So, how much do Google Ads cost these days?
Honestly, it’s one of the questions my clients ask me the most.
I love to discuss with ecommerce businesses who are just discovering the world of PPC and curious about what goes into the budget, how it gets spent and what to expect in terms of Google Ads price points.
If you’re new to advertising on Google or don’t know the process of ad buying, how much it will cost you to run a Google Ads campaign or hire a PPC agency, I’ve got your back.
Here’s what I’ll share with you:
- How much do Google Ads cost
- What the typical ad spends of ecommerce businesses are
- How you can estimate your ROAS and PPC profit with my free Google Ads cost calculator
- What fees you can expect when working with PPC specialists
- Pro tips that helped my ecommerce clients grow their businesses
- How does Google Ads actually work?
- Are Google Ads expensive? How much does it cost to run a PPC campaign?
- How much should I spend on Google Ads?
- Is Google Ads cost effective?
- Google Ads Price: how much does it cost to hire Google Advertising Experts?
- Can’t I run my own PPC campaign?
- Bottom line: the real deal with Google Advertising
How does Google Ads actually work?
Before I dive into the numbers and examine Google Ads costs more closely, let’s first take a look at how the process works.
Google Ads uses an auction model that determines the ad placement and its cost.
The auction begins when a user enters a query on Google. Whenever the keywords used for your ad correlate with the keywords that are being typed by the user in Google search, your ad qualifies for the query. Then the auctioning process begins.
In the course of the auction, the ad placement and CPC (cost-per-click) are determined by the ad rank. From there, it’s further determined by two other aspects: the bid you had set up for the keywords and the quality score of your ad.
I’ll teach you more about the subtleties of the ad charging process further in this guide. For now, it is important to know that Google offers all the necessary details advertisers need to know so that they can successfully manage their campaigns and have unlimited control on how their budget is spent.
Afterwards, it’s a work in progress, with monitoring and optimization being critical to a successful ad campaign.
By the way, there are tons of other aspects I haven’t covered here to not digress. Therefore, if you want to learn more about optimizing your Google Ads cost, check out my Google Shopping Campaigns Optimization Guide.
Are Google Ads expensive? How much does it cost to run a PPC campaign?
Usually, a client gets on a call with me and I ask them what their budget is.
Almost every time they revert that question to me, asking what budget I would propose.
You can’t expect an expert to throw around numbers and decide your PPC budget for you.
Ultimately, it all comes down to how much you want to invest.
However, a good question many of my new PPC clients address is how and when their Google advertising budget gets spent.
You might assume your ad budget will last for an entire month, only to be surprised that it was already spent within the first week. Ouch.
This can lead to the misconception that PPC is expensive. I reassure you that it’s not the case for all. More often than not, it’s due to a lack of knowledge in regards to how budgeting works.
How does Google Ads charge?
Let me briefly break down how the money is spent.
There are two bidding strategies you can use in Google Ads:
- Manual CPC bidding – allows you to establish a maximum cost-per-click bid
- Automated or smart bidding – advanced machine learning powered by automated bid signals
Adfix Pro Tip: From my hands-on experience, some of the most useful smart bid strategies for ecommerce are target CPA and target ROAS.
If you want to see which bidding strategy is the best fit for your marketing goals, set up a consultation call with me and I’ll be glad to point you in the right direction.
How does PPC budgeting work?
As I mentioned earlier, one of the keys to making sense of the Google Ads price process is to get a grasp on how PPC budgeting functions.
One way to start budgeting a PPC account that I personally recommend is on a per-campaign basis. Each one of the campaigns typically has its own daily budget, which you can set depending on importance.
You can set this budget to only be spent during certain hours, days, and even locations to make the most out of your investment.
Adfix Pro Tip: Let’s say you want to create a campaign that promotes your best-selling products. I would advise allocating a larger daily budget than another campaign promoting content to prospective customers at the top of the funnel.
When it comes to Google Ads, a campaign budget will also vary significantly from one niche to another. Consequently, to determine the minimum or optimal budget for your business, you have to thoroughly examine different marketing aspects, such as:
- Cost of keywords based on the industry
- Your business’ seasonality
- Campaign type and your advertising purpose (such as Black Friday or other special events)
- Your website’s conversion rate
- Average revenue you receive from a single conversion or sale
Adfix Pro Tip: Once your PPC specialist has an accurate idea of all of the above variables – especially of how the industry, conversion rate, and average revenue rate indicators fluctuate – you can go further on estimating the general CPC, and start to calculate the initial budget.
What costs go into my PPC budget?
I know, I know, running a PPC campaign can be a complicated process. All my clients agree that it’s a true challenge.
Basically, the success of your Google Ads campaign will depend on the skills of the advertiser controlling the complex aspects involved. Anticipating your competitors’ moves, bids, and the quality of their ads is enough to give you interminable headaches.
However, that’s where the pros come in and make your life infinitely easier. A team of PPC professionals like those I have the pleasure to work with at my agency can manage the ad campaign for you to get the highest results in generating revenue for your business.
With this recommendation in mind, the budget you need to prepare for a PPC campaign on Google Ads is three-fold:
- Ad Spend – The Google Ads budget you are willing to invest in your ad campaigns. This will always be the largest portion of your budget.
- Agency Fee – The costs of hiring a PPC expert to make your campaigns successful. Agencies can charge around 10% – 20% of ad spend, but the pricing plans vary greatly from one agency to the other.
- Production costs:
- Banner ads if you are doing Display campaigns
- Video ads if you are advertising on YouTube
When you’re ready to make the first steps towards a thriving PPC campaign, book my free 30-minute call and let’s talk specifics.
PPC monthly costs: how much does an ecommerce business spend on average?
The average small business using Google Ads spends between $1,000 and $10,000 per month on their Google paid search campaigns. That’s $12,000 to $120,000 per year.
This average is calculated from my own client portfolio, which includes ecommerce businesses of all sizes, from the small, family-owned ones right through to enterprise retailers or luxury brands.
For example, one of my clients in the outdoor sports niche had a large store that had been selling camping gear offline. The family owned and operated business had recently built their website after observing both that their customers had been searching for their store online and that ecommerce businesses were on the rise.
They saw the opportunity to enter the market and not get left behind, so they looked at Google Ads (then AdWords) as a viable means of advertising their business.
Considering it was the first time they were dealing with PPC campaigns, they were very skeptical.
They didn’t know what to expect, so they started with a low budget of $2,000 per month. And guess what? Their results were impressive right off the bat, with a positive ROI in the first month.
Therefore, they continued the program and, after seeing the first round of success, they wanted to understand how it all works. I had guided them up until that point, but their curiosity and desire to get involved in the process lead to them become one of my closest collaborators.
They’ve been my agency’s client for the past two years, and our partnership only gets stronger with time, while their business continues to grow.
Companies that sell their own products
Conversely, I’ve also had clients who had done Google AdWords a decade or more ago and had discarded it. For example, a client of mine in the health industry that sold their own medical devices was in that precise situation. Even though they saw that their resellers and competitors were using Google Ads, they didn’t think that PPC ads could be profitable.
However, after redoing their website, they decided to give Google Ads another go to bring new traffic.
Although they were also conservative to begin with, they eventually started, with a smaller budget at first ($2,000 – $3,000 per month).
After the first month of studying data and optimizing, my team and I succeeded in obtaining a positive return on investment from the second month.
Ultimately, their business thrived.
On the other side of the spectrum, I had an ecommerce startup that built an MVP and got seed funding.
They started using Google Ads with a $3,000/month budget. After gaining traction with the ads, they received a new funding round.
We took them from $3,000/month to $100,000/month and profitably acquiring new customers.
I can help you attain results that are just as satisfying for your business. Just drop me a line and we can set up a call to start creating your Google Ads strategy.
How much should I spend on Google Ads?
I’m going to keep it real with you.
There’s no one size fits all recipe for any type of business.
Be that as it may, my recommendation is that an ecommerce business from the US should be ready to invest a minimum of $1,000 per month in Google Ads to see viable results. With a budget that’s any tighter than that, you’d need a ton of conversions from sales to cover all your costs.
Adfix Pro Tip: The way I see it, you need to allocate a test budget of at least $1,000/month for three consecutive months to have enough data to work with.
You have to create your budget to obtain at least 2,000 clicks. Any less and you won’t have enough results to make an educated decision regarding whether it’s worth continuing the campaign or not.
Of course, my suggestion is based on my personal experience with hundreds of ecommerce businesses in the US. Still, the guideline applies to 90% of cases when approaching Google Ads for the first time.
In terms of daily budgets, I always explain to my clients that it can constantly fluctuate. For example, diving a $1,000 budget to the number of days in a month will get you roughly $32.80 a day. In reality, I can spend $20 one day, $30 another day, $40 after a week, and so on.
Adfix Pro Tip: Honestly, clients shouldn’t be bothered with calculating daily budgets. It’s an implementation detail that the PPC agency should take care of.
Your spend will depend on your budget, customer type, product, and aggressiveness.
Strategies for estimating Google Ads costs
I can’t stress this enough – start slowly and work in steps.
The first few months are about gathering data and optimizing information. Once some working ads, they’ll be exploited to boost conversions.
Adfix Pro Tip: A good strategy I have helped my clients implement to estimate their Google Ads costs is to run three versions of an ad for at least a month. Then, I’d analyze all the resulting data from their campaign to see which ad performed better. Starting the process anew the next month, I analyzed all the data once again and created a long-term budget estimation based on how each campaign performed.
Then, I’d analyze all the resulting data from their campaign to see which ad performed better. Starting the process anew the next month, I analyzed all the data once again and created a long-term budget estimation based on how each campaign performed.
I know you want to find out exactly how much you should be spending on Google Ads. That’s why I welcome you to reach out and book a no-strings-attached consult call with me so I can give you a specific budget proposal for your ecommerce business.
Factors that can influence Google Ads average CPC
I’ll say it again for emphasis – how much you choose to spend on Google Ads is entirely up to you.
There are some factors that contribute to your ad spend, such as the ad performance, where you run your ads, (e.g. Display Network, Search Network or both), and how competitive the industry you’re in is.
Hiring a Google Ads expert helps you better manage your campaigns, avoid any pitfalls, and apply all the best Google Ads campaign optimization practices to get the maximum effects from each ad.
An expert can also help you manage the factors Google takes into consideration when it comes to the cost-per-click advertisers pay, such as:
- Quality Score
- Max CPC bid
- Ad rank
By taking into account these and other multiple factors, a PPC specialist can constantly refine each campaign and the keywords they use, in order to improve your overall result and attain the most fruitful ROI in online advertising.
How CPC varies from market to market
Before you launch a PPC campaign, it’s important to know that some keywords are significantly more expensive to bid on than others.
Take a look at this research by WordStream that illustrates how Google Average CPC (Cost Per Click) varies from one market to another:
|Average CPC (Search)
|Average CPC (GDN)
|Dating & Personals
|Finance & Insurance
|Health & Medical
|Travel & Hospitality
Data source: WordStream
Highest CPC in Google Ads
According to SEO Tribunal, the average CPC in Google ads across all markets are as follows:
- $2.69 – Search Network
- $0.63 – Display Network
Another research by WordStream shows that if you’re part of one the following niches, you need to prepare to pay serious money for some of the highest costs per clicks in Google Ads:
|Cost per Click (CPC)
Data source: WordStream
As you can see, the most expensive CPCs are representative for B2Bs – business to business – and services businesses, while ecommerce businesses usually have lower costs.
How do I calculate CPC?
So, how are you supposed to forecast what CPC you will obtain for your business, in particular?
Well, I always advise my clients to use the tools provided by Google to get the best estimates.
With the help of the Google Ads Keyword Planner, you can perform preliminary research and find the main keywords and search volumes in your industry. This is the forecasting tool that I use for my clients, and it’s also used by the majority of PPC agencies.
For instance, let’s say that your ecommerce business sells safety shoes. To get more ideas of keywords for your market, choose the Discover new keywords option when you open up the Keyword Planner.
Quite a few of my clients ask me about the efficiency of short-tail keywords versus long-tail keywords.
My answer will always be the same – choosing keywords based on this type of criteria isn’t enough to get you an accurate estimate.
Adfix Pro Tip: Although more specific keywords will convert at a higher rate, without history-based data, you’ll just be taking a guess (and wasting time while you’re at it).
Keyword Planner forecasting
Once you have a good idea about what keywords you can use for your ads, choose the Get search volume and forecasts option and insert your desired keywords.
Adfix Pro Tip: When you’re doing keyword research, I recommend that you add more high-volume keywords from your industry, even if you won’t necessarily target all of them.
Based on the keywords you add, it’ll show you how many clicks and the approximate number of conversions you could get.
Do note that Google will show you the default CPC. It isn’t the CPC you’ll be paying, but rather the bid – the maximum CPC you set and can edit. For example, if you lower the default bid, you will obtain fewer clicks because you wouldn’t win that many auctions.
To see the optimum level, you can also tweak the curve that shows where the CPC is mapped. Even more, you can edit the conversion rates value for conversions. Thanks to all these custom options, the tool proves to be extremely useful in terms of forecasting.
Overall, with the Keyword Planner, Google gives you a rough estimate of how much you should invest to obtain a specific number of clicks.
What about my return on ad spend (ROAS)?
After you have your keyword data figured out, you can see continue to estimate your Google Ads costs with a few additional calculations.
For my agency, I have created a PPC Estimator that helps you determine your approximate return on ad spend.
You can access my free ROAS Google Ads Cost Calculator here and use it for your own ecommerce business.
Free ROAS Google Ads Cost Calculator created by Adfix
- Make a copy of the file in your own Google Drive account and head to the ROAS Calc. sheet.
- Enter your ad spend in the first column on the left side.
- Fill in the colored cells in the Expected Metrics area to the right of the main table:
- Conversion Rate
- Avg. Order Value
- You can also edit the Agency Fees column if the rates are different from those provided in the example.
- Based on the data you provide, you’ll get an output with the transactions, revenue and ROI you could have.
Please keep in mind that this tool will help you plan your digital marketing budget, but the actual costs will vary depending on your results.
How to estimate gross profit margin
I also have another version of the Google Ads cost calculator that will help you calculate your gross profit margin.
Free PPC Profit Google Ads Cost Estimator created by Adfix
After you have the sheet copied in your Drive account, choose the PPC Profit Calc. tab and follow the instructions below:
- Insert your ad spend in the designated cells.
- Edit the agency fee column (if applicable).
- Complete the colored cells under the Expected Metrics column on the right side:
- Conversion Rate
- Avg. Order Value
- Gross Margin
- The tool will automatically calculate your Revenue, Earnings, and Profit.
Adfix Pro Tip: In this situation, I tell my clients that although they might not be making killer profit, they’re acquiring customers without any real costs to the business. Essentially, each customer you get here is already paid for by the revenue generated in the first month. Any subsequent transactions will be profit for the company.
For more insight on the topic, I also encourage you to read my guide on how to make PPC finally profitable here.
Is Google Ads cost effective?
In all honesty, investing in Google Ads can be highly lucrative if done right. Otherwise, if not managed properly, it can turn out to be a complete waste of your money.
PPC statistics show that every dollar spent on Google Ads PPC campaigns generates at least two dollars in small business revenue.
This can, of course, differ from business to business. However, since Google Ads is a fully-measurable channel, you’ll be able to see the ROI for yourself. In other words – just how much you spent and how much you gained back.
In this sense, there is no question whether Ads campaigns are cost effective – the stats show it clearly. So much so, I’ve actually created an entire article detailing the benefits of investing in Google Ads that you can access here.
Paid search marketing strategies
From my experience, it’s more a matter of how you make use of paid search marketing to efficiently boost your sales performance and get a stronger ROI.
What really makes the difference is the series of strategies you choose for running your Google Ads campaign to increase the traffic to your website while decreasing the spent budget. Go ahead and pick my brain about them in a 30-minute one-on-one phone call.
Adfix Pro Tip: To get maximum efficiency of your budget, I recommend splitting up your potential customers into segments based on where they are in the buying cycle: top, middle or bottom of the funnel.
- TOFU (top of the funnel) – customers are not aware of the product or that the product exists
- MOFU (middle of the funnel) – customers are aware of the problem/ need and they want to know more about the solutions
- BOFU (bottom of the funnel) – customers have decided that they want to buy and are researching places to buy from
Adfix Pro Tip: For your ads to be cost-effective, I also recommend targeting your campaigns from the bottom and working your way up the funnel. BOFU campaigns can be very profitable. In this case, users have already expressed an interest in your product or service by searching for it on Google. I guarantee the demand is there; you just have to show them the right product at the right time.
Google Ads Price: how much does it cost to hire Google Advertising Experts?
When you decide to start running campaigns on Google Ads, there are three ways of doing it:
- Hiring an in-house PPC employee
- Outsourcing PPC services to a consultant or freelancer
- Outsourcing PPC services to a specialized PPC agency
In-house PPC specialist costs
Extending your team with one or more PPC specialists will efficiently optimize your Google Ads campaign on a high level of brand knowledge that can give you an important advantage over your competitors.
It can be a good option for you if you’re in one of these two situations:
- You plan to spend a large amount on Google Ads each month and the advertising platform is one of your most important revenue streams. Still, you’ll probably need some additional PPC software to help you manage your campaigns at scale.
- You want to test the waters with a lower ad spend
However, finding the right in-house PPC management expert is no easy task. You’ll additionally have to take into consideration recruiting costs. The average salary for a PPC manager starts around $4,000 per month, plus taxes. Nevertheless, the salary can be a lot higher for a certified Google Ads expert.
When it comes to hiring a freelancer, the costs can also differ significantly based on the level of expertise of the PPC consultant, and whether they are accredited as a Google Ads Certified Partner or not.
To give you an estimate, PPC freelancer rates usually start at $100 per hour, but if you want someone that has an extensive portfolio and a rich experience in running efficient Google Ads campaigns, you’ll have to get ready for a higher rate.
Take into consideration that consults or free agents usually work on their own and may have nobody else to cover for them in case of an emergency or vacation, compared to an agency, where there’s always a specialist on call, without putting your business at risk.
PPC agency fees
Thirdly, you can contract a specialized digital agency, with employees that are certified PPC experts. For example, my agency, Adfix, is a Google Premium Partner, as well as a Facebook Marketing Partner and Bing Ads Accredited.
Working with a PPC agency offers several benefits, such as minimal personal investment of time and effort in actually managing your PPC account.
Agencies can also boast many years of experience in PPC account management, making them trustworthy partners who can offer expert advice and guidance.
So, how much does it cost to hire a PPC agency?
Agency pricing can be wildly different, depending on whether they provide full service PPC management or an automated service.
The rough costs can be around 10% – 20%, but they can come in the form of a flat rate, hourly billing or performance-based fees (percentage of ad spend or percentage of revenue).
Some agencies also work with a minimum fee in addition to the percentage of ad spend. For instance, if you have a $1,000 budget per month, you might have an agency that has a 10% fee but also a minimum threshold of $600 per month. In this case, you’ll be paying the $600 rate and not the 10% of ad spend.
Adfix Pro Tip: Trust me, hiring a PPC specialist or an agency is one of the most important marketing investments you’ll ever make.
Take a look at my article detailing everything you need to look for in the right PPC team for your needs. If you’re ready to take your business to the next level with strategic Google Ads, schedule your free consultation with me so we can get to work.
Can’t I run my own PPC campaign?
Of course you can. The beauty of PPC marketing is that the platforms are open to any person. They’ll take anyone’s money.
That said, PPC marketing has a steep learning curve. It takes years to learn how to tweak ads, creative elements, and bidding to find that sweet spot where traffic explodes and visitors buy.
Strong tracking and analysis require technical expertise. Your time can be better spent running your business than poring over spreadsheets.
All in all, although the specific costs of Google Ads vary, I ensure you that they’re an excellent way to boost your brand awareness, generate more traffic to your website, increase your sales, and get a good return on investment for your business.
Although it can take some time to figure it out completely, with the right PPC management that can effectively boost your traffic and conversion rates, Google Ads campaigns can make a massive difference for your ecommerce business.
If you’re serious about investing in this channel, you will want to have a strategy that’s repeatable, scalable, and manageable.
However, to strategically follow the metrics and use them to improve your campaigns over time, I strongly encourage you to hire a dedicated PPC team that can systematically optimize and adjust your campaigns to help you attain a solid ROI.
If you want to study Google advertising even more, I warmly recommend that you read my guide on how Google Ads compares to Google Shopping campaigns, but also my breakdown of how Google Shopping compares to Facebook and Instagram ads.
So, do you have any more questions I didn’t cover? Send me a message and I’ll be happy to help you accelerate your business.