Calculating and Setting Optimal Google Ads Advertising Costs

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How Much Does it Cost to Advertise on Google Ads?

The amount of costs incurred in running Google Ads, ads is a question that often arises when someone is new to the world of PPC marketing. Unfortunately, there is no simple way to answer this question.

The cost to run Google Ads varies greatly depending on various factors and your needs.

How Google Ads Determines Advertising Costs

Google does not determine the fixed costs required for each ad, but uses an auction model in which advertisers bid on a keyword.

Applying this model makes the cost of advertising on Google uncertain and keeps changing depending on how tight the competition is for a keyword.

6 Factors That Affect Google Ads Costs

There are several factors that affect the calculation of Quality Score, Ad Rank, and how much you should spend on Google Ads ads. Here are some of them.

Ad Type

Google offers several types of ads, each of which has a different average CPC (cost-per-click).

Search Ads: the most popular Google ad type with the highest average CPC.
Shopping Ads: the amount of advertising costs will depend on the products you sell.
Display Network Ads: Google ad type with the lowest average CPC.

Schedule

The period you specify for your ads to run can affect how much your advertising costs. If the majority of advertisers in your industry want to advertise in the same time period, then the competition will be higher and result in increased advertising costs.

Device Targeting

Some keywords will have a higher cost if you target them on specific devices. Generally, B2C keywords will cost more if you target on mobile devices, and B2B keywords will cost more on desktop.

Bid Strategy

Advertisers can have one of 8 types of automated or smart bidding strategies. Each bid strategy has a different goal and can have an impact on the advertising costs incurred.

Your Business Industry

Each industry will have a different average CPC. Advertisements in the highly competitive legal, accounting, and real estate industries will have high CPCs. On the other hand, advertisements in the arts and entertainment industries will have lower CPCs.

As an illustration, Wordstream summarizes the average CPC Google Ads ads from each industry in the infographic below.

How Is Your Google Ads Budget Spent?

The scenario that most new advertisers experience in Google Ads is that their advertising budget runs out faster than the specified period. It is this specific case that often gives rise to the misconception that advertising on Google Ads seems expensive.

To avoid this misunderstanding, then you need to really understand how to use your advertising budget in Google Ads.

Determine Google Ads Budget

In general, setting a Google Ads, ad budget is not much different than setting a budget for other things.

Budget formulation starts from determining the overall budget that will be issued, as well as a small allocation to anticipate situations beyond your control.

But specifically, the most appropriate approach in managing the Google Ads budget is to divide it per ad campaign.

Daily Budget

Each campaign in your Google Ads will have a settings column where you can set various specific parameters. Thus, each of your campaigns will ideally have its own daily budget.

If you run more than one campaign simultaneously, determine your priority campaigns to spend your advertising budget more effectively.

For example, you run two different ad campaigns (Campaign A and Campaign B) at the same time.

Campaign A is aimed at advertising the best-selling products for your business, while Campaign B promotes content to prospects in your top marketing funnel.

In that case, you should allocate a larger budget for Campaign A.

If you plan to set a monthly budget, you only need to add up the daily budget for each advertising campaign and allocate the budget according to the priority of each campaign.

How to Set a Google Ads Budget to be More Efficient

Now you understand how Google determines advertising costs, the factors that affect Google Ads advertising costs, and how your budget is spent.

Then it’s time for you to set your Google Ads advertising budget to be more efficient with some of the tips below.

Make a Daily Budget

As mentioned earlier, one of the factors that make advertising on Google seem expensive is that the advertising budget often runs out before the specified advertising period ends.

To overcome this, determine the maximum budget, you need to spend per day. This technique will help so that your budget can be spread evenly each month.

Geotargeting

One way to ensure that your ads are only accepted by your target audience is to do geotargeting. That way, your advertising budget will not be wasted due to receiving clicks from people who are unlikely to be your customers.

Adding Negative Keywords

Targeting keywords that are not relevant to your ad can waste your advertising budget.

For this reason, Google presents the Negative Keywords feature so that advertisers can eliminate unwanted keywords for their ads to appear on these searches.

Taking advantage of this feature can help you reduce your overall advertising budget and improve the quality of traffic coming to your landing page.

Improve Quality Score

The higher your Quality Score (QS), the more likely your advertising costs will be lower than your competitors.

Cooperating with Digital Marketing Agency

Maybe this approach seems counterintuitive where you actually spend more money on hiring a marketing agency when you are planning to streamline your advertising budget.

However, digital marketing agencies have the capability to properly execute all of the above tactics to significantly reduce your advertising costs and increase the ROI of your advertising campaigns.

Although setting up and designing an advertising strategy on Google may seem complicated, Google Ads can be one of the most effective online advertising channels to bring in profits for your business if executed properly.

Studying and applying some of the information above can at least help you to reduce mistakes in running an advertising campaign on Google Ads so that your advertising budget is not wasted.

Hartley-Stone Digital Agency provides Google advertising services to ensure you get optimal Google Ads advertising costs.