Understanding Google Ads Pricing Structure and Cost Factors

Google Ads pricing is primarily based on a pay-per-click (PPC) model, where advertisers are charged each time a user clicks on their ad. The cost per click (CPC) varies widely depending on several key factors:

1. Campaign Type:

   • Search Ads appear on Google search results and typically have higher CPCs because they target users with strong purchase intent. CPCs for Search Ads generally range from SGD $2 to $20.
   • Display Ads appear as banners or videos on websites, apps, and YouTube, with much lower CPCs (SGD $0.05 to $0.80) but usually require more clicks to convert since they target users who may not be actively searching.
   • Other campaign types like Performance Max and Shopping Ads have CPCs ranging roughly from SGD $0.20 to $2 and SGD $0.20 to $1, respectively.

2. Industry and Competition:
   CPCs vary significantly by industry due to competition and lead value. For example, legal services and fintech sectors tend to have higher CPCs, while industries like travel or automotive have lower CPCs. This is because advertisers in competitive, high-value industries are willing to pay more for clicks.

3. Ad Quality and Relevance (Quality Score):
   Google assigns a Quality Score based on the relevance of the ad and the landing page experience. Higher Quality Scores can lower CPCs because Google rewards more relevant ads with better placement at a lower cost.

4. Location and Device Targeting:
   Costs vary depending on where the ads are shown and on which devices. Ads targeted to highly competitive locations or specific devices (desktop vs mobile) can have different CPCs. For example, B2B keywords may cost more on desktops, while B2C keywords might be pricier on mobile.

5. Seasonality and Trends:
   Advertising costs fluctuate with market demand. During peak seasons or events (e.g., festive periods), competition increases, driving up CPCs.

6. Budget and Bidding Strategy:
   Advertisers set daily or monthly budgets and choose bidding strategies (manual CPC, automated bidding, target CPA, etc.) that influence how much they pay per click or conversion.

Typical monthly budgets for businesses vary widely but often range from SGD $1,000 to $10,000+ depending on goals and scale.

In summary, Google Ads pricing is dynamic and influenced by campaign type, industry competition, ad quality, targeting settings, and market trends. Understanding these factors helps advertisers optimise their spend and campaign performance.