What is a good cpc for google ads?

But don’t worry. In this guide, we’re going to cover all of the variables involved in Google Ads pricing so you can understand how much Google Ads will cost for your business and how to set a realistic budget.

As mentioned above (and precisely why we’ve written this guide), there is no simple or one-size-fits all answer to the question of how much Google Ads will cost your business. Google Ads pricing varies depending on your industry, customer lifecycle, current trends, and how well you manage your account.

The biggest influence on Google Ads pricing is industry. For example, the business services vertical (legal, accounting, real estate, etc.) is one of the more competitive verticals in Google Ads, which generally translates to higher costs per click (CPC). This is due to the nature of the professional services industry: one new client could yield upwards of $1,000 – $10,000 depending on your business, so a CPC of $50 is a small price to pay for that client.

On the other hand, businesses in the arts and entertainment vertical have lower CPCs, but they need to reach a lot more customers to hit that $1,000 - $10,000 number. You can see our latest paid search advertising benchmarks here.

You also have to take into account the lifecycle of your customer. For bigger ticket offerings, it takes longer for potential clients to move through the decision-making process, and your business needs to stay top-of-mind throughout that journey. This may involve multiple visits to your website, a content download or two, participation in a webinar, and more—before taking that final step.

Neither consumer trends nor online advertising platforms are ever in a state of rest. It's important to keep up with what's going in your industry and within your niche—sentimentally and empirically. Take COVID, for example. At the height of the pandemic, average cost per click for the apparel industry was about $1.40. It dropped down to $0.70 in April when average conversion rates went up, and then ended up at $0.89 in May.

A recent study by Google showed that the average ROI on Google Ads is 800%—that is, $8 for every $1 spent. Of course, this all depends on how well you manage your account. You can't just activate your ads and kick back. If you want to keep your Google Ads costs low and your returns high, you need to:

The great part about Google Ads is that while it works as an auction, the winners aren't chosen based on bid alone, and you don't necessarily pay your maximum bid. How is this possible? Let's take a quick run-through on how Google Ads determines the winners and what they pay per click.

When someone searches on Google, Google looks to see if any advertisers are bidding on keywords relevant to that query. If yes, an auction is triggered and Google enters all relevant ads into the auction. Its first step in choosing a winner is to assign each ad a Quality Score. This is a number from 1-10 determined by the ad and landing page's relevance to the keyword, expected click-through rate (which involves your historic performance), and landing page experience.

To learn more, head on over to this post: What is a Good Quality Score for Each Type of Keyword?

Google will then calculate each contending ad's Ad Rank, which determines if and where your ad will be placed in the paid results section. Ad Rank is your Quality Score multiplied by your maximum bid (the most you're willing to pay per click on your ad).

The ads with the highest Ad Rank scores are the ones that get shown.

If your ad gets shown, you only pay if someone clicks on it. But as mentioned above, you don't necessarily pay your maximum bid. The Google Ads cost per click formula is: the Ad Rank of the ad below yours divided by your Quality Score, plus one cent.

With this formula, an advertiser can pay less per click than another advertiser in the SERP and still be in the higher position due to a better Quality Score. This is why advertisers with a small budget can compete with big spenders on Google.

For a more in-depth explanation on the Google Ads auction, head to our post >> How Does Google Ads Work? The Complete, Visual Guide.

There are several other variables that impact your Ad Rank—and ultimately, your ad spend—but maximum bid and Quality Score are the important ones to know. Here are some (but certainly not all) of the additional factors that influence your costs.

📙 Free guide  >> Hacking Google Ads: One Weird Trick That Could Save You Thousands

Let's move on to the next component of Google Ads cost: budgeting. All too often, advertisers see their Google Ads budget for the month get burned up in a matter of days, leading them to believe Google Ads is prohibitively expensive. This isn’t necessarily the case; more often than not it's the result of a misunderstanding of how Google Ads budgeting works. So let's set the record straight. Here are the terms to know:

When you set up a campaign in Google Ads, you will be asked to provide a daily budget. There is a shared budget feature, but if you're just starting out, it's best to give each campaign its own separate budget. But the daily budget you set does not mean Google will spend that exact amount each day. You’re giving Google a rough idea of what you’d like your daily spend to average out to at the end of the month—meaning it could exceed or fall short of that amount on any given day. Which leads us to spending limits.

Originally, Google could spend up to 20% more than your daily average budget in this manner—until October 2017 when it announced it could spend up to 100% more of, or double, your budget—if it means more clicks or conversions. This means that if you set a daily average budget of $50, your daily spending limit is $100. You will never pay more in a day than your daily spending limit, and you will never pay more than a month than your monthly spending limit (your average daily budget x 30.4; although if you're not paying for Google Ads with the invoice method, you can set a monthly spend limit at the account level).

Image source

To calculate your average daily budget, simply take your budget for the month for that campaign and divide it by 30.4. What should your monthly budget be? This depends on:

For example, you may want to dedicate more budget to Campaign A, advertising your best-selling product, than to Campaign B, which promotes content to prospective customers at the top of the funnel.

You can also plug different daily average budget numbers into the budget report mentioned above to see how it would impact your monthly spend.

The Google Ads budget report gives you visibility into how much of your budget it spent on any given day.

You can also play around with different daily budget adjustments to see how it will impact your monthly spend.

For more help with budgeting, check out our Complete, Digestible Guide to Google Ads Budgets.

💰 Want more Google Ads budgeting tips? Free download >> The Easy Guide to Google Ads Budgets

As we've mentioned a few times already in this guide, how much you'll pay for Google Ads also depends on your bid. This is the maximum amount you're willing to pay for a click on your ad. Simple enough, right? Well, as is the theme with this post, no. A few things to know:

You can learn more about bidding in our guide to automated bidding strategies in Google.

Just as there are factors that influence your Quality Score, which influences your Ad Rank, which influences your cost per click, there are factors that influence how your budget gets spent—which also play into how you can save money in Google Ads.

Also known as ad scheduling, dayparting is the practice of specifying when you want your ads to appear to prospective customers. Although your ads will still have to go through the ad auction process, you can tell Google when you want your ads to be displayed.

This is especially useful for local businesses that want to attract customers to a physical location through their ads. If you run a bakery that closes at 7pm, for example, you may not want your ads to be shown outside your normal business hours. Alternatively, you can specify that your ads run continually throughout the day, but allocate a greater portion of your daily budget for hours during which you want increased visibility.

Just as you can allocate more of your Google Ads budget to certain times of day, you can also spend more of your budget on certain geographical areas. This technique is known as geo targeting, or location targeting.

Geotargeting allows you to ensure your ads appear only for Google searchers in specific areas, which can be as large as a state or province, or as small as a three-block radius from your store.

Google Ads geotargeting can be an excellent way to capitalize on growing mobile traffic trends and on-the-go shopping habits of today’s consumers, and it might factor into how you allocate your daily ad budget. For example, you may want your ads to appear alongside relevant searches in a particular state, but you could also allocate more budget to searches conducted in a specific city or even neighborhood.

Long gone are the days when prospects searched exclusively from desktop browsers. Today, consumers are searching online across multiple devices (often at the same time), which means you need to pay attention to where your most valuable leads are coming from. This is where device targeting comes into play.

Let’s say that you want to appear on results across both desktop and mobile searches, but that mobile traffic is more valuable to you. You could specify that a portion of your budget be used for desktop, but a greater portion be allocated to mobile devices. You may even want to devote more money to traffic coming from specific types of mobile devices, depending on what you’re advertising or your ad copy.

Setting a daily budget and understanding how it will be depleted are the most important aspects of budgeting for PPC, but it pays to be aware of how advanced targeting options can affect your ad spend.

Now that you know how the Google Ads process works and how to set your budget, it makes sense for your next question to be, “How much does a typical click cost in Google Ads?” Unsurprisingly, the answer is complicated. But we're going to break it down.

In some ways, you can think of PPC advertising roughly along the same lines as traditional print advertising; you’d expect to spend more on a glossy full-page ad in a national magazine than you would for a classified ad in a local newspaper. In digital marketing, however, the pricing isn't influenced by the format of the ad, but rather the intent of and competition for the keywords you’re bidding on. So you can expect to spend more on a high-intent keyword like "roof repair near me" than something lower intent like "how much does it cost to repair a roof."

In super-competitive markets like legal and accounting, clicks can get much pricier. Let’s take a look at some keyword benchmarks in Google Ads to give you an idea of how much a click can cost for your business.

If you take the average CPCs across all different types of businesses and keywords in the US, the overall average CPC in Google Ads is between $1 and $2. That's on the Search Network. On the Google Display network, clicks tend to be cheaper, averaging under $1.

People sometimes like to point at the grand, show-stopping keyword categories above as a definitive example of how expensive Google Ads can be. The reality, however, is that these keyword categories only make up a small portion of total search volumes. Long-tail keywords actually account for the majority of web searches and are also often significantly cheaper than shorter keyword-rich queries and can have as much—if not more—commercial intent.

This is the kind of opportunity that long-tail keyword targeting presents to advertisers. In addition to making up the vast majority of searches,

You can learn more in this guide to long-tail keywords.

As we've mentioned, Google Ads pricing varies from industry to industry, and even by subcategories within each industry. You can see the average CTR, CVR as well as average cost per click and cost per lead in 20 different industries in our paid search advertising benchmarks report. But here are some additional insights to help you decide whether you should use Google Ads.

As Google owns the largest paid search platform, we’ll focus on Google Ads first.

Listed below are the most expensive keyword categories in Google Ads, and the average cost-per-click of each. It’s worth noting that these are keyword categories, not actual keywords themselves—in some cases, the CPCs of keywords within each category may be higher than the averages stated:

You can check out the full infographic and learn about the methodology behind the data here.

We then ran a second report a few years later. The results were similar, but we did see some new highly expensive keyword niches on the list, and also that average CPC's (unsurprisingly) had gone up. You can check out the list of the top 25 most expensive keywords here.

As Bing is growing in market share, we decided to conduct a similar study to find the most expensive keywords in Bing Ads.

Listed below are the most expensive keyword categories in Bing Ads, as well as the average cost-per-click for each:

You can see the full infographic and the category breakdown here.

Of course, these are just some of the hundreds of thousands of keywords that businesses all over the world are bidding on, and costs can vary widely depending on a wide range of factors. Even if you’re in an industry with high average costs-per-click, such as insurance or legal services, it doesn’t necessarily mean you’ll be forced to pay these amounts for each click on your ad.

Overall, the average CPC of keywords across all industries typically ranges between $2-4—significantly less than the averages from Google Ads and Bing listed above.

Furthermore, it's important to take ROI into account. These industries can afford high CPCs because the average lifetime value of a customer is so high.

Usually, once someone has asked about the average cost-per-click of a PPC ad, their next question will be how much do “typical” businesses spend on Google Ads as part of their larger online marketing costs. Unfortunately, this is another question without an easy answer. However, that doesn’t mean we can’t tell you a little bit more about how much a “typical” business spends on paid search. First, we need to look at overall spend data by industry.

If you look at the average CPC data below, you’ll see that the top five most competitive terms are found in:

In our latest search advertising benchmarks report, we found these industries to have the highest average costs per click:

There's also significant overlap in the industries with the highest average cost per lead:

As you can see, companies in the insurance and legal industries spend the most per month on Google Ads. Big brands in the industries above can spend $40 to $50 million a year, but this isn't exactly relevant information to would-be advertiser who’s still on the fence about Google Ads. And good news for you, you don't need to spend millions on Google Ads to make it work for your business.

As you might expect, the amount that small businesses spend on PPC varies widely. Some, such as for real estate, home services, and healthcare, spend $1,000 - $3,000 on Google Ads per month.

Here's what we found in our latest vertical benchmarks reports:

But for mid-sized companies and agencies, we see anywhere from $7,000 - $30,000 per month. Historically, from the very smallest mom-and-pop shop to the mid-sized PPC agency—we've seen an average of $9,813 per month spent on PPC advertising.That's still a pretty wide range, but you can at least orient yourself with respect to where you fall on the spectrum.

You can find more helpful tips and strategies in our Small Business Guide to Google Ads.

Your ad budget will always be the largest, most direct cost associated with your Google Ads campaigns. However, while your ad budget is important, it’s not necessarily the be-all and end-all of your paid search efforts. There are other potential costs you may have to consider, depending on your business, marketing goals, and individual situation when evaluating whether your investment in Google ads is worth it for your business.

Some small businesses opt to have an agency handle their PPC work to save them the time and stress. This isn't cheap, and even the smallest of boutique agencies will take a percentage of your ad spend, regardless of ROI. Agency cuts typically hover around the 10% mark, though this varies from one agency to another. Also, some agencies may guarantee a threshold ROI, whereas others won’t.

Even still, having a seasoned expert run your account can save you from costly errors and also help you yield the highest returns on your ad spend. To ensure you choose an agency that is worth the investment, make sure you check off all your boxes when vetting them. You can use our checklist below:

There's a lot more than price to consider when choosing an agency.

Obviously it’s in the agency’s best interests to deliver results (to reduce churn and retain clients), but even if your ads don’t result in any conversions, you’ll still have to pony up and pay your agency unless it’s explicitly stated otherwise in your contract.

We've covered a lot in this guide, so let's go over the key takeaways that you can use to orient yourself in terms of what you could spend in Google Ads:

Each month, on average, 1,300 people worldwide ask Google, “What is a good CTR?” Beyond CTR, though, digital marketers want to know:

Digital marketers crave these answers because knowing key PPC metrics, industry benchmarks, and how to interpret them allows advertisers and agencies to understand their success relative to competitors.

Below are the latest Google Ads benchmarks, based on a sample of accounts advertising on Google’s Search and Display networks.

Note: The Google benchmarks below are from WordStream, and “averages” are median figures to account for outliers.

The Google Ads average CTR across all industries is 5.06% for search, with a high of 7.83% in the travel & tourism industry, and a low of 3.27% for law & government:

Other industries with high search CTR benchmarks include vehicles (7.35%), dining & nightlife (6.63%), and real estate (6.19%). On the low end with law & government -- computers & computer electronics (3.49%) and finance (3.58%).

Meanwhile, on the Display Network, the Google Ads average CTR across all industries was only 0.50%, with business & industrial having a high of 0.64%, and health with the lowest at 0.37%.

The difference between the average CTR on Search and GDN was drastic in some industries (the highest Display Network average didn’t even reach the lowest Search Network average). Despite the major differences, both the average CTR for display ads and search ads were higher than in previous years.

While your offer ad copy, CTAs, ad extensions, and a whole host of other factors impacts your CTR, one of the greatest influencers is audience targeting.

Consider this: You show interest in an agency’s PPC services, but they continuously send you information on their SEO resources. You’re probably going to ignore their ads no matter how persuasive the copy, creative, etc. because that’s not the product or service you need.

If your CTR is suffering, it could mean your targeting is off, and you’re not choosing the right keywords or other criteria. It could also mean you need to get more specific and utilize segmented marketing campaigns.

Google Ads Smart Bidding can help with this by tracking all visible and hidden user behavior signals from every search and click, cross-referencing those signals with performance data, and then increasing or decreasing bids to meet your selected target. Ultimately, this machine learning process helps immensely to boost CTR.

The average Google Ads cost per click across all industries is $2.41 for search and $0.59 for display:

While the average cost per click for search was $2.41, many industries paid less for their clicks, including apparel ($1.38), arts & entertainment ($1.47), hobbies & leisure ($1.68), jobs & education ($2.24), real estate ($2.27), retailers & general stores ($2.16), sports & fitness ($1.46), travel & tourism ($1.42), and vehicles ($2.03).

The outlier of them all on the Search Network is law & government because their ad clicks cost the most at $6.35 per click.

Law & government is tied for the most expensive on the GDN as well, right next to finance, costing $0.81 per click. However, most industries have relatively inexpensive CPCs on the Display Network. Apparel, arts & entertainment, and jobs & education, for example, all fall below $0.50 per click.

CPC is important because it determines the financial success of your PPC campaigns.

However, your ROI is determined by how much you’re paying for clicks. And by the quality you’re getting for that investment. So you want to identify and target clicks that are both inexpensive and valuable.

There are two primary ways to do this:

Conversion rate by industry showed a lot of diversity in range. While the average rate across all industries was 4.40% for search and 0.57% for display, the outliers were extreme:

For example, while a majority of the industries fall between 4.0% and 5.0% on the Search Network, both law & government (7.45%) and vehicles (7.98%) enjoy the highest conversion rates.

Now let’s compare this to the Display Network, which has significantly lower conversion rates.

The highest GDN conversion rate (1.12% for hobbies & leisure) doesn’t reach the lowest Search Network conversion rate (2.77% for apparel).

Compared to the 2015 data, search conversion rates have risen slightly, but display conversion rates have fallen -- and neither are too impressive.

This could be a sign that most advertisers are ignoring the post-click landing page and need to pay more attention to conversion optimization techniques, like post-click automation.

Instapage customers, for instance, enjoy about 4x better conversion rates than the industry average, mainly due to optimizing the post-click landing page.

The average CPA in Google Ads across all industries is $56.11 for search and $90.80 for display network -- the first time the Search Network had a lower average than the GDN:

When looking at the average cost per acquisition on the Display Network, over $115 separated the highest and lowest industry averages, with business & industrial at a high of $152.03 and hobbies & leisure at a low of $35.43.

On the Search Network, the computers & computer electronics industry had the highest average CPA at $101.40, while the vehicles industry had the lowest at $26.17.

Several industries face average CPAs over $100:

Although the average CPA on the search network is actually lower now than it was several years ago. Costs in advertising have been and are expected to continue rising over time.

Did you notice how the CPA graph is the only one that includes display averages higher than search averages? Why is it that most of the GDN data is much lower than search?

The main reason is people have higher intent on the Search Network. They actively conduct searches based on specific keywords because they already know exactly what they’re looking for.

On the Display Network, users are passive searchers. Since they may not be looking for anything specific, they have lower intent, which typically leads to lower click-through rates, conversion rates, cost per click, etc.

Knowing the Google Ads benchmarks is essential because if your metrics don’t compare favorably -- or at least keep pace with the average -- that means there’s room for improvement.

The average cost per click in Google Ads is between $2 and $4 on the Search Network. The average cost per click on the Display Network is under $1. The most expensive keywords in Google Ads and Bing Ads cost $50 or more per click.

Check out the Google Ads industry benchmarks our clients are seeing, including:

You’ll find averages across these ads metrics for twenty industries: Advocacy, Auto, B2B, Consumer Services, Dating & Personals, E-Commerce, Education, Employment Services, Finance & Insurance, Health & Medical, Home Goods, Industrial Services, Legal, Real Estate, Technology, and Travel & Hospitality.

Dating and personal services really click with PPC – boasting an average search CTR of 6%! No doubt, it’s easy to write powerful emotional ad copy when your prospects are searching for love. Other industries with high search CTRs include Advocacy, Autos, and Travel.

When we first collected this data in 2015, legal services could struggle to attract attention on the SERP (with a relatively low average 1.35% CTR) – in large part due to advertising restrictions enforced by both Google and government organizations. Legal advertisers have improved their stats in the past few years!

As of 2018, the industries with the lowest average click-through rates including Technology, B2B, and Consumer Services.

The average click-through rate in Google Ads across all industries is 3.17% for search and 0.46% for display.

Both of these averages are higher than they were a couple of years ago: Good news for Ads advertisers and agencies!

📙 Free guide >> Hacking Google Ads: One Trick That Could Save You Thousands

It’s no surprise that legal services have some of the highest CPCs among all Google ads on the search network. Both “Lawyer” and “Attorney” make the top 10 most expensive keywords on Google and on Bing. Average CPCs in the legal industry are over $6. Consumer services aren’t too far behind, with an average CPC of $6.40.

Advocacy and nonprofit groups are fortunate to have a cost per click under $2, likely as a result of the $2 max CPC bid Google Grant advertisers have to set on all of their keywords.

Most industries have pretty inexpensive CPCs on the Google Display Network. The only industry with costs per click over $1 on the Display network is Dating & Personals.

The average cost per click in google ads across all industries is $2.69 for search and $0.63 for display.

The news here is good too: These Google Ads costs have increased very little over the figures we found a couple of years ago (when the averages were $2.32 and $0.58 respectively).

A couple of years ago, the Finance and Insurance industries were leading the pack when it came to conversion rates.

However, our newly updated data shows that the Dating & Personal industry is way out ahead now, with search conversion rates on average over 9%! Other standouts include the legal industries, consumer services, and autos.

In many of these cases, the best converting advertisers aren’t afraid to change their offer or their conversion flow to boost their conversion rates. Or they may be taking advantage of conversion-boosting tactics such as video landing pages.

Ecommerce clients may not have many options to change their offer and consequently suffer one of the poorer average conversion rates on both search and display. To boot, they often have gigantic inventories, which prevents doing fine-tuning on ad copy across all ecommerce keywords.

While removing barriers to purchase will always be an important CRO tool to help ecommerce clients, Google Ads advertisers should focus on improving the performance of their keywords with high commercial intent to yield the most out of their search campaigns.

The average conversion rate in google ads across all industries is 3.75% for search and 0.77% for display.

Since the last time we compiled this data, search conversion rates have risen slightly, but display conversion rates have fallen slightly, perhaps a sign that display advertisers need to pay more attention to placements and audience optimization.

CPA’s have shifted quite a bit in the past couple of years. The lowest cost per action across industries is now autos, coming in at just $33 per action. B2B, real estate, and tech companies, on the other hand, confront average costs per action over $100.

We generally expect costs in advertising to rise over time, but the average CPA on the search network is actually lower now than it was a couple of years ago. Display CPA’s, however, have gone up a little bit.

The average CPA in google ads across all industries is $48.96 for search and $75.51 for display.

✴️ Download the PDF of our latest Google Ads Benchmarks report here.

If you find yourself on the lower end of these numbers, that just means there’s plenty of room for improvement! Try running our free Google Ads Grader to diagnose exactly where your campaigns are failing when compared to peers in your industry. If you’re hitting these benchmarks – don’t stop and settle for average either! Always strive to be a unicorn by writing the best ad copy and creating landing page unicorns that convert better than anyone else!

Use these search advertising benchmarks to see how you stack up against your competitors and where you can improve. For help making sense of this data, check out our PPC metrics guide or our visual explanation on how Google Ads works  You may also be interested in these:

Check out the full infographic below:

This report is based on a sample of 14,197 US-based WordStream client accounts in all verticals (representing over $200 million in aggregate Google Ads spend) who were advertising on Google’s Search and Display networks between August 2017 and January 2018. Each industry includes at minimum 30 unique active clients. “Averages” are technically median figures to account for outliers. All currency values are posted in USD.

Do these figures include branded keywords or just generic keywords?

The figures omit advertisers who were exclusively bidding on branded terms. Averages presented were median values to prevent a large advertiser with particularly good or bad performance from skewing the average.

Any accounting for the impact of fraud and bots on CTR?

The data was pulled directly from Google Ads, which does have provisions for omitting automated or fraudulent traffic, as opposed to Google Analytics. Additionally, reported averages are medians to prevent any skew from any account that may have artificially high CTRs due to automatic traffic.

Is this worldwide data?

The above data is reflective of a sample of US-based accounts. We have some international data on average costs per click around the world here.

How does search look with branded and non-branded segments?

While we didn’t specifically segment the brand and nonbranded search segments, those accounts that were exclusively on branded terms were omitted to prevent that upward skew.

Last Google Ads click conversion attribution?

All these conversion figures follow a last paid click attribution model.

How about people in the home improvement, bathroom remodeling, kitchen remodeling, and replacement window space? Which of these industries does that fall under?

Those are under the Home Goods industry.

Could you define “CPA”? Depending on industry or product, the action could be a sale, or just a newsletter sign-up. I managed many PPC accounts and every client had a different definition of an “action”.

Cost per action or cost per acquisition, but as you note, the exact definition of “action” is going to vary depending on the business.

I have some questions about how conversions and actions are defined by category (especially real estate) for calculating the CPA and CVR. Can you advise or connect me with someone who can answer?

These conversions are defined as the useful measure of success for each account. For retailers, that may be a sale – for others such as real estate that may be a form fill or a phone call.

Any sense of how these CPCs and CTRs compare to prior years? Curious how they might have changed as Google has changed their SEO/SEM formats and rankings.

Overall, these CTRs have risen and CPCs have fallen.

FYI. Your implied CPM on google search is $57.42. I don’t think so. In general, I think you’re numbers skew more favorable to the search network than reality. Just sayin…

The averages here are the median of our client accounts. I’m happy to hear that you find that our clients are overperforming your expectations on the search network!

I wanted to clarify “conversion rate.” Is that percentage of people who click on the ad? Eg. 1.9% click on the ad, then 2.7% of that 1.9% make a purchase?

The conversion rate is the likelihood of someone completing the action we’re looking for them to do after clicking the ad. You can calculate conversion rate by taking the number of conversions by the number of clicks.

Why would conversion rate be higher than CTR? By definition CTR is always higher than conversion rate isnt it?

No. The total number of conversions will be lower than the total number of clicks, but the conversion RATE can be higher. For example, if only 1 out of 100 people click your ad, but every single person who clicks your ad converts, that’s a 1% click-through rate but a 100% conversion rate. The conversion rate is based on people who click, not the total # of people who saw the ad from the beginning.

Why is there a specific category for e-commerce? Would that not apply to all of the other categories?

Not all advertisers are ecommerce. Many are looking to provide services or lead generation for their business.

Could you just explain what you define the “Advocacy” industry as?

Advocacy groups aim to create support, awareness, or fundraising for a cause, policy, or organization.

Is search inclusive of shopping? Or is this text ads only?

You have setup a great Google ads search campaign with super effective keywords and now you are looking to get a handle on your advertising expenses? It’s a smart move for any pay-per-click (PPC) marketer, as knowing your actual costs will give you a better idea of what is going on with your campaign.

In Google Ads, it’s easy to get misled by the many metrics, especially as there are two similar ones to consider when you are assessing cost – average cost and average CPC.

In this article, we’re going to explore both so that you understand how pay-per-click advertising works, and how to determine your advertising costs and formula to find Average CPC.

When a user clicks your ad, the platform (i.e. Google Ads) will charge you for that click. The Average CPC (cost-per-click) metric tells us the average cost of a single click. How to calculate Average CPC?

Average CPC Formula:

Total cost of clicks / total number of clicks

For example, if your ad receives two clicks – one at $0.20 and one at $0.40, the total cost is $0.60.

Average CPC = $0.60 / 2 = $0.30

The metric Average CPC in Google Ads will likely differ from the maximum CPC that you set in your campaign – this is the most you are willing to pay for a single click. According to recent research, the Average cost per click in Google Ads across all industries is $2.69 for the search network and $0.63 for the display network.  On average it is a very little hike in average CPC from what it has been a couple of years back. (when the averages were $2.32 and $0.58 respectively). This is good news for PPC advertisers.

Average Cost per click (CPC)

Lowering Average CPC of a Google Ads account has been a challenge for PPC managers and regular account audits can help to get to the level of optimization they need.

As CPC can attract relevant leads, it is one of the most effective methods of direct marketing that PPC advertisers use today. With more leads, the chances of conversion increase.

The logic behind this strategy is that marketers don’t need to go to great expense with mass marketing of their products and services as it is more cost-effective to directly target those people are already interested in what you have to offer.

CPC advertising is very effective in this way, however, there are other core aspects required for it to succeed, such as:

In paid advertising, there are few metrics as important as your return on investment (ROI). By focusing on your cost per click, you’ll find it easier to measure the value of your advertising spend. As most CPC traffic tends to be relevant, you are likely to generate more sales.

Consequently, your conversion rate should rise with CPC advertising. Another option worth considering is CPM (Cost per Mille – 1,000 impressions). This a good choice if you have a larger budget for a branding campaign.

That being said, CPC is undoubtedly the more cost-effective strategy, which often yields a better return on your spending in the short term. By continuously analyzing and refining your campaign, you can optimize it to maintain a low average CPC.

So, with the benefits of a low average CPC now clear, the big question looms:

How can you lower it?

In theory, it’s quite simple. You need to bid more for keywords that currently have a low CPC and a good opportunity for impressions. If you want to lower the average CPC in your Google Ads account, follow the steps below to implement this strategy:

Average cost-per-click is not the only cost metric that PPC managers need to be aware of.

The Average Cost metric is the average amount you have paid for user interactions with your ad. It is calculated as follows:

Total cost of ads / total number of interactions

For example, let’s say your ad receives two interactions – one at US$0.30 and one at US$0.40.

Average Cost = ($0.30 + $0.40) / 2 = US$0.35

The Interaction Rate is how often people respond to your ad when they view it. It is calculated as follows:

Number of Interactions / Number of Times the Ad Was Displayed

This is a useful value to track when gauging the efficacy of your advertising. For example, an ad that garners 1,000 impressions and 10 interactions would have an interaction rate of 1% – not a great impact!

Interactions can differ depending on the type of campaign. Imagine you have two campaigns running for the same product, one on video and one on the Search Network.

To measure performance, you can track clicks on the Search Network campaign. That won’t be so useful for measuring the video campaign. The key interaction here is video views.

Quite often, you’ll find yourself managing several campaign types. By using three cross-campaign reporting columns – Interactions, Interaction Rate, and Average Cost – you can quickly glean insights from the campaigns at a glance.

This makes it easier for PPC managers, data analysts, and even C-Suite members to evaluate campaign performance. The key metrics are presented relevant to each campaign type, and you can gauge how effective the ads are in relation to your advertising goals and objectives.

Typically, the countries that share strong economic ties with the US have a few things in common:

In fact, Google almost monopolizes the search engine industry in such countries, with little challenge from any other engine.

When you are actively working on reducing Google Ads costs, it’s important to look at both of these key metrics.

As your marketing efforts grow, you can use the Average Cost metric to assess costs across several campaigns. Think about which countries your target audience is in and you can determine which interactions are worth the expense.

By keeping your average CPC in mind, you can find valuable keywords with a great impression opportunity for a relatively low cost. This enables you to earn cheaper clicks, more leads, and a better ROI.

Ultimately, there is lot to be gained by knowing the right metrics to measure for a successful ad campaign.