PPC stands for Pay-Per-Click. It is a model of online marketing in which advertisers pay the hosts each time one of their ads is clicked.
PPC is a very common advertisement expenditure. In 2018 alone, businesses paid around $10,000 monthly on PPC. But we cannot hold on to this figure forever as the price keeps on varying. In this article, we will help you estimate how much PPC can cost you in 2022 and how you should align your marketing budget accordingly.
Google Ads
To understand PPC’s costing we first need to take a look at what Google Ads is and how it affects your PPC.
To keep it simple, in Google Ads you are choosing keywords. These keywords are those words against the searches of which, you want your ads to appear. After choosing your keywords, you set a maximum bid for how much you are willing to pay for every click on your ad for that keyword.
If you bid the highest for any keyword or phrase among all other advertisers, your ad will be ranked at the top of the search results. The ad will bear a small tag announcing that it is a paid ad.
Benefits of Google Ads:
Google Ads is a preferable option for advertisers because it saves them a lot of costs. Marketers pay only when their ads are clicked. So, the financial resources of a business are not frittered away in marketing to those who aren’t remotely interested in their products or services.
The cost of PPC fluctuates depending upon the competition in the industry. Competitive industries spend more on PPC while less competitive ones can secure a good rank for their ads by paying less in comparison.
Since your ads appear when people are searching the keywords, your chances of reaching genuine leads increase. As the people are already interested in something related to your keyword, your ad has a higher chance of success.
But, it is important to note that Google doesn’t rank your ads solely on the basis of the maximum bid.
It also calculates something known as your Quality Score or QS, for short.
Your Quality Score is determined by a combination of various elements like the importance of your ad in relation to the keyword, the click-through rate, and the quality of your landing page.
Using the Quality Score and Maximum Bid, we arrive at the Ad Rank Formula.
Ad Rank Formula = Maximum Bid*QS
The ad with the highest Ad Rank will appear at the top of the search results. The logical conclusion that you can derive just by observing the above formula is that it is possible to be ranked high by spending less, if you can enhance your QS.
Now, we can determine the PPC by applying the following formula:
(Ad Rank of the ad below yours) / (Your QS) + $0.01.
How much will PPC Advertising through Google Ads cost?
Of the factors controlling your PPC, you have the power to determine the maximum bid and the quality of your ads.
But still, there are a number of things that will affect your PPC, which lie beyond your scope of control. Say, for example, your competitor’s maximum bid or their ad quality; the level of competition in your industry, etc.
On average, per click can cost the marketers around $1-$2 on Google. This leads us to the monthly figure we discussed at the beginning of this article.
The competitive industries in terms of PPC usage are insurance, legal and financial services industries. Hence, their PPC costs go way beyond expectations into hundreds of dollars per click. Retail companies spend heavily on PPC too, with Amazon leading the space at $50 million spent on PPC advertising.
Making the best of your Google Ads Budget
As you are the controlling force behind two very important factors of PPC determination: Maximum Bid and Quality, you can adjust your advertising budget to suit your needs.
Though before we do that, it is imperative to understand how Google Ads allocates your budget to various activities.
Google Ads makes it easy for you to control each marketing campaign separately. As such, every campaign comes with its own setting, which you can tweak according to your priority. Hence, you can achieve cost-efficiency in your marketing campaigns by prioritizing.
Suppose, campaigns introducing new features of products that have received good feedback or performed well in the past are obviously more important than the ones that haven’t received a great reception by comparison.
So, you should allot bigger chunks of your budget to campaigns you expect to perform well, and hence, prioritize over all others.
Your maximum bid, as the term states, is the last highest price you are willing to bid for that keyword and so, you will never pay more than your maximum bid on an ad; but with the help of a good QS you may end up paying less.
Another way to get the most out of your ad budget is to specify where and when you want your ads to appear. This kind of targeting can lead to higher conversion rates. You can also increase your bids at certain times of the day to rank higher at those peak hours. You can specify the geographical location of the public that you want to see your ads. This will enable you to grab the attention of people in those specific geographical areas.
Another setting that you can adjust is that of reaching mobile users. If you think that mobile traffic is more beneficial for your business, you may use device targeting and specify in the campaigns that you wish to target people on mobile devices. Google Ads even allows you to choose specific types of mobile devices, the users of which you want to target.
Retargeting
Retargeting in the marketing world means showing ads to people who have previously shown an interest in your products and services. When you opt for retargeting, your ads will be shown again to people on other websites, if they have clicked on them previously.
It is believed that 96% of people leave a website without finalizing their purchase. In such a case, retargeting them is a great way of giving them that much-needed extra nudge in the right direction. Remarketing is important enough that businesses spend about 10% of their ad budget on remarketing efforts.
So, how much does retargeting cost?
Retargeting costs are slightly less than PPC advertising. So while PPC can cost around $1-$2 per click, retargeting will cost you an average of $0.66-$1.23 per click.
But just like PPC ads, retargeting costs will vary according to the size and level of competition in your industry.
We hope that this article gave you a fairly good idea of how much you can expect to spend on PPC as well as how to optimize your Google Ads settings to better utilize your existing budget!
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