Google Advertising Costs: Your Google Ads Pricing Guide for 2021
Google themselves estimate an average Return on Investment (ROI) of 8x over their platform, including paid and organic search.
That means for every R 1 spent on the platform, on average people earn R 8 of gross revenue in return.
This includes paid and organic search, but paid alone sees a 2x ROI on average alone!
With such an incredible rate of returns, it’s no wonder that Google owns 73% of the paid search market.
Take that figure as a vote of confidence from the market at large, because it means that almost every business has something to gain by running Google ads.
When it comes to the question of “How much will running Google ads cost me?”, there’s only one completely honest answer and that is “It depends”.
There are a variety of factors and variables which can influence the cost of your Google ads.
We’ll outline those below, as well as giving you some rough benchmarks so you can approximate how much it might cost.
Be aware, however, that these figures are benchmarks taken from averages and so it’s highly unlikely they’ll be 100% accurate to your own experience with the platform.
We’re giving you these numbers as a reference point only.
In general, the best comparison point for your business is your business yesterday.
Compare your performance to what you’ve done in the past, and don’t worry about what other businesses are doing.
If you have a solid strategy, it won’t matter in the long-term. Focus on improving your own performance.
Benchmarks for How Much Google Ads Costs
As we mentioned above, these numbers should be taken as a rough benchmark rather than a definite figure.
Costs on Google ads can vary dramatically, for reasons we’ll explore later.
For now, just take these figures with a grain of salt when comparing them to your own current or future ad spend.
Google Ads CPC (Costs Per Click) Benchmarks:
It’s worth pointing out here that there are two subsections of Google ads: the Google Search Network and the Google Display Network.
The Google Search Network is where we bid to place our ads on the Google SERP (Search Engine Results Page).
The Google Display Network, by contrast, is where we can bid to show display ads on various sites across the internet that form part of the Google Display Network.
In general, the Google Search Network is always more expensive but more likely to create conversions because it lets us target long-tail keyphrases to capture people near the end of the conversion funnel.
Display ads are kind of a “shot in the dark” by comparison, where we can only broadly choose which sites the ads are displayed on.
The following figures are mostly from a 2018 study by Wordstream, which we chose because it’s consistent with our own experience running Google Ads.
We’ve taken the liberty of rounding them up in the conversion to Rands for your convenience:
Average Across Industries:
Google Search Network (GSN): R 15 (1 $) to R 30 ($ 2) per click
Google Display Network (GDN): Less than R 15 (1 $) per click
This figure is the overall average CPC across all industries, according to an article by WebFx.
GSN: R 38 per click ($2.46)
GDN: R 9 per click ($0.58)
GSN: R 51 per click ($3.33)
GDN: R 12 per click ($0.79)
Consumer Services Industry:
GSN: R 98 per click ($6.40)
GDN: R 12 per click ($0.81)
GSN: R 18 per click ($1.16)
GDN: R 7 per click ($0.45)
GSN: R 73 per click ($2.40)
GDN: R 7 per click ($0.47)
Employment Services Industry:
GSN: R 31 per click ($2.04)
GDN: R 12 per click ($0.78)
Finance & Insurance Industry:
GSN: R 53 per click ($3.44)
GDN: R 13 per click ($0.86)
Health & Medical Industry:
GSN: R 40 per click ($2.62)
GDN: R 10 per click ($0.63)
Home Goods Industry:
GSN: R 45 per click ($2.94)
GDN: R 9 per click ($0.60)
Industrial Services Industry:
GSN: R 9 per click ($2.56)
GDN: R 8 per click ($0.54)
GSN: R 103 per click ($6.75)
GDN: R 11 per click ($0.72)
Real Estate Industry:
GSN: R 36 per click ($2.37)
GDN: R 11 per click ($0.75)
GSN: R 58 per click ($3.80)
GDN: R 8 per click ($0.51)
Travel & Hospitality Industry:
GSN: R 24 per click ($1.53)
GDN: R 7 per click ($0.44)
How Are Google Ads Charged?
Google ads are charged on a Cost Per Click (CPC) basis, using a bidding model along with several other variables to determine how much you’re charged.
Just like social media advertising costs, the cost of Google ads is worked out using a bidding system.
You’re actually charged on a CPC (Cost Per Click) basis, so you bid on how much you’re willing to pay for each click.
As we mentioned above, your CPC will vary wildly depending on many different variables.
Note we’re going to be mostly covering the Google Search Network here, as it’s usually the more competitive option.
The main variables you want to consider are:
1. The Amount of Competition
Firstly, because they use a bidding system to determine costs a very important consideration is how much competition we’re up against.
More competition means higher costs, like with any auction.
You’ll face more competition in industries with higher margins, where businesses can afford to pay more per acquisition.
This can be a problem for new businesses in large industries, as you may be bidding against a big corporate company with many times your advertising budget to spend.
E.g. companies in financial industries often struggle with this.
You’ll also face more competition in certain industries, usually those which tend to perform well online or have an established online consumer base.
E.g. The fashion and clothing industry is a prime example of this because there are so many brands competing in the space.
Finding success on Google Ads is largely a question of balancing the amount of competition you’re directly up against, with the rate of returns you’re able to get from your audiences.
There is some limited functionality to target groups of consumers using demographic data, but the main way of managing your competition is through your choice of keywords.
2. Keyword Choice
Keyword choice is one of the biggest things we can influence to change the amount of competition we’re up against.
Say you’re a car dealership looking to sell cars online.
Going for broad, generic, keywords like “Cars” is always going to be more expensive.
This is because more companies will fall under the category of these keywords. You might be up against companies selling “cars”, “insurance for cars” or “car accessories.”
This obviously isn’t ideal, so we want to avoid using broad keywords like this as much as possible unless you’re going for a brand-awareness focused campaign with less focus on creating direct sales.
High purchase intent keywords will also always have a lot of competition because they’re the most likely to result in sales.
What do we mean by purchase intent?
Simply put, think of where consumers are in the purchase funnel using the different keywords you’re targeting.
Someone searching for “best types of cars” is much higher up than somebody searching for a “Nissan hatchback”.
So rather than going for a broad key phrase like “Buy cars Johannesburg”, a car dealership would be better off targeting a specific, higher intent, keyphrase like “2015 Nissan hatchback Johannesburg”.
3. How Much You’re Willing to Bid
Your bid on the Google ad auctions can be a huge variable in how much it costs overall.
Firstly, and most obviously, if you’re bidding more per click then you’re going to be paying more overall for the ad campaign.
This isn’t quite as straightforward as it sounds, however, when you consider the competition.
When bidding on Google ads, you can also bid on the position your ad is shown on the SERP for the Google Search Network.
Sometimes, bidding more on high-value keywords or keyphrases can bring overall costs down by dramatically improving conversion rates.
Consumers are, in many cases, much more likely to click on the first result they see on any SERP.
Bidding slightly more than your competitors can be more cost-effective overall because you waste less ad spend on lost conversions.
4. Campaign Quality and Relevance
Last, but far from least, the overall quality of your ad campaign is actually a huge factor in how much your Google ads will cost you.
Google directly incentivises you to run high-quality ads, by prioritising them in the SERP rankings.
They give each ad an “ad rank” score behind the scenes, composed of your bid multiplied by a “quality score”.
This means you can directly rank higher, whilst paying less, by having higher quality ads than your competitors.
How to Reduce CPC in Google Ads
1. Reducing CPC from Competition
The best way to combat high levels of competition is to consider, which niche or under-served need does your business fulfil?
For instance, there are millions of companies in the world selling cars.
What are you doing differently, that would make a consumer choose you?
Perhaps, you have the first purely electric car dealership in South Africa.
This can inform our Google Ads strategy, by telling us not to focus on bidding for broad terms like “cars”, because those aren’t our ideal customers.
Instead, we want to run ads on key phrases like “electric cars south africa”, or “electric car service specialist south africa”.
These will be both cheaper to run, and more profitable for us.
This is a good foundation for a long-tail keyword strategy, which we’ll explore in the next section.
2. Bringing Down CPC Using Keywords
Running into some amount of keyword competition on Google ads is more or less inevitable unless you’re creating a brand new industry or product category.
How do we work around this, then, and still maintain a good ROI?
There are two main ways we’ve found to optimise your strategy by reducing competition.
Firstly, it’s almost always easier to compete using branded keywords.
Creating a strong brand, for instance, using social media marketing, allows us to bid directly on our brand name.
This is great for two reasons: firstly there’s usually less competition on your specific brand name and secondly, these searches are more likely to be high-intent consumers looking to buy from (or research) your brand.
This relies heavily on other marketing strategies if you don’t have established brands to work with, and it can require a hefty upfront investment.
The other downside is that you’ll start to find competitors will bid on your branded keywords once they start to gain traction.
This is, however, also another great strategy when you’re just starting.
If you can find a big-name direct competitor which doesn’t have a lot of competition on its name, you can advertise yourself as an alternative to their services right on the results page.
The second way we’ve found is making the most out of long-tail keyword searches.
What is a long-tail search?
Well as we mentioned previously, more specific keywords can typically be cheaper than broader ones.
Also, we know that high purchase intent keywords will sometimes be more expensive, too.
What we want to do is find long-tail keywords with high purchase intent and low competition that our competitors aren’t “on to” yet.
This lets us bring down our CPC costs because of the lower competition, and boost conversion rates at the same time by targeting these high intent phrases.
Finding these phrases can be difficult, but we may cover keyword research in more detail at a future date.
3. Bringing Down CPC Using Bidding Strategies
As we mentioned previously, it can often paradoxically be worth it to up your bid amounts to lower costs.
However, the obvious solution of lowering your bid amounts to bring down costs can also work.
There are two main situations where this is a good idea.
Firstly, if you’ve invested heavily into creating high-quality ads that you’re confident blow your competition out of the water.
When you have a high “quality score” like this, you can afford to lower your bid and still rank among the top ads on the search results because Google will still prioritise your ads.
Secondly, it isn’t always that imperative to be number one in the search results.
In some cases, we’ve found our clients can get just as many clicks in a lower position, but for a cheaper cost.
In these cases, it is worth experimenting with lowering your bid to see how much it impacts your rankings.
You obviously don’t want to lower it so much that you’re no longer being shown to customers for your desired keywords, but you can sometimes get away with lowering it a bit and taking a lower position on purpose.
4. Using High-Quality Campaigns to Bring Down CPC
As we mentioned above, Google incentivises high-quality ads by boosting them above others in the search rankings.
We’ll now go over how you can use this to bring down your costs.
The three main aspects of your campaign that can influence the quality score are ad quality, ad relevance and landing pages.
Ad quality is simply how effective your ad is in getting the attention of users.
It consists of any copy, images or other supporting elements designed to grab people’s attention and make them want to engage with your ads.
Having some great, high quality, ads is one of the best ways to boost your conversion rates and indirectly bring down costs.
Creating great ads is mostly a question of experience and knowing your target market, so many businesses choose to hire agencies to streamline the process.
Ad relevance, on the other hand, refers to how relevant the ads you put together are to the people seeing them.
This incentivises us to use all the targeting features Google has available, as well as using long-tail searches to further refine who we’re reaching.
This is also largely a question of experience and experimentation.
Over time you get a better idea of who your ideal customer really is, and with experience, you get better at finding relevant long-tail keywords which they’re searching.
This is another area agencies can come in handy because they likely already have a lot of experience running Google Ads and as a result have a history of learnings to work from.
Lastly, an often overlooked aspect is your landing page.
This doesn’t factor into the Google quality score as heavily, but it’s nonetheless vital that you optimise your landing pages for conversions.
Once you’ve done all the work of getting your ideal customer to click on a paid Google ad, the last thing you want is to lose them here.
Make sure your landing page is consistent with the message your ads are putting out and is optimised for making converting as easy as possible.
Advanced Tips for Reducing CPC in Google Ads
1. Consider Branching Out
Google is certainly the biggest search engine out there, but it isn’t the only one.
As we covered in a previous article, smaller platforms such as Bing can be worth considering for certain businesses because the lower competition means lower CPCs.
They also allow you to reach different groups of consumers that may not use Google, and which your competition may not be using.
If you’re struggling to make headway into Google Ads, or simply looking for cost-effective ways to expand your marketing, they’re definitely worth looking into.
2. You Don’t Always Need to Be Number One
As we mentioned previously, you definitely want to be amongst the top ads chosen for your desired keywords but you don’t always need to be number one.
Certain businesses and industries can get away with being in the second, third or fourth position, especially when you have a very compelling offer compared to your closest competitors.
If your margins are particularly tight, it may be worth considering at least.
Lower your bid costs and see if your conversion rate dips dramatically, if not it may be a worthwhile strategy to pursue.
This works particularly well in combination with investing heavily in your ad quality.
If you have a high ad quality score, you can afford to put this even lower and still rank amongst the top results even if you’re not at the top.
3. Use Negative Keywords
A great way to further refining our long-tail or regular keywords is by using negative keywords.
What are they?
Well, just like we can target specific keywords, we can also ask Google to exclude keywords or phrases from the list of searches our ads are shown on.
This lets us eliminate irrelevant queries, or those with low buying intent, and further refine our strategy.
For instance, if you’re selling cars but not car accessories, it might be worth excluding all mentions of the word “accessories” from the terms you’re bidding on.
4. Use Google’s Toolbox
Keywords and key phrases are important and don’t underestimate that, but we should also take advantage of the other tools Google ads provide us with.
The two big features we want to highlight are the advanced targeting tools and ad scheduling.
Advanced targeting is primarily useful for letting us narrow down searches geographically and by the device.
Geographic targeting can be very useful if your business only operates in a certain area, to eliminate wasted leads or sales prospects you can’t actually service.
Device targeting can be very useful for a variety of industries, for instance, if you’re selling phone accessories you can target only mobile users.
Scheduling is an advanced tool which can be very useful if you notice a dip in conversions at certain times of day or days of the week.
You can schedule your ads around these, and as a result, bring down average CPC.
It’s worth experimenting, at the very least, with many of these features to see if they can help you get an edge over the competition.
5. “Theme” Your Ad Groups
Lastly, an advanced strategy worth considering for many businesses, especially those with a diverse range of products, is “theming” your ad groups.
Ensuring all your ads in a particular group speak to the same message, and products is a good way to boost your relevancy score (assuming your targeting is right).
Since Google is run by a machine algorithm, it can often be challenging for them to determine exactly what each ad (or ad set) is selling.
If the ads are all themed, it’s easier for Google to determine what your product or service is about and recommend it to the people it is most relevant to.
For instance, if you have an ad group that contains ads for car sound systems and bicycle pumps, it can be confusing for the Google algorithm.
Rather separate them into two ad groups, one for car accessories and one for bicycle accessories, and it’ll have an easier time (and reward you with a higher relevancy score).
We hope this helped you benchmark how much your Google Ads will cost you going into 2021.
Ultimately it’s a very fluid process, and your costs will vary drastically over time, which is why it’s important to constantly be managing your ads to maximise performance.
We also hope the advice on how to bring down these costs could help you.
Ultimately, it’s all about experimentation and finding out what works.
We’re obviously biased here, but this is where having a good digital agency can come in handy.
They’ve already done most of the experimentation and learning for you, and it frees up time that you can spend elsewhere.
We’ve not included the cost of hiring someone to handle your digital marketing, but we’ve previously written guides comparing your cost options for digital marketing services and a guide on the cost of hiring digital marketing agencies, which you can check out for details on that.
If you enjoyed this article or found it helpful, check out more e-commerce marketing content on the inSyte blog or listen to the inSyte Podcast.
This article was brought to you by Syte.
We’re a specialist e-commerce digital marketing agency dedicated to driving up your bottom line.
If you need any help running your business’ Google Ads effectively, feel free to reach out with the form below or check out our case studies page to see what we’ve been able to do for our clients.