Google Ads are free
Google Ads (formerly Ads) is by far one of the most popular platforms for placing advertisements in online marketing. The obvious question is how much money should be budgeted for a Google Ads campaign. It is difficult to give a general answer here, because the final costs depend on aspects such as the quality of the advertisements and the competitive situation. So that you can get the most accurate picture possible of the expected costs, in this article we will show you how the costs for an ads campaign are generally calculated.
How much does an AdWords campaign cost?
Creating a Google AdWords campaign is free. You only pay as soon as someone clicks on the advert (s) placed. How high this amount, the so-called "cost per click (CPC)", cannot be stated in general, as it depends on factors such as the respective keyword as well as the ad position and quality. The average costs are between € 0.40 and € 2.
Create a Google Ads campaign: what are the costs?
The tool itself is free. And the creation of advertisements or campaigns does not initially incur any costs. Depending on the chosen billing model, these only arise as soon as users see the adverts, click on them or interact with them.
In this article, we'll focus on the cost-per-click (CPC) model, where you have to pay a certain amount for each click on an ad that is placed.
The problem: These costs per click are not consistent. Instead, they vary depending on the industry, keyword and even specific search query. Together, these and other factors result in the respective click price. It is correspondingly difficult to state specific amounts that are incurred when using Google Ads.
What factors influence the cost per click?
General statements on the level of the “cost per click” are not possible due to the variability already mentioned. But if you look at the factors Google Ads includes in the calculation, you can at least get a rough idea of them:
Competition for the keyword
Basically, the more websites want to rank for a keyword, the higher the price for a corresponding ads. Because Google assigns ad spaces according to the auction principle. So if you target a keyword that is highly competitive, you can expect correspondingly higher costs.
Google automatically calculates a so-called quality factor on a scale from 1 to 10 for each ad. This indicates how well the keyword, website and ad fit together - and thus how well the ad corresponds to the search intentions of the users. The click rate of your website as well as high-quality texts and headings also ensure a higher quality factor.
And that pays off: high-quality ads have lower costs per click because they offer users added value and are therefore attractive to Google.
Position of the ad
If you want your ad to be at the top of the search results, you also have to pay more. However, the ad position cannot be selected directly, but is determined by Google using the maximum click price you have determined and the quality factor using the following formula:
Ad Rank = Maximum CPC x Quality Score
Since the competitive situation and quality vary, the cost per click also changes with each click on an ad. However, they cannot exceed a maximum that you have set. For orientation, the Keyword Planner gives a rough direction to the average click price for your planned ads.
In most cases this is between EUR 0.40 and EUR 2. However, significantly higher prices are also possible. Google allegedly charges 80 euros per click for the most expensive keyword.
How are the “cost per click” calculated exactly?
The prices are basically first after the respective auction calculated around one ad space and vary with the bids. Even if the click price cannot be predicted exactly, it is known how it is basically composed.
During the auction, a higher position is always compared with the next bidder. So if you are currently in position one, the bid will be compared to position two. This in turn must be comparable with the bidder in third position, etc.
Now the ad rank of the next bidder is divided by the quality factor of the higher bid and a cent is added. The result is the ad price. For a better illustration, we have set up the following sample calculation:
As you can see from this example, your chances in the ad auction do not only depend on your budget: Despite a higher maximum click price, Bidder Y loses out here because his Quality factor lower fails.
Set a suitable budget
With your You set the daily budget in Ads determines the maximum amount of money that can flow into the ad placement per day. If you are counting on your budget per month, you can simply divide that by 30.4 to get your daily budget.
If this is used up, no more ads will be placed on that day. On the one hand, this is an advantage as it eliminates unforeseen costs. On the other hand, a budget that is too low can quickly cost you valuable reach.
It is all the more important to have a really realistic budget to be determined. How high this turns out is of course a very individual matter. As a rule of thumb, however, Google recommends smaller companies a budget of 10 to 20 euros per day, which should lead to an average of 50 to 100 clicks.
Another good option to get the most out of your budget is to set specific playout times. This ensures that ads are not shown at times of the day when your respective target group is hardly active online. Otherwise the daily budget is quickly used up by the afternoon. This is particularly annoying because many (working) target groups are increasingly online in the evening and you can then no longer reach them.
Content quality also pays off in advertisements
General statements about Google Ads costs cannot be made. To do this, they are dependent on too many individual factors. However, the above example shows that high quality ads and linked websites in the auction around the ad placement can easily outperform other bidders with higher budgets.
Good content also pays off in the area of paid advertising: high-quality texts ensure the lowest possible cost per click, so that you can display more ads with a given budget and thus reach more people.
Header image: Kritchanut / iStock / Getty Images Plus
Originally published June 14, 2019, updated 12 May 2021
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