How much does Google Ads cost?

Advertising on Google is one of the most effective ways to reach potential customers in a targeted manner, but you might be wondering how much Google Ads actually cost.  

Search engine advertising (SEA) prices vary widely and depend on several factors. There are multiple factors that influence the cost, including the competitiveness and quality of your ads. 

In this article, we’ll go through how Google Ads costs are calculated, what factors determine the price per click (PPC),  and how you can optimise your budget. We’ll also show you common mistakes that cause unnecessary costs and give you valuable tips to get the most out of your SEA strategy. 

With the right approach, you can efficiently manage your ad spend and maximise the reach of your campaigns without breaking the bank.

What is the cost of Google Ads?  

The cost of Google Ads depends on several factors. A key one is your bidding strategy, which is the amount you’re willing to pay for each click, impression, or conversion. Other factors include the competitiveness of your specific industry and the quality of your ads. Let’s break it down! 

Bidding strategies: how you’re charged by Google Ads  

Google Ads offers different pricing models: 

• CPC (cost per click): You only pay when someone clicks on your ad. Ideal for targeted traffic to your website.  
• CPM (cost per thousand impressions): You pay per 1000 impressions, i.e. sightings of your ad, regardless of clicks. This model is especially useful for branding campaigns.  
• CPA (cost per action): You only pay when a desired action (such as a purchase or sign-up) occurs. This strategy is suitable for campaigns that target conversions. 

Factors that determine costs 

Choosing the right search terms is crucial. High-quality, frequently searched keywords are more expensive, while specific or niche keywords can be more cost-effective.  

If you want to dive deeper into keywords, we can recommend our comprehensive article on keyword research.  

Keyword competition also plays a role. The more companies bid for the same keyword, the higher the price rises. Industries with strong competition, such as finance or healthcare, often have higher costs.  

Google evaluates ad quality according to keyword relevance, click-through rate (CTR), and the overall user experience on your site. Google looks at the landing page where customers land to assess whether the website is useful and fast.  

These factors make up the Quality Score. Higher quality scores lower your cost per click, as Google prefers to display relevant ads.  

Examples:

• Poorly optimised ad: A generic keyword like “buy hosting” without a clear landing page has low relevance and costs more. 
• Well-optimised ad: A targeted keyword like “buy hosting for WordPress with 200 GB of SSD storage and backups” is more relevant and gives a better Quality Score, which can reduce costs.  

Market competitiveness 

Prices fluctuate greatly depending on the industry and demand. As mentioned earlier, when many companies bid for a specific keyword, the price increases. 

Examples:

• Insurance and finance: High competition, as many providers are trying to attract customers (keywords like “get car insurance” can cost over €10 per click). 
• Ecommerce and fashion: Medium competition, depending on the product and brand (keywords like “buy sneakers” are often between €0.50 and €2 per click). 
• Local services: Often lower competition but dependent on location (e.g. “dentist in Manchester” can range from £1.50 to £4 per click). 

Ad positioning and auction system 

Google Ad campaigns work through an auction system, which means that ads with a higher bid and better quality will appear higher up.  

A better ranking also means higher visibility, but that often also means higher costs per click. 

Examples:

• Number 1 in the search results: Highest costs, but maximum visibility. 
• Places 2–3: Good balance between costs and click-through rate. 
• 4th place or lower: Lower costs, but fewer clicks. 

As you can see, click prices vary greatly depending on the industry, keyword optimisation, and ad placement. A clever strategy with high-quality ads, relevant keywords, and optimised landing pages can significantly reduce your costs and increase the success of your campaign. 

How to optimise your budget for Google Ads  

Google Ads can quickly become expensive if campaigns aren’t managed efficiently. However, with the right strategies, the budget can be used in a targeted manner to achieve greater reach and better results. 

Effective keyword strategies for better results  

Choosing the right keywords will largely determine the performance of your ads:  

• Targeted keyword research: Tools like Google Keyword Planner can help you find relevant and cost-effective keywords. You can also use paid tools such as Semrush or Ahrefs.  
• Use long-tail keywords: More specific keywords like “best website builder with AI onboarding” are cheaper and convert better than generic terms like “build a website.”  
• Use negative keywords: Prevent unnecessary clicks by excluding terms that don’t fit the target audience (e.g., “free” in a sales ad). For example, an online shop for sportswear might use “buy running shoes online” as the main keyword but exclude “used running shoes” as a negative keyword. 

Use smart bidding and automation for better results 

Google Ads offers several smart bidding strategies to help you get the most out of your budget:  

• Use Smart Bidding: Automatic bidding strategies such as “Target CPA” (Cost per Action) or “Maximise Conversion Values” will help you adjust costs efficiently.  
• Use AI-powered automation: Google analyses user behaviour and adjusts bids to drive more conversions.  
• Run A/B tests: Regular testing with different ad formats and copy will help you figure out which ads are more efficient. 

Smart Bidding example:

An ecommerce store sets Smart Bidding to “target Return on Ad Spend”. This makes it so Google automatically adjusts bids and only prioritises clicks that result in a purchase.  

If the online shop spends £1,000 per month on Google Ads and sets a target ROAS of 400% (i.e. a factor of 4), then Google Ads optimises the campaign so that the shop generates at least £4,000 in revenue from these ads. If the ads underperform, Google will automatically adjust the bids to meet the target ROAS. 

Common errors that drive up Google Ads costs 

Google Ads can be very efficient, but only if campaigns are strategic. Common mistakes cause advertising budgets to be consumed faster than necessary without achieving the desired success. Here are three key areas of concern and how to avoid them: 

Reaching the wrong target group  

If ads are not played out in a targeted manner, they reach people who are not interested in your offer. The solution for this is to use detailed target group settings such as location, age, interests and buying behaviour to reduce the wasted budget. 

Example: A regional craft business should ensure that ads are only displayed to users from its city, not nationwide. 

Keyword strategy that is too broad 

General keywords attract a lot of clicks, but not necessarily from customers who are ready to buy. Therefore, make sure that your ads are targeted to the right users (age, interests, location) and avoid non-relevant audiences.  

Another solution is to use long-tail keywords because they are more specific and have a higher conversion rate. 

Example: Instead of choosing “sneakers” as a keyword, an online store could use “buy sneakers for marathon runners”. This is more targeted and cost-efficient. 

Landing pages that have not been optimised 

Visitors will bounce if a website loads slowly or is cluttered, even if the ad is good. The solution is to make sure that the landing page loads quickly, is mobile-friendly and responsive, and shows the most important information directly. 

Examples: A travel agency could create a landing page with clear offers, offer appointments through an online booking system,  and create trust-building customer reviews to drive visitors directly to an action.  

Make Google Ads work for you  

Google Ads offers you a powerful way to increase your reach and thus your traffic and address customers directly. Costs depend on various factors – but with an efficient strategy, they can be controlled in a targeted manner.  

By choosing the right keywords, smart bidding strategies and optimised ads, you can avoid unnecessary spending and get the maximum effect from your budget.