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October 18th, 2018 | By: | Category: content marketing | Internet Marketing
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How Much Are You Charged for a Click on Your Adwords Ad?

How much are you charged for a click on your AdWords ad?

It seems like a simple question, right?

You have probably heard of the phrase “pay-per-click” (PPC advertising) and it makes sense for the most part.

Your advertisement shows up on Google and you pay each time someone clicks on it.

Google Adwords

But how does Google determine how much you spend each time someone clicks on your ad?

In today’s post, we’ll provide a simple explanation for how Google AdWords works.

By the end of this post, you’ll know how you’ll be charged for ads, the different factors that affect your budget, and insights you’ll need to create your own successful Google AdWords campaign.

Factors That Affect How Much You’re Charged for a Click on Your AdWords Ad

Before we dive into specifics on using the Google AdWords platform, let’s talk about some of the different factors Google uses – either directly or indirectly – to determine how much you’re charged when someone clicks on your ad.

In essence, Google AdWords is a “pay to play” platform. If you outspend your competition, your results will appear first. In some cases, it makes sense to spend premium amounts for a click:

  • If your product has a high price or has a high customer lifetime value (CLV)
  • You are confident you can convert visitors to leads and sales when the land on your website
  • You know you can make a return on investment (ROI) on the amount you spend

In other cases, you’ll have to balance different factors to determine how much you are willing to spend on an ad.

Here are some important factors to note.

Competition

You’ll likely spend less per click to advertise handmade socks than you would if you created parts for airplanes and rockets.

The more competitive the service or product you want your website to appear for, the more it will cost.

What factors determine competition? Here are a few:

  • Commercial intent – Products or services people are searching for because they are ready to buy have “commercial intent.” These keywords (the phrase typed on Google related to the product or service) receive lots of attention from advertisers. Example:  Red Men’s Nike Shoes Size 12
  • The number of advertisers – This relates to the first point, but the more advertisers who want to promote a similar product or service, the higher the cost per click (CPC) because the advertisers will try to outbid each other and drive up the price
  • The bids themselves – Google uses an auction system to display ads. The behavior of the group of advertisers who bid on keywords changes depending on the word, the industry, and other factors like personality

Industries

Wordstream created an excellent graphic that shows the average cost per click for ads in different types of industries:

adwords-industry-benchmarks-average-cpc

You can infer why some industries have a different average cost per click than others.

Lawyers and consumer services are at the top. Both make sense in their own way. Lawyers can spend more because the price of their service is high. While the consumer services industry has lower priced products and services, the commercial intent is higher.

Before you create an AdWords campaign, do your research on industry benchmarks.

Better yet, you can work with us to create aPPC strategyy from scratch:




 

Your Strategy

Your PPC strategy is one of the major factors for how much you’ll spend per click.

In Google AdWords, you can both set track different metrics like:

  • Max CPC – You can set a cost-per-click amount you aren’t willing to exceed
  • Total Budget – You can set an amount for the total amount you want to spend per day, per month, or for a longer period of time
  • Impressions – This is the number of people who see your ad
  • Click Through Rate -This is the percentage of people who see your ad and then also visit your site

When you put together an AdWords campaign, you have to keep the metrics in mind while creating your strategy and altering it.

We will walk through the details in a bit, but here are some potential scenarios to consider:

  • If your impressions and click through rate are low, you aren’t spending enough relative to your competitors
  • If your impressions are high but your click-through rate is low, your ad might not be persuasive enough
  • An ad with a high click-through rate, but a modest CPC and number of impressions could mean you can spend more because you have a winning ad that will convert when you increase your bid
  • If your ad has a high click-through rate, but people don’t engage with your website once they visit it, you may need some design or content upgrades to make your service or product more attractive

When it comes to answering the question  – How much are you charged for a click on your AdWords Ad? There are a lot of factors to consider.

Your best bet, learn the basics and start a PPC campaign. Experience teaches you more than any blog post will.

Let’s talk about the basics. Then, let’s talk options. We can help you set up a custom PPC plan based on your businesses needs that will help you attract people who want your product or service.

The Basics Behind Creating a Successful Google AdWords Campaign

Keyword Research

When you create ads for Google, you need to research keywords.

What are keywords? Keywords are words or phrases people type into Google when they’re searching for stuff.

Google keeps track of important data about keywords:

  • Monthly Volume – This number tells you how many people search for a keyword every month
  • Competition – Google bases this number off of how aggressive the bidders are
  • Average CPC – This number shows the average amount of money you would need to spend to get a click

Google provides a tool called the Google Keyword Planner where you can see this data and make decisions about which keywords to use for your campaign:

Google Keyword Planner

You can use this tool along with good old-fashioned brainstorming to come up with potential keywords to use in your campaigns.

Creating Your PPC Ads

After doing your research, you’ll have a group of keywords you want to target during your campaign.

If your business has multiple services or products, you will want to separate the keywords you targeted into groups based on the different types of products or services you have.

These are called ad groups:

Google Ad Groups

 

 

Each ad group will have its own individual set of keywords:

google PPC ad keywords

When you visit the campaign settings, you can set a daily budget and a bidding strategy:

The dashboard provides useful tips to help with your campaign. You can choose between manual options where you can set your own bid prices. You can also use Google’s ‘smart bidding options’ which allow you to choose your budget and leave it to Google to make the best use of your money.

For each Ad group, you can create different advertisements to display on the search engine.

Google uses a quality score measure to determine how likely your ads are to get click-throughs. It also uses your quality score to determine your placement. An ad with a high-quality score and a lower bid could show up higher than an Ad with a low-quality score, but a higher bid.

Neil Patel has a great guide on ways to improve your quality score if you’re looking for an in-depth analysis

If you decide to work with a smart digital marketing agency like MLT Group, we will walk you through the process from start to finish using cutting-edge research and optimization techniques.

Conclusion

The concept of PPC advertising is simple. If you make more money than it costs to advertise, advertising makes sense.

As a business owner, you just want to get great results. Instead of learning all the industry jargon and creating a campaign for yourself, why not work with an agency who will partner with you.

Here’s your next step. Fill out this form below, we’ll give you a free audit of your website and marketing, then we’ll reach out to talk about a great campaign that works for your business. 




 


 

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