How Much It Costs to Advertise on Google in 2023
Elizabeth Kraus has more than a decade of first-hand experience building and growing a boutique digital marketing agency and double that in small and mid-size business marketing management. She provides expert answers to marketing questions related to branding, content marketing, web development, email, social media, and SEO.
Hazel Emnace writes content for small businesses in the USA, Australia, South East Asia, and New Zealand, from engaging copy to marketing tips for business owners.
Google Ads cost averaged $2.96 per click in 2022. But there is no single answer as to how much it costs to advertise on Google because it varies based on your budget, keywords, industry, and quality score. However, you can set a budget for your ads so you only have to pay for actual results within that price. Keep reading to learn more about the factors that can impact your Google Ads costs and how to set a budget.
Monitoring and controlling Google Ads costs can be time-consuming and comes with a learning curve. Get expert help to improve your return on ad spend (ROAS) from WebFX, including data-driven insights and a dashboard to keep you in the know.
Average Google Ads Cost-per-click & Lead
WordStream’s Google Ads benchmarks report show that the average search advertising cost-per-click (CPC) across all industries was $2.96 in 2022. The average cost-per-lead (CPL), also known as cost-per-action or cost-per-conversion, was $40.74, going up by 19% from 2021.
The average cost for Google Ads increased as the platform became more competitive each year. Yielding an average return on investment (ROI) of $2 for every $1 spent, more advertisers flocked to pay-per-click (PPC) advertising. The cost-per-click in all industries averaged at $2 to $4.
Key average figures for cost-per-click, per-lead, and expected Google Ads monthly cost are:
- Cost-per-click (CPC): $2.96
- Cost-per-lead (CPL): $40.74
- Monthly expected ad spend: $9,000 to $30,000 per month
Keep in mind that the actual costs are different for each business, depending on its industry and several other factors discussed below. For example, an arts and entertainment company that advertises its services on Google search results sees an average CPC of $1.51. On the other hand, attorneys or law firms that use Google Ads have an average CPC that goes up to $8.67.
This significant difference in average cost can be attributed to the click-through rates of ads under these industries and the actual value placed on individual conversion. Industries such as legal services, dental services, and home improvement have lower click-through rates (CTR). At the same time, their services are generally more expensive. This leads to an increase in marketing costs.
Google Ads Cost by Industry in 2022
As mentioned above, the cost of Google Ads varies depending on the business and its industry. Businesses under arts and entertainment, travel, and real estate have the lowest average ad cost, led by real estate, with a $1.36 average CPC. The most expensive industry to advertise in is legal services, with an $8.67 CPC. To get a clearer picture of your potential Google Ads cost, refer to the benchmarks below.
Average Search Advertising CPC, CR & CPL by Industry
Industry | Avg. Click-through Rate (CTR) | Avg. Cost-per-click (CPC) | Avg. Conversion Rate (CR) | Avg. Cost-per-lead (CPL) |
|---|---|---|---|---|
Arts & Entertainment | 11.43% | $1.51 | 4.81% | $50.40 |
Animals & Pets | 7.08% | $2.86 | 15.45% | $17.46 |
Apparel / Fashion & Jewelry | 6.27% | $2.66 | 2.06% | $57.97 |
Attorneys & Legal Services | 4.24% | $8.67 | 9.33% | $83.10 |
Automotive - For Sale | 8.67% | $2.27 | 5.77% | $46.99 |
Automotive - Repair, Service & Parts | 5.65% | $3.13 | 12.74% | $18.73 |
Beauty & Personal Care | 5.92% | $3.10 | 6.88% | $40.04 |
Business Services | 5.17% | $4.85 | 5.31% | $73.70 |
Career & Employment | 5.93% | $3.94 | 4.58% | $81.45 |
Dentists & Dental Services | 5.03% | $7.10 | 13.33% | $50.91 |
Education & Instruction | 6.16% | $3.94 | 5.93% | $54.60 |
Finance & Insurance | 5.70% | $4.57 | 5.59% | $74.44 |
Furniture | 6.01% | $2.39 | 2.59% | $76.71 |
Health & Fitness | 6.15% | $4.01 | 9.21% | $45.04 |
Home & Home Improvement | 4.62% | $6.11 | 11.21% | $54.05 |
Industrial & Commercial | 5.61% | $4.18 | 7.78% | $49.90 |
Personal Services | 6.95% | $3.32 | 10.18% | $29.08 |
Physicians & Surgeons | 6.25% | $3.78 | 15.07% | $29.96 |
Real Estate | 8.55% | $1.36 | 3.52% | $44.70 |
Restaurants & Food | 7.60% | $1.84 | 5.54% | $26.58 |
Shopping, Collectibles & Gifts | 5.50% | $2.25 | 3.07% | $30.27 |
Sports & Recreation | 8.82% | $1.73 | 5.86% | $31.50 |
Travel | 9.19% | $1.63 | 5.19% | $46.01 |
(Source: WordStream)
Factors Affecting Google AdWords Cost
Google Ads work as an auction. Businesses place their maximum bids that help determine which rankings they get for their ads. However, unlike real auctions, the businesses that “win” the top rankings for their ads don’t necessarily have to have the highest bids. It is also common that you don’t pay the amount you set as your maximum bid. Here’s a breakdown of the factors that affect Google Ads cost-per-click:
Budget & Bids
Your budget and maximum cost-per-click bid (maximum CPC bid) are two key components you must fill out when running a Google Ads campaign. The budget is the average amount you are comfortable spending on a daily basis over a 30.4-day period (the average number of days per month). Meanwhile, your maximum bid is the most you are willing to pay for every click on your ad.
- Budget = Average amount willing to be spent
- Maximum CPC Bid = Maximum amount to be spent per ad click
Another term you will encounter is your spending limit—the maximum amount you will pay per month. The spending limit is twice the amount of your budget. This is because Google Ads needs the flexibility to adjust how much you bid depending on fluctuations in traffic. For example, on some days, you spend your maximum daily spend, but on most days, you spend less than expected.
- Daily Budget = (Google Ads Budget / 30.4) / 2
- Google Ads Budget = Maximum Daily Spend x 30.4
- Google Ads Budget = (Daily Budget x 2 ) x 30.4
If you want to figure out what you should set your daily budget to, you can work backward to get the exact amount to input for your campaign. For example, if you cannot pay more than $3,000 for your Google Ads campaign, input it as the “Google Ads Budget” variable in the above formula. This will give you the following equation:
- Daily Budget = ($3,000 / 30.4) / 2
- Daily Budget = $49.34
Google made bidding easier with their automated bidding tool. Select your bid strategy by selecting the type of ad interaction you want to focus on: conversions, conversion value, clicks, or impression share. Learn how to advertise on Google by following our step-by-step guide on how to set up and use Google Ads.
Keywords
How much does Google advertising cost is affected by keywords and their search intent. High-value keywords are more costly because they have high intent for purchase. These are usually keywords that include “buy,” “order,” or “near me.”
For example, the keyword “how to make coffee” is only asking for a specific piece of information, so there is no assurance that the searcher is looking to make a purchase. On the other hand, “coffee near me” is a keyword with a higher intent to purchase a product since the searcher is actively looking to make a transaction.
Quality Score
Quality score is Google’s rating of your business based on three factors: expected click-through rate, ad relevance, and landing page experience. Google values customer experience, so if it believes your ad will provide the best information for a specific search query, it will more likely win the bid for that keyword.
The lowest quality score is 1, while the highest is 10. You can find your Google Ads quality score by logging into your Google Ads account, selecting the campaign and ad group, and heading to the “Keywords” tab. Choose the icon in the “Status” column next to each keyword to show the numerical value of each Quality Score per keyword.
Ad Rank
Your ad rank is the quality score multiplied by your maximum bid. The ads with the highest ad ranks are the ones shown to web users after a search query. Because of this algorithm, small businesses with modest budgets can compete with larger companies by improving their quality score.
Ad Rank = Quality Score x Maximum Bid
(Source: VidenGlobe)
From the example below, the top two advertisers can secure the highest ad ranks because of their quality score. Notice that their maximum bids are much smaller than the business that ranks third. This puts the ad of Business 1 in the top position despite its lower bid.
Max Bid | Quality Score | Ad Rank | |
|---|---|---|---|
Business 1 | $2 | 10 | 20 |
Business 2 | $4 | 4 | 16 |
Business 3 | $7 | 1 | 7 |
Targeting
Targeting options can help reduce your Google Ad spend by limiting when and where you want your ads to appear. This is especially useful for aligning local business advertising with specific operating hours. For example, a coffee shop that opens early in the morning can opt to only bid during its business hours to make sure it reaches people who are already active (therefore more likely to visit) in the morning.
At the same time, geotargeting or location targeting can benefit local businesses since people who search near their area are their most likely customers. An alternative to Google Ads for gaining brand exposure with your target audience is advertising on social channels like Facebook and Instagram. Learn more in our guide to social media advertising.
Industry
As seen in the Average Google Ads Cost by Industry table, industry plays a vital role in determining your ad spend. Despite seeing a $2.96 average CPC across all industries, a lot of those industries pay less than the average CPC—notably Real Estate ($1.36) and Arts and Entertainment ($1.51), which costs more or less just half of the average CPC.
This variation in average cost-per-click can be attributed to the following factors:
- The value per conversion of products or services in that industry
- The length of time it takes for a customer to complete a transaction
- External circumstances and trends that affect specific industries
Focused on ranking high in local searches? Learn how to use Google Local Services Ads to put your brand on top of search pages when local customers are looking for a business like yours.
How to Calculate Your Expected Google Ads Cost
How much you pay for a given click on your ad is determined in real time by a formula. The formula takes into account the competition level of the keyword, your bid, your competitors’ bids, and your ad’s quality.
Once a user enters a search query, Google instantly performs an auction among companies with keywords relevant to the search. The businesses with the highest ad rank will then win a position of their ad on Google’s search results. The cost-per-click can be calculated by dividing the ad rank of the ad below yours by your quality score plus one cent.
CPC = Ad rank of person below you / your quality score + $0.01
(Source: VidenGlobe)
We can expand the previous example by adding the CPC column. Business 1’s actual CPC can be calculated by dividing Business 2’s ad rank by Business 1’s quality score. This can be expressed with the equation CPC = 16 / 10 + 0.01. Ultimately, Business 3 ends up with the highest CPC.
Max Bid | Quality Score | Ad Rank | CPC | |
|---|---|---|---|---|
Business 1 | $2 | 10 | 20 | $1.61 |
Business 2 | $4 | 4 | 16 | $1.76 |
Business 3 | $7 | 1 | 7 | Highest CPC |
How Much to Bid for Google Ads
The ideal bid varies depending on your campaign type and keywords. Essentially, it is deciding how much a click on your ad is worth to you. Google recommends starting with $1 as your maximum CPC bid if you don’t have an idea on what to put just yet. The best way to ensure that you get a good return on ad spend (ROAS) is to keep your maximum bid lower than the breakeven point.
- Max Bid < Breakeven CPC
The breakeven CPC is the point where your Google advertising costs are equal to the profit. It is equal to your conversion rate multiplied by the value of each conversion (the value of your product or service) divided by your target return on investment (ROI).
Breakeven CPC = (Average Conversion Rate x Value per Conversion) / Target ROI
(Source: Optimization Up)
Setting the max bid to any value higher than the breakeven CPC may lead to more conversions. Still, the ad spend will outweigh the profit—leading to a loss. On the other hand, lowering the max bid too much may significantly affect your ad ranking and lead to no conversions at all.
How Much Does It Cost to Advertise on Google for Small Businesses
Google ads for small business advertising vary depending on industry and keywords. WordStream reported that small businesses under the real estate, home services, and healthcare industries spend an average of $1,000 to $3,000 per month on Google Ads. Among the three, healthcare has the lowest average cost range, starting at $500 a month.
Other factors can impact how much it costs to advertise on Google besides your campaigns. For example, outsourcing to a digital marketing agency can cost from a few hundred dollars into the thousands. Also, using PPC software like Semrush to access Google Ads history and performance (for you and your competitors) as well as keyword research, average CPC, and keyword difficulty, starts at around $100 to $120.
WebFX (our top pick for best digital marketing agency for small businesses) notes that the average cost to advertise on Google small to medium businesses starts at $9,000 per month. However, they also say that small businesses pay about $1 to $2 per click on average, and their managed PPC services can be used for ad budgets as low as $100. Get a free consultation to learn more.
Frequently Asked Questions
How can I advertise on Google for free?
You can advertise on Google for free by creating a Google Business Profile (GBP). This allows you to generate customer reviews that boost your business’ profile and brand reputation when it’s seen in online search results—without spending a dime on paid ads. In addition, you can also optimize your Google Maps listing and add your products to Google Shopping for free.
Is advertising on Google expensive?
Advertising on Google can be expensive if your keywords or industry is highly competitive (e.g., law or attorney services, dental services, and home improvement industries). However, advertisers can fully control the cost of Google Ads through budget limits. Advertising on Google is also more expensive than other options, like Facebook—learn more in our Facebook Ads vs Google Ads comparison.
Is advertising on Google worth it?
The average return on ad spend (ROAS) for Google Ads is $2 for every $1 spent, but it could be as high as $8 for every $1 spent if your campaign is optimized and managed correctly. One way to see if Google Ads is worth it is by tying ad spend to measurable goals, such as increasing web traffic, lead generation, and sales within a specific time period. Learn more about how to advertise on Google effectively.
Bottom Line
The sheer number of people who search on Google makes Google Ads a great opportunity for businesses to generate more conversions. How much Google Ads will cost depends on factors such as keywords, industry, quality score, ad rank, and targeting. However, how much you will actually spend on Google Ads is ultimately up to you, and easily controlled.
If you need help determining your budget and planning your Google Ads campaign, tap into the expertise available to you at WebFX. WebFX is a Google Premier Partner whose PPC management services drive growth and results for businesses of all sizes with Google Ads. See what they have to offer today with a free, no-obligation consultation.
