How Much Does Google Adwords Cost for your Business?

Do you know how much does Google Adwords Cost for your business?  Let’s have a look.

What is Google Adwords?

Google Adwords is Google’s Advertising Platform for Pay-Per-click Ad Campaigns that enables you to target the right people at the right time to market your products & services. It allows you to control how much you spend on your ads, when you spend it, and even increase or decrease your Google Adwords budget in real-time.

You can use Google Adwords to create online advertisements, bid on relevant target keywords and decide how much you’re willing to pay for every Ad click. When user searches for your target keyword or phrase, if your bid amount is more than that of other advertisers who have bid for the same keyword, then your ad is displayed on top of the search results.


google adwords example


The best part about Google Adwords is that you only pay if a user clicks on your Google Ads. No matter how many times your Google Ad is displayed, you only pay if people click your Google Ad and visit your website.

Google Adwords also allows you to set estimated daily & monthly ad budget for each Google Adwords Campaign. So, once you find a profitable keyword that drives a lot of high-quality traffic for your Google Ads, you can continue to run your Google Ad campaign and grow your business faster.


Bonus Read: 5 Best PPC Management Software to manage your PPC Advertising Campaigns. You can also read how to create a Google Adwords Ad Campaign.


How does Google Adwords work?

Before we find out how much Google Adwords costs, let’s understand how Google’s advertising platform works.

Google Adwords uses an Ad Auction model to determine your Ad placement and cost. When a user enters a search query in Google search, all the advertisers who have bid on the keywords and phrases present in that search query enter an Ad auction.

In the auction, each ad is assigned an Ad Rank, based on the the maximum bid for that keyword and Ad Quality Score. Ad Rank is used to determine the placement & cost of your Ads. The ad with the highest Ad rank gets the top spot in Google Ad listings on top of the search results. The same Ad Auction model is also used to display Ads on other Google Services such as GMail & YouTube.

Google assigns an Ad Quality Score for each Ad, based on its keyword relevance, click-through rate and quality of the target landing page user is sent to on clicking your ad.

So the Ad Rank formula is really simple. Ad Rank = Maximum cost-per-click (CPC) for a keyword x As Quality Score

For example, if you your maximum CPC bid is $3 and Ad Quality Score is 7 then your Ad Rank is 21.

Here’s how Google Adwords uses Ad Rank to calculate your actual cost-per-click.

Actual Cost-per-click =  (Ad Rank of Ad below yours/ Your Ad Quality Score) + 0.01

Here’s a quick example

google adwords cpc estimator example

So the key to reducing your actual CPC is to improve your Google Ad Quality Score.


Bonus Read : 3 Best Google Adwords Reports to Optimize your PPC Marketing Campaigns. Also learn How to Become a Google Adwords Partner


How much does Google Adwords Cost?

The cost of advertising on Google Adwords platform depends on a variety of factors – some of which are in your control, like maximum CPC bid and Ad Quality Score, and some are not in your direct control, like your competitors’ CPC bid amounts and quality of their ads.

It also depends on how competitive your Ad niche is, and even how competitive your individual keywords are. This is where you can be creative and optimize your Google Adwords cost.

Let’s say you run an insurance business. Bidding on a keyword like “Car insurance” will result in a very high CPC because it’s a very broad and competitive keyword term that has a huge search volume. So all the top advertisers in your industry will most likely bid large amounts on it.

google adwords example

Instead, you can do keyword research using Google Keyword Planner and find out low competition keywords that you can bid on. For example, you can bid on long tail keywords like ‘car insurance for women’ which may not drive high traffic as ‘car insurance’ keyword, but will surely be less competitive and less expensive. In fact, long-tail keywords can also drive more high-quality traffic since people who use long tail keywords, tend to clearly know what they’re looking for.


Here’s our list of Best Keyword Research Tools and the Top Long-Tail Keyword Research Tools that you can use to find the right keywords for Google Ads.


How to Monitor Google Adwords Cost?

google adwords analyticcs

Google Adwords provides excellent, robust Ad Campaign performance analytics and reporting that enable you to track your Ad Spend and optimize your Ad budget quickly. You can see the number of times your Ad was displayed, how many people clicked it, how many people converted after visiting your landing page, the best performing times of the day for your ads, what type of users click your ads, and more. The amount of in-depth of analytics allows you to precisely control your Google Advertising Campaign Performance.


Also read about the new Expanded Text Ads by Google to help you drive more website traffic.



Hopefully, now you have a good idea of how much Google Adwords costs and how Google charges for Advertising. It’s important to know how much Google charges for Ads, to estimate the cost of using Google Adwords.

How much Google Adwords Costs for your business, depends on various factors, but the best part is that you have many different ways to control the cost of advertising on Google Adwords platform, and optimizing your Google Adwords Campaign Performance. You can optimize Google Adwords Cost through direct ad budget control, using data-driven ad strategies, or improving Ad Quality Score. You can also indirectly control Google Ad Spend by avoiding highly competitive expensive keywords and targeting the right long-tail keywords instead.

Google Adwords is an awesome advertising platform for any kind of business. The best part about Google Adwords is that you don’t need a minimum investment to get started. You can simply run a Google Adwords campaign for as little as $5/day. Give it a try a for sure.


What tricks do you use to optimize Google Adwords Cost for your business?