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Google Ads is the world’s biggest online advertising system, but how much does it cost for your typical business? With Average CPCs ranging between £1.22 and £7.27 and monthly ad spends anywhere between £800 and £25,000, it’s a difficult question to answer with specific figures. In this article, we explore the full costs of advertising on Google Ads and – more importantly – how you can maximise profits.
The first expense most advertisers look at is the average cost per click (CPC) of a platform. Although CPCs vary wildly across different industries, audiences, keywords and other factors, they provide a quick and easy price comparison for different advertising platforms.
In its latest Google Ads Benchmarks report (2023), WordStream analyses over 17 thousand US-based campaigns. The report finds that – across all industries – the average CPC is £3.33 (converted from $4.22).
Now, this is significantly higher than the figures you’ll find from most online sources. A quick search will return all kinds of results citing average CPCs around the £1.00-£1.50 region. The problem is, most of these sources either cite out-of-date reports (in many cases, older WordStream data) or insights from much smaller surveys.
For example, WebFX asked 350 marketers how much they spend on Google Ads and a 36.73% majority reported average CPCs between £0.08-£0.40 on the Search Network.
Only 3.06% of respondents selected CPCs between $3.01-$5.00, which would include the £3.33 average WordStream’s survey produces. A smaller sample size doesn’t invalidate WebFX’s insights, but the disparity between these results teaches an important lesson.
Don’t expect to get reliable CPC predictions from third-party data. You’ll get a more accurate picture by speaking to agencies that work with similar companies (industry, target keywords, budgets, etc.).
Ultimately, the only way to find out how much Google Ads will cost you is to run and optimise campaigns – and, even then, your monthly spend will fluctuate.
Average CPCs vary significantly across industries, largely due to the competitiveness of relevant keywords. Again, don’t take these figures too seriously, but adapt your expectations based on the industry you’re operating in.
If we use WordStream’s 2023 Google Ads Benchmarks report as a reference, the average CPC across all industries is £3.33. However, you’ll see this average is propped up by some highly competitive (and expensive) niches.
As you can see, advertisers in the legal industry are looking at the highest average CPCs of £7.27 (converted from $9.21). At the opposite end of the spectrum, campaigns advertising arts and entertainment or real estate enjoy the lowest average CPCs of £1.22 (converted from $1.55).
Again, these are averages – so the most competitive keywords in each niche will be much more expensive. That being said, you’ll also have less competitive keyword opportunities and optimised campaigns will help reduce the overall expense of your Google Ads strategy.
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A separate study from WebFX asks 270 US-based marketers how much they spend on social advertising. Once again, the findings are presented in ranges (many starting from $0.00), which makes comparisons a little trickier.
As mentioned earlier, though, we can’t take specific numbers seriously with averages – especially from a sample size of 270 respondents. Even still, if we divide the ranges in half, we get the following for average costs per click (CPCs) and costs per 1000 impressions (CPMs):
In WebFX’s Google Ads cost survey, roughly 75% said their average CPC is under £0.75 with a 36.73% majority citing average CPCs of £0.08-£0.40.
Although we can’t take specific numbers too seriously, it’s fair to say most of the major social platforms provide more visibility for your money. You’ll generally get lower CPCs, too, but clicks can be harder to earn on platforms designed for scrolling and content consumption.
This brings us to the key point with Google Ads and PPC pricing, in general.
As part of the search experience, Google Ads helps you target users actively looking for things: products, services, hotel rooms, etc. You can’t really target this kind of commercial intent on social platforms so you have to consider the value of clicks from Google Ads vs social platforms. Yes, CPCs are generally higher on Google Ads, but the average conversion rates and conversion values should also be higher.
It’s important not to get too obsessed about how much you’re paying for individual clicks. The most important factor to consider is how much you’re getting in return. So what kind of ROI can you expect to get from advertising on Google Ads?
Well, Google ran the numbers in 2022 across global accounts and found that for every $1 a business spends on Google Ads, they generate an average of $8 in profit.
Global brands can spend significant figures on Google Ads campaigns but the great thing about PPC is that you can make it work on budgets of all sizes. In fact, the average small business spends anywhere between £800-£2,500 per month on Google Ads while the typical mid-sized company spends between £5,000-£25,000 per month (roughly converted from $USD).
Now, the trick to maximising profit from your Google Ads strategy is turning as many of those monthly clicks as possible into paying customers. A monthly spend of £12,000 at an average CPC of £3.33 should generate around 3,600 clicks. With a 7.04% conversion rate, you’d convert roughly 253 of those clicks every month. From this, your PPC revenue for the month will be 253 x whatever your average conversion value is.
So, while CPCs are an important consideration, the key factors here are how many clicks you convert into paying customers and how much profit you generate from each transaction.
Although we don’t want to focus too much on CPCs, the fact is that Google Ads CPCs are increasing – and so are average ad spends, as a result.
This means advertisers have to work a little harder to optimise campaigns. So how can you tame the cost of Google Ads and maximise profits?
The list goes on, but you’ll see very few of these tips mention lowering CPCs. This doesn’t mean CPCs aren’t important, but they’re one of many metrics that can help us optimise more profitable PPC campaigns – and profit is always the priority.
Find out more about our Google Ads services or if you’d like to speak to one of our PPC specialists, contact us on 02392 830281 or submit your details here.
James has led Vertical Leap’s PPC team since early 2012, and is responsible for ensuring the effective and efficient delivery that our customers relish. He has a wealth of experience, having managed PPC campaigns across all markets and platforms for more than 15 years, and manages a thriving team of experts. An ecommerce specialist, he loves the data driven nature of PPC. After achieving a BEng degree in Mechanical Engineering at university, he applied his strong problem-solving and mathematical skillset to paid advertising, where he can optimise and analyse the complexities of click and conversion data. James can very quickly identify and solve any hurdles surrounding a PPC campaign to ensure quick wins, successful results and ongoing ROI. James loves his motorbike, brewing, and camping in all weathers; but spends virtually all his weekends sailing his sea fishing boat around the Isle of Wight not managing to catch anything to feed his family.
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