Google Ads – How Much Does It Cost?

Google Ads – How Much Does It Cost?

From our today’s entry you will learn about the available payment methods, billing options, budget operations, auction processes and factors that influence the ad position. Moreover, we’ll also tell you how much are the agency fees.

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Today, we would like to focus on familiarizing you with available billing options, payment methods or the operation of budgets. The auction processes will be explained on a par with factors affecting ad position and we’ll also outline the issue of agency fees. Just to begin with, it’s essential to mention that using Google Ads platform is completely free. It means that you can not only create or configure an account but also go through available tools without being charged. However, without a minimum amount of data some of the tools such as attribution modeling, previewing, ad diagnostics or reports may turn out to be completely useless. In Google Ads you pay only when somebody clicks or displays your advert. Check out the available payment methods and elements affecting the fees.

Now you will learn everything you should know about Google Ads payments and billings.

Billing options available at Google Ads platform

CPC (cost per click) – this is a settlement model of Google Ads in which you’re charged for every single click on your ad. CPC enables setting the maximum cost-per-click for a specific keyword (in search network) or advert (in advertising network). Usually, the actual cost-per-click is lower than the maximum CPC set and it’s equal to the minimum cost required to outbid your competition on the market. Quality score, relevance of the ad or expected clickthrough rate are factors that influence the click cost. If you want to learn about individual elements that have an impact on the ad rank, keep reading the article.

CPM (cost per mille) – this is the cost per thousand ad impressions. If you want to pay every time your ad is displayed a thousand times, then setting a CPM rate is a great solution. This year, CPM was replaced by vCPM, meaning one thousand of viewable ad impressions. Consequently, you’ll be charged only if your advertisement was displayed in minimum 50% for at least one second. This strategy is available not only when it comes to ads targeting the search network and is particularly recommended for those who want to maximize their advertising reach.

CPV (cost per view) – this is the cost you pay for your video on YouTube being watched. When it comes to In-Stream ads, you’ll pay only if the user watches at least 30 seconds of the video or alternatively watches it to the end if it’s shorter. It’s important to mention that the fee is also charged when the user somehow interacts with the video.

eCPC – this is the enhanced cost per click settlement model. This rate setting methodology adjusts the maximum CPC in order to increase the number of conversions in your account. Depending on the possible chance of a conversion, clickthrough rates may be increased or decreased. This mechanism not only makes use of many signals accessible from the level of Google algorithms but also takes into account your campaign settings such as schedules, device settings or RLSA.

CPA (cost per action) – the cost of the action and conversion. This is an automatic rate setting methodology in which you determine the maximum cost you’re willing to spend to get more conversions. You must possess a suitable number of conversions if you want this strategy to work effectively, as in this case properly configured conversions aren’t enough. The better and more accurate the data, the more efficient the strategy. Although Google Ads recommends a minimum of 15 conversions in the last month, this value often turns out to be insufficient. In comparison to the Double Click platform, from the level of Google Ads you’ve limited ability to configure the rate and actually you’re capable of settling only the maximum CPA value. In order to get the expected CPA, this strategy optimizes your maximum CPC.

ROAS (return on ad spend) – this is a smart rate setting methodology working similarly to the CPA. In order to achieve a specified ROAS, the maximum cost-per-click is optimized beforehand. Likewise with CPA, you’re required to have at least 15 conversions in the last month and to achieve even better results, 50 conversions are recommended. You should keep in mind that the bigger the number of conversions, the more necessary data you get.

Each and every of the above rate setting methodologies is limited by the daily budget, meaning the maximum amount of money you can afford to spend on promotion per day. The new Google Ads policies introduced in 2017 give leading companies the possibility to increase their daily budget even by 100% if the advertising potential on a given day is noticeably higher. However, the maximum monthly budget should be 30,4 times maximum daily budget, where 30,4 represents the average number of days in a month.

Types of budgets in Google Ads

In Google Ads the basic strategy are daily budgets and they’re the declared maximum sum of money you’re willing to pay for the broadcast of your advertisement. You can change the daily budget as many times as you wish, Google also reserves the right to double your set maximum daily expenses. Nevertheless, the total monthly budget should equal the daily budget multiplied by an average number of days in a month – 30,4 (these are so called excessive impressions). When your daily budget runs out your ads are no longer displayed. In the campaign settings you can choose whether you prefer to have your ads evenly distributed or accelerated throughout the day.

You can set a total budget only for video campaigns. In such case you choose the date of start and end of the campaign and declare the maximum amount devoted to promotion. It’s worth mentioning that after you create such campaigns, the total budget can’t be changed again and the financial burden will equal the declared amount. Additionally, the budget is spread evenly over the entire duration of the campaign and there are no extra fees for surplus ads impressions.

Monitoring campaign budgets takes more time and is less automated with each subsequent change implemented by Google. What’s more, any errors in settings may be irreparable.

When it comes to billing options, the additional possibility you get is the ability to set a total budget for your account and after it’s exceeded, all your campaigns will be suspended.

You can also monitor the percentage of the budget used for any payments by properly adjusting columns from the MCC view.

Payment methods available in Google Ads

You must complete all billing and payment information if you want to have your ads properly displayed. Some forms of billings are unavailable to new advertisers. In Google Support you can find all terms and conditions of using available payment methods and you can choose among the following:

  1. AUTOMATIC PAYMENTS

The payment is charged automatically after the ad is displayed and you settle the payment at the end of the month or after the set limit is exceeded.

billing method - google ads
Source: google.com

The most interesting benefits of choosing this payment method include:

  • continuity in displaying ads – there are no breaks caused by late payments;
  • no need to remember about regular bank transfers;
  • no freezing of capital;
  • you can still use the manual payments.
  1. MANUAL PAYMENTS

Payments are charged before the ad is displayed and they’re settled manually by the advertiser. However, this function is inaccessible for new accounts in some countries. After exceeding the amount you’ve paid, the ads aren’t displayed anymore.

The most interesting benefits of choosing this payment method include:

  • lower risk of budget allocation in a short period of time (protection against possible errors in account administration).
  1. MONTHLY INVOICING (credit line)

Some advertisers can get a credit line from Google and in this case they must pay within the time limit set by Google. The basic requirement you have to meet to be eligible for this strategy is spending a minimum of USD 5,000 a month (this can vary by country) for any 3 of the last 12 months. To apply for monthly invoicing you have to be registered as a business for a minimum of one year.

Available payment methods include bank payment and credit or debit card.

  1. GOOGLE AD GRANTS

The Google Ad Grants program provides free Google Ads to select charitable organizations. A foundation that meets the requirements of Ad Grants can get up to USD 10,000 per month for extending their public service messages to make a greater impact on the world. However, promotional activities have restrictions among which the most important are:

  • promotional activities can’t be conducted on a content or display network and all campaigns must be keyword-targeted;
  • the maximum CPC is USD 2;
  • the maximum monthly budget is USD 10,000 (up to 40,000 USD for the participants of Grantspro program);
  • the maximum daily expenses can’t exceed USD 329;
  • adverts and keywords should be connected to the objectives of the organization.

Should you need any additional information about Google Ad Grants, don’t hesitate to contact us.

  1. INVALID CLICKS

The Google algorithm monitors the clicks that may have been invalid, perhaps they were even acts of unfair competition. You get a refund after they’re taken into account. If you happen to find invalid ad clicks based on logs or any other sources, you can always report it to Google which usually positively deals with such requests.

  1. GOOGLE ADS INVOICE

Invoices are generated up to 5 days at the beginning of each month. For countries within European Union, invoices are issued by Google Ireland Ltd, based in Ireland. So what does it mean for an entrepreneur from UE? The invoice doesn’t include VAT and should be accounted as an import of services.

Adjusting Google Ads bid

Google Ads is one of the leading services accessible on the PPC advertising market and the only one within the search advertising (without including the DoubleClick platform). In order to be more efficient and successfully accomplish business objectives, you can manually adjust bid for: devices and recipients (depending on geographical or demographic data), the type of a device as well as the system and schedule. Work on account optimization includes all activities preceded by a previous data analysis. Smart bid strategies which are currently being developed also use this data in the process of optimizing CPC.

What affects ad position?

If until now you thought that only the maximum amount you’re able to spend on promotion influences the ad position, then we have bad news for you. Although you take part in the auction, Google puts special emphasis on the quality of your ads and landing pages. Therefore, the position on which your advert is displayed for a particular query depends mainly on the quality score, the actual maximum CPC calculated as the product of the max cost-per-click and adjusted rates, the landing page quality and the influence of ad extensions. Sounds like Greek for you? Don’t worry, in simple words, it means that even at a lower CPC, your ad can be displayed higher than the one of your competition.

The Google Ads system can be compared to an auction in which the maximum amount you’re willing to pay is as important as the quality of the ad or landing page.

What affects position of ga?

As specialists, our aim is to ensure that our partners’ ads are displayed as high as possible while maintaining the lowest CPC compared to the competition on the market. Continuous optimization of the quality score is an essential element of working on a Google Ads account.

How much should I spend on Google Ads per month?

The question about advisable sum of money which should be spent on Google Ads campaigns is most frequently asked by companies that either just started their adventure with search engine marketing or by those who want to implement completely new activities like promotion channels or expansion into foreign markets. To be able to determine your advertising budget, first you must answer a question whether your goal are high sales or building up your business image. The next question concerns promotion channels which you’re about to use and which are available in Google Ads. Below you can find table which may be particularly useful in choosing and adjusting your budget.

SearchGDNRemarketingPLASum up
Clothes store (small)USD 1-2kUSD 900-1,200USD 900-1,200USD 1-2kUSD 3,800-6,400
Clothes store (medium)USD 2-6kUSD 1-2kUSD 1-3kUSD 5-15kUSD 9-26k
sport store (small)USD 1-3kUSD 300-600USD 600-1,200USD 1-2kUSD 2,900 – 6,800
Sport store (medium)USD 2-5kUSD 900-1,200kUSD 1-2kUSD 4-8kUSD 7900-16,200

In most cases the customers are responsible for putting credit on the Ads account, but sometimes the agency may make the payment for them.

The data essential to prepare the above tables was prepared based on Google tools which have the information about the number of searched phrases or the actual costs of clicks. Google Keyword Planner is a basic tool which together with forecasts indicates the potential of the campaign and enables predicting monthly costs. Another useful tool that supports budget planning is Google Trends showing interest in given phrases over a certain period of time.

The basic criterion concerning budget planning for an online store would be CPA, meaning cost per action, and CPM (or CPV when it comes to promotion on YouTube), which is the cost of reaching a thousand of recipients, for companies building up their brand.

In the first stages of promotion the budget should be slightly lower so that you have the opportunity to test channels and optimize the campaigns before you start spending more money. If you have any doubts or problems with estimating the budget essential to run a Google Ads campaign, please contact us – we’ll be happy to help you with preparing the forecasts.

How much should you pay an agency to manage your Ads campaign?

The most popular way of settling with the agency is to take a percentage of a customer’s total monthly expenses. Most often the amount of work you do is commensurate with your budget but this isn’t always the case. Sometimes not the customer’s objectives but the budget spent in Google Ads is the most important. Then, we may have to deal with some well-known situations such as fraudulent brand campaigns or wasting the budget, therefore it’s vital to reasonably choose the agency for this settlement method.

Another available method is a fixed monthly fee which is charged for running an account, any assessments or different types of packages. Each campaign is different and each customer needs an individual approach because of the differing business objectives and requirements.

Agency fees depend on many factors and range from USD 250 when advertisers’ workload doesn’t exceed several hours per month to over USD 1,500 for larger and more influential advertisers whose work complexity is much higher.

So how much does Google Ads cost? Well, as much, as you’re willing to pay for it. We totally support basing budgets on ROAS, meaning return on ad spend (for more inquisitive ones, also from LTV for image or coverage campaigns). Thanks to advanced Google tools and our own experience we’re able to prepare forecasts for our customers. When it comes to companies running Google Ads campaigns for a long time, we offer them an audit and evaluation of the effectiveness of budget distribution activities. You should also keep in mind that the quality of advertisements or landing pages has a great impact on your budget and is a key element in building your competitive advantage.
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SEO / SEM Agency - Delante

SEO / SEM Agency

Delante is an online marketing agency specialized in generating website traffic from search engines and paid ads (SEO / SEM). Over 80% of our clients are from rapidly growing e-commerce industry.

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