The cost of AdWords is highly flexible, easy to manage and an efficient means to generate a good return on investment for your business.
Google ads cost can also be confusing to those new to PPC and the AdWords platform.
Many clients unfamiliar with AdWords ask about the cost to advertise on Google but it is never the same for any two businesses.
This is because the cost of AdWords is wholly different to traditional advertising costs like television, print or radio. Within these mediums, you pay a set price but with AdWords you can select your own budget.
In PPC advertising you only pay when you receive traffic, therefore your budget is dictated by how much traffic you hope to receive over a given period.
The other major factor controlling your budget is your industry. On television, an ad will be a set price whether you’re a travel agent or a clothing retailer. With AdWords, cost is very much dependent on what you and your competitors think a click is worth. If more businesses bid on the same keywords, the more competitive and pricey the click for that keyword will become.
Some of the most competitive industries on Google are insurance, loans, mortgages, legal services and financial services.
Without a proper understanding of the variable cost to advertise on Google, it is easy for businesses to become overwhelmed. If you’re feeling apprehensive about the cost of Google ads just remember that AdWords is an investment rather than an expense. A successful campaign will generate more profit than you invest.
Even the most competitive businesses can find AdWords cost-effective. It is a fantastic opportunity since you only bid on relevant traffic and the cost of AdWords is always within your control.
Knowing all this can make it hard for new advertisers to pick a starting budget but this AdWords cost guide will point you in the right direction.
Calculating your Google ads cost can be tricky and intimidating owing to differing AdWords costs for different sectors but there are formulas and practices you can use to guide your initial budget.
It is important to remember that, while PPC agencies can advise you on suitable budgets, this is not fixed for the lifetime of your account. Google pay per click costs fluctuate depending on the changing bids of your competitors. The transient nature of cost per click must always be considered.
Campaign objectives differ, however, in the end, the final goal is always more customers. You can use this to inform your Google ads cost calculations.
Decide how many new customers you would like to generate in a given time frame e.g. desired quarterly customer increase. You can then use the following formula to discover your Google ads cost:
Traffic required x average cost per click = total budget
There are many Google AdWords cost estimators you can use to approximate a decent starter budget. We love this AdWords cost estimator method because it factors in your average industry cost per click by keyword and your business’ usual conversion rate. This allows for the best accuracy and a healthy budget.
This formula works well even if you have never run a PPC campaign before because you start by reviewing your organic results in Google Analytics. Here you will find your organic average conversion rate.
Now you have a rough idea of the traffic levels you will require to reach your new customer goal.
The most essential step to calculating Google ads cost is deciphering how expensive your keyword bids will be. Check how competitive your industry is by looking at keyword cost using the AdWords keyword planner.
The keyword planner not only allows you to research relevant keywords for your campaign but shows you an estimated bid amount.
Having created your keyword list, you can use the AdWords forecast tool to calculate the average maximum cost per click of your keywords and the daily cost by how many clicks you would like to acquire.
Now simply multiply your required traffic, based on desired customers and conversion rate, with your average cost per click and you will have a starter Google ads cost.
This is a helpful tactic for first timers looking to use a Google AdWords cost estimator, however lead generation companies must factor in their close rates. Your average close rate will have a big impact on the amount of traffic required for a conversion. Your Google ads cost calculator might look more like this:
To learn more about budget calculating formulae with some helpful examples, take a look at our comprehensive blog on AdWords budgeting.
Before moving ahead with your new starter budget, you can use additional formulae to check that your budget has a chance of being profitable:
Expected gross revenue = AOV x new customers.
Return on investment is: ROI = (gross revenue – investment)/investment.
AOV is average order value and it is vital to factor in AOV for positive ROI. 2.45% is the average conversion rate for AdWords but is this enough to turn a profit for you based on average order value?
If you sell a high-priced item like a house, your average order value is higher than a retailer selling stationary. AOV can also differ between product categories for the same business. If this is the case for your company, it is a good idea to segregate campaigns by product category based on average order value and calculate separate budgets.
If you are embarking on Bing advertising, our formulae will also help guide your Bing advertising cost. You may find the required budget for your Bing advertising cost is less than your Google ads cost. This is due to Bing cost per click being cheaper than AdWords on average. Don’t let this alone be the deciding factor in which search engine to use for PPC advertising. Both Bing and Google can deliver good ROI but Google has a much larger audience.
When it comes to working with a PPC agency, it is important to understand the variables of your Google ads pricing. For clients wondering about the cost of Google AdWords, it can be broken down into three segments:
1) Google ads budget – This is your Google ads cost, literally what you pay to Google every time a user clicks your ad. Now that you understand more about how to calculate your starter budget and the nuance of bidding you are in a good position to choose a Google ads budget.
While Google ads cost can vary a great deal between industries, we highly recommend starting on a budget of no less than $1000. Years of experience have shown that you need a substantial starting budget to see the best results. This budget provides a good base for the research phase of your campaign. You have enough funds to run experiments and see which keywords and ads are proving the most profitable for your objective. Without a sufficient budget you will be unable to gather the necessary data to guide your AdWords strategy.
2) Campaign management pricing packages – Running successful AdWords management means achieving a good return for your money. This will require sophisticated tactics, utilising advanced AdWords functionality, extensive monitoring and of course admin work to continually improve and build upon the campaigns. This may sound complex and time consuming but this is where we come in. By using AdWords agencies like Paid Traffic, you will save time and ensure your budget is used proactively to generate the best results possible. Having calculated a suitable starter budget for your Google ads pricing, it is time to select the right campaign management package.
Your management package is separate to your Google ads cost. The Google search engine cost is the budget you pay directly to Google to bid on ad positions and which are charged when a user clicks. Your management package is what you will pay to us to manage your campaign and enhance it for the greatest return on investment.
Paid Traffic offer several packages to match a wide range of financial resources and various business sizes. We can also customise your package to suit your sector.
Our smallest package, The Prospector option, is perfect for small businesses. It starts at only $94 a week and incorporates everything you need for a small but highly targeted and well optimised campaign. It includes ad creation for search and display networks and in-depth reporting, as well as keyword research, conversion tracking and bid management.
Our Quest option is the most popular package at Paid Traffic. It is ideal for slightly larger businesses looking to take their first foray into AdWords and offers more flexibility than the Prospector package. At only $175 a week it offers a much larger campaign build out and more research.
For those in need of larger campaigns we have the Predator package for $244. If you have a wide range of services and wish to market them all using AdWords this option will be perfect for your needs.
Some businesses like large e-commerce companies will need even more extensive campaigns, so we have designed a package just for them. The Dominator option is the largest package available at Paid Traffic. For $300 a week we can manage AdWords campaigns with an unlimited number of keywords, run highly advanced keyword research and build out large campaigns for your advertising needs.
In addition to ongoing management Paid Traffic have a standard set up charge of $385 for your account and first campaign to help keep our packages affordable for small businesses.
We specialise in small to medium sized businesses and our experience has helped us develop these packages to help different business sizes keep the cost of Google AdWords low. Our packages offer competitive prices, so you can dedicate more to your Google ads pricing budget and gain more exposure.
3) Goods and service tax – One final fee you should factor into your Google ads pricing is GST. Since November 2016 Google is obligated to charge 10% GST to businesses in Australia using its AdWords services. Don’t worry though because if you are GST registered this will not affect your Google search engine cost. You can claim back the tax charge at BAS time. GST charges for AdWords are exclusive not inclusive and will be charged on your AdWords statement after you are charged for clicks. This charge is also paid directly to Google. These changes have come into effect to help Google comply with tax avoidance laws.
Businesses who are not GST registered will not be able to claim the tax charge back.
Once you understand your advertising costs and have a budget and package in mind, you are ready to embark into PPC marketing.
Paid Traffic’s scalable packages help clients to manage their Google ads cost. AdWords also provides a range of devices to make your advertising costs as flexible as possible.
With daily budgets, which can be reduced or increased or even paused at any time, you will find it easy to match your expenditure to your seasonal requirements. To make the most of your campaign, your advertising cost can be regulated into shared budgets or separate budgets for different campaign priorities.
Your AdWords managers can bid on keywords manually or match automated bidding to your goals. Thanks to the wide variety of bidding and budgeting methods AdWords provides, you will find managing your Google ads cost not only simple but also adaptable to whatever you need at the time.
For a more detailed, step-by-step instructions check out this guide on choosing an Adwords starter budget.