users will be using them when searching for your products or services
  • The ones using them will be ready to purchase
  • This will make advertisers to bid higher on these keywords
  • The CPC for these keywords will increase and so will the competition

AdWords Marketing Campaign

The two most common types of Google Ads campaigns are CPC and CPM. When it comes to Google Adwords pricing, you should know the difference between the two based on your budget and goals.

  • Cost Per Click (CPC): You will be paying whenever someone clicks on your ads.
  • Cost Per Mille (CPM): You will be paying when your ads are displayed a thousand times.

There is another option known as cost per action or CPA. It indicates how much you may be required to spend whenever there is a conversion. The average costs depend on the industry you are operating in. CPM ads are usually cheaper, but they don’t provide the high conversion rates of CPC ads. When it comes to return on investment (ROI), it makes more sense to choose CPC campaigns. This also leads to the increased prevalence of CPC ads in the industry.

Google AdWords guide for realtors, builders and land developers

When it comes to CPC campaigns, the following are some of the most expensive sectors:

  • Insurance
  • Attorney
  • Loans
  • Credit
  • Hosting

All these fields are expensive because they are capable of providing very high ROI. When you acquire a client in these sectors, you can generate recurring payments from them.

Your Budget & Your Approach

Now that you have an idea of how things work, you should use the following strategies for your budget:

I. Set Your Test Budget

When you are starting your campaign, your goal should be to contain the costs. This is because you are uncertain about what is going to work and what is not. You should set a test budget to begin with.

It is likely that your initial campaign may turn out to be profitable. Or else it may result in losing some money or just making it to break-even. Your initial budget should be small and you should approach your campaign with the intention that you are investing in researching or testing.

The testing phase will help you in the following ways:

  • Ad messages that work effectively with your target market
  • Keywords that convert into leads and sales
  • Test messages on landing pages that result in converting clicks into leads and sales

When it comes to calculating your test budget, you should use a simple strategy. Multiply the number of keywords to be tested by the CPC and minimum 100 clicks. You should get at least 100 clicks on a key phrase to find out if it converts or not.

One you have run your initial test and found the factors that generate high ROI, you can continue increasing your investment and generating more and more profit. However, that doesn’t mean that you should keep increasing your investment without any cap. There should be a control on your AdWords expenditure to also keep a tap on your google advertising cost.

You should control the expenditure from the very beginning, the test phase. It will be required to spend a hundred to two hundred dollars during the test phase to determine which keywords work the best. You will be gathering valuable data during this time. Even that is lots of money and you should follow these tips to control the expenditure:

  • Make sure that budget doesn’t get spent in a day
  • The lure of quick results can make it easy to spend it all in a short period of time
  • Keep in mind that your target audience can be interested in buying at certain times of the day or on specific days or dates
  • It is also likely that your ads may perform better with audience from specific locations
  • Make sure that your budget is spread across 1 or 2 weeks

Once you learn which ads work better with which type of audiences, it will become easier to target different segments more effectively. This can result in higher conversion and ROI.

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II. Don’t Set the Budget Any Longer

Once you have tested multiple campaigns and created a profitable one, the initial testing phase is over. One of the traits common among successful advertisers is that they never cap their Google Ads budgets. This is because once you find the key to running effective ad campaigns, it works as an investment in your business.

ROI is Everything

It is more important to focus on ROI than think of how much to spend on Google AdWords. If you want to succeed with your advertising campaigns, you should go beyond managing costs.  Your goal should be to maximize your ROI. Once you start generating profits from advertising, you will want to invest more to generate more returns.

So when it comes to Google AdWords pricing, you should focus on more things than just CPC. There are many businesses that focus on bringing down the CPC. They do so by writing better ads that help increase the quality scores, leading to cheaper clicks. There is nothing wrong in doing so, as this helps in increasing the efficiency of your ads.

Looking for best adwords management company

The key to succeeding in a big way with Google Ads is to increase your earnings per click or EPC, not just CPC. When you have the highest EPC in your segment, your edge over your competition include more:

  • Clicks
  • Leads
  • Sales

That is where the key to succeeding in Adwords lies. It is quite simple to calculate your EPC. All you have to do is to multiply the conversion rate with your customer value.

  • Conversion Rate: This is the percentage of users clicking and turning into paying customers
  • Customer Value: This is the revenue generated after deducting the costs

When you increase your EPC, you can boost your bids and increase your market share.

Google AdWords gives you features like daily budgets and advanced targeting. These tools allow you to set your ad campaigns to run automatically. Once the test phase is over and you move onto running your main campaigns, you can set them and focus only on checking the reports. 

How Google AdWords work? How much do the ads cost? How PPC budget is allocated?

So if you are looking for answers to the question of how much does google ads cost, the above-mentioned guide should help you find effective answers. You will have to run test campaigns to determine what works and what doesn’t. You should also consider all the different factors that affect the performance of your campaigns. Once you know what works, you should treat Adwords as a way to make an investment in your business to generate more and more ROI. we as AdWords expert is recommended to run longer test phases to gather as much data as possible before setting your mainstream ad campaigns. Eventually, you should keep in mind that ROI is everything.

Media Challengers, led by Birendra Kumar, is the foremost SEO and PPC services company, specializing in implementing a comprehensive range of online marketing techniques to enhance business profitability. As a Google certified agency partner, we bring expertise in SEO (Search Engine Optimization) and PPC (Pay-Per-Click) strategies to drive successful digital campaigns.


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    • Jennifer Wood
    • May 27, 2022

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