Google is a platform for advertising products, services, and brands chosen by many businesses due to its ability to reach a large number of potential customers and high conversion rates. When starting to run Google Ads, many people are concerned about “how much does Google advertising cost.” Follow this article for the answer!
How does Google ads mechanism operate and cost?
To understand how Google ads fees are calculated, you need to understand Google’s operation mechanism. Similar to Facebook, Google operates on an auction mechanism, and businesses wanting their ads to appear when customers perform a search query need to set a competitive bid price. The Ads Rank, or ad ranking, is the factor determining whether your ad will be displayed on Google.
Ads Rank = Bid Price × Quality Score + Other factors (Search Ranking Threshold, Search Context (keywords, devices, location, and search time), and ad extensions).
Of which the bid price (CPC) is the maximum amount you are willing to pay for a customer to click on your ad. When a user searches for a specific keyword, advertisers with keywords related to the user’s search query enter a 0.3s-long auction session. Google’s system then determines which ads will be displayed and their locations.
Besides the bid price, the Quality Score is a crucial factor affecting the ad’s rank on Google. This score, rated on a scale of 1-10, is essential to consider before delving into the cost of Google advertising. The higher quality ads are, the more likely to be displayed in higher positions at a lower cost.
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Common methods to calculate how much does Google Ads cost
Currently, Google Ads costs are calculated using the following methods:
Cost Per Click (CPC): The most common method where the cost is based on the number of clicks to access the website.
Cost Per Thousand Impressions (CPM): Typically used for ads displayed on the Google Display Network. Businesses pay for every 1,000 ad shown to the target audience.
Cost Per View (CPV): Used for video ads on YouTube. Businesses pay when users view or interact with the video ad.
Cost Per Acquisition (CPA): Advertisers only pay when a customer accesses the website and performs a specific action, such as purchasing or filling out a form.
The average cost of running Google Ads can range from $0.12 to $1.23 per click depending on the industry. For highly competitive industries like real estate, automotive, design, or interior construction, the cost can go up to $8.22 per click.
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Determining Google ads costs
Determining the specific cost of Google Ads is challenging, but you can follow these principles:
Based on average CPC and search volume
This principle is suitable for search ads. It uses Google Search to find the average bidding price and search volume for each keyword in Google Keyword Planner within a month. By that, the estimate the advertising cost is based on CPC and click volume.
Based on desired conversions
To follow this principle, you have to analyze this metrics:
- AOV: Average Order Value
- Desired order quantity
- Desired ROAS: Desired revenue/cost ratio
Of which the Estimated Revenue = AOV x Desired order quantity.
Costs = Revenue/desire ROAS
When starting to deploy Google Ads, the ROAS rate is lower than you target.
Before starting Google Ads, you need to pay the activation fee with two options:
Prepayment Method: Deposit a certain amount into your Google Ads account to start advertising. The minimum deposit is $6.57.
Postpayment Method: Run ads immediately without upfront payment. Google automatically deducts funds from your Visa card until the advertising cost reaches $32.87 or the end of the month.
In addition, you can choose the postpaid payment method so you can run ads immediately without having to pay in advance. Then, Google automatically deducts money from your Visa card until your advertising costs reach $32.87 or the end of the month.
The Googe Ads cost depends on many other factors. Please continue following the article.
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Factors affecting Google Ads cost
It is differentiated Google Ads cost between each field, the factors that affect this cost are:
Industry competition
This is an important factor when running Google Ads, specifically in large industries with high competition (Construction, real estate, interior design,…), CPC costs will be higher.
In times of high competition, advertisers can spend up to $4.11 – $8.22 per click for Google Search Ads.
To check the competition level of the industry, go to Google and search for keywords related to the industry. If the results on Google show that there are many units running ads, this is a highly competitive industry. This can lead to higher CPC costs.
Location of the ads
Among the factors affecting Google Ads costs. The location where you want to place your ad is one of the factors that affect fees. Specifically, in Vietnam, the cost per search ad click is 0.12 USD. While in foreign markets, the average price is low at 0.62 – 1.03 USD.
Size of targeted customer base
The ads costs are affected by the size of the targeted customer group. The narrower your customer base is, the higher your costs will be. That is clearly shown in the forms of Google Ads Display and Youtube Ads.
If you run a remarketing campaign on people who have previously visited the website, the cost of Google Ads advertising will be higher than when running a wide customer base.
Shopping trends
This is most evident with products sold seasonally or on special occasions. When running Google Ads for products sold at a certain time, the bidding price will increase. Because in times of increasing shopping trends, every individual and business wants their ads to appear in front of customers. Therefore, they increase the number of ads campaigns, leading to bid prices being pushed up high.
Advertiser’s techniques
In addition to external factors, Google Ads cost also depends on the advertiser’s techniques. If you want to lower your Google Ads costs, you need to take very good care of your account. You cannot expect costs to decrease automatically when running ads.
If you want to deploy effective Google Ads campaigns, you should rent a Google Ads account from Optimal Agency. Here, you will be granted a trusted, stable Google Agency account with the best price and other attractive offers. Along with our highly specialized and experienced technical teams. Your Google Ads campaigns will have the best bidding price, be optimized and be the most effective when using Optimal account.
Using our service, you do not need to take care of or manage your account, you just need to send detailed information about the campaign and ads budget. Our experts guarantee your Google Ads campaigns will be 100% active (Camp active). Our expert will provide detailed reports on the status of your Google Ads campaign to you daily.
You can use this data to compare your business’s activities and evaluate ads effectiveness. In addition, we will always accompany and support you 24/7: content consulting, cloaking a safe and effective internal black hat, censoring keywords and advertising content, editing to ads campaigns,… Contact hotline: +84 8 1900 4282 immediately for more information.
Tips for optimal effective Google Ads cost
Besides understanding “How much does Google ads cost,” consider these tips for optimizing Google Ads costs:
If your current Google Ads account cannot provide ROI reports, seek help from Google’s preferred partners. Regularly monitor conversion rates and ad performance over specific periods.
Search and state the suitable keyword for your campaign. By identifying relevant keywords, it will help to have high click-through rates (CTR), low competition, and relevance to your product or service.
One of the optimized cost methods is to adjust the bidding price. Google now offers two main bidding prices: manual CPC and enhanced CPC. Set the bidding price that fit your campaign target.
Utilize Google Ads’ built-in A/B testing to compare the effectiveness of different ad campaign components and choose the most suitable option based on real data.
You should consider combining different Google ad types to broaden your advertising reach and control costs.
By now, you have the answer to the question, “How much does Google ads cost?” Hope that with the above information, you will successfully deploy Google Ads campaign and cost-effective.
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FAQ:
When customers click on the business’s advertisement on Google, charges are only incurred for legitimate clicks. Currently, Google has deployed measures to protect advertisers against virtual clicks from a user through the virtual click filtering system. The system performs filtering at the end of each day, and approximately 15 days later, it removes invalid clicks and refunds you. To prevent harassment from competitive opponents, Google also imposes a maximum daily charge.
You can add an “Invalid Clicks” column in Google Ads Manager to examine the metrics of virtual clicks. If the issue of virtual clicks persists, you should take additional measures such as blocking IP access, turning off keywords associated with virtual clicks, or negating the display position.
The extra costs that the advertiser needs to pay are:
VAT: Google Ads officially started charging VAT on all Google Ads accounts from November 1, 2022. VAT is calculated at 5% of the cost.
Taxes of specific countries: If the ads is deployed in other countries other than Vietnam, you have to pay that country’s taxes, including possible national fees.
