If you’re thinking about running Google Ads, you probably want to get an idea of how much it’s going to cost you.
In this article, I’ll show you what it costs to run Google Ads, show you the minimum budget you need, and give you some insights to evaluate whether Google ads are worth the investment.
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How Much Do Google Ads Cost?
Google Ads charges the advertiser for every click on their ads.
But there is no precise answer to the question: “How much do Google Ads cost?”.
That’s because the actual cost depends on several different factors. Some are fixed and you don’t have much control over them:
- Industry
- Competition
- Country
But other factors have to do with how you run your Google Ads campaigns:
- Campaign type
- Bid strategy
- Keyword quality score
First, let’s have a look at the impact of the campaign type on the cost of Google Ads.
Cost of Google Search Ads
Search Ads are the typical “text ads” that show up in the Google Search results and that are labeled with the “sponsored” tag.
A click on a Search Ads costs on average $2.69. But specifically for ecommerce, a click costs $1.16.
(To learn about the cost per click or Search Ads CPC in other industries, check our benchmarks.)
To put that in perspective, if your ecommerce site has a 0.5% conversion rate, it would cost you $232 to make a single sale.
That’s very expensive for most businesses, which makes this the most expensive campaign type in Google Ads.
Cost of Shopping Ads
Shopping Ads are the ads that feature a product in the Google Search results and that are labeled with the “sponsored” tag.
A click on a Shopping Ads costs on average $0.66.
(To learn about the Shopping Ads CPC for other verticals, check our benchmarks.)
To put that in perspective, if your ecommerce site has a 0.5% conversion rate, it would cost you $132 to make a single sale.
That’s still a lot, but already more affordable than Search Ads.
Cost of Display Ads
Display Ads are image ads that show on the Google Display Network, which is a collection of different websites, apps, or Gmail.
A click on a Display ad costs on average $0.63.
(To learn about the Display Ads CPC for other verticals, check our benchmarks.)
To put that in perspective, if your ecommerce site has a 0.5% conversion rate, it would cost you $126 to make a single sale.
It’s cheaper than Search and Shopping Ads, but still expensive. With the first two campaign types, you either get the click or you don’t.
It’s not worth much if someone sees your ad. With Display that’s a little different. The whole advertising world is built on people seeing ads but not taking action right away.
The hope is that each impression helps to build the brand and improve awareness, so customers might pick your brand over others when they need it.
Cost of YouTube Ads
YouTube ads show up in various places on the YouTube platform.
A click on a YouTube Ads costs on average $0.49.
To put that in perspective, if your ecommerce site has a 0.5% conversion rate, it would cost you $98 to make a single sale.
This is the cheapest of all of the different campaign types.
But even more so than Display Ads, YouTube Ads is a way to improve the awareness of your brand. So that $98 that you spent to make a single sale, might actually result in a few additional sales down the line.
Cost of Performance Max campaigns
Performance Max campaigns have gained a lot in popularity. So what does it cost to advertise your products using pMax?
That’s very hard to say and that’s because Performance Max is a mix of different campaign types. If you’re using pMax, your ads can show as Search, Shopping, Display, or YouTube Ads.
And since Google isn’t sharing the exact breakdown of which ad formats your ads are showing in, it’s hard to determine an average cost per click for Performance Max campaigns.
But if you want to get an estimate, it’s usually close to the average CPC of a Shopping Ad.
Cost of Demand Gen campaigns
Demand Gen is the newest campaign type inside of Google Ads.
Similar to Performance Max, they are a mix of different ad formats: Gmail, Discover, and YouTube.
And since Google isn’t sharing the exact breakdown of which ad formats your ads are showing in, it’s hard to determine an average cost per click for Demand Gen campaigns.
But if you want to get an estimate, it’s usually close to the average CPC of a Display ad.
Understanding Campaign Specifics: How to Plan Your Budget?
While there is no definitive “average” for Google Ad cost, as it depends on many factors, it’s still important for you to have an idea of how much companies from your industry spend on Google Ads on average. This type of data can help you set benchmarks for your business’s Google Ads spend.
Moreover, when planning your next Google Ads campaign, you should carefully consider all of the campaign types and their objectives, as each has a different purpose and caters to different profiles of audiences.
For example, with search campaigns, you can rest assured that you are targeting the people who are actively looking for what you’re offering.
These campaigns will often require higher budget allocation. They will also need to be more specific, as they’re catering to an audience that is already informed about your product or service.
On the other hand, with Display and YouTube Ads, you are interrupting people while they are doing something else, like watching videos or reading news.
In this case, you are paying for views or impressions. These campaigns are usually focused on brand awareness and have a lower price.
What is the Minimum Budget for Google Ads?
So how much money should you allocate to Google Ads?
If you’re new to Google Ads, your first job is to learn how Google Ads works.
That might sound strange because you want to start making sales as quickly as you can right?
But as I’ve shown you above, Google Ads is expensive. So you want to start small and figure out how much Google Ads can generate for your business.
During that period, I recommend a minimum of $10/day (or your local currency equivalent).
Then as you see results come in, or you become more confident, you can slowly ramp up the budget.
If you’re a new advertiser, you might qualify for a Google Ads coupon. It depends on how much credit you can get, but it usually requires you to spend $200, in order to get $200 in credit.
Is Google Ads Worth the Investment?
Now that you have a better grasp on what Google Ads costs, and what budget you need as a minimum, you need to decide: are Google ads worth paying for?
The simplest form of answer I can give is yes, if you do them the right way. If you pay a visit to my blog, you can read these five case studies and learn how some of the top ecommerce brands use Google Ads for their success.
If your unit economics are solid, and you don’t make any obvious mistakes, it should be possible to generate profit with Google Ads.
