Power Your Business by Taking Control of Your Google Ads Budget

Introduction

If you are reading this, you are probably starting a new business and looking for ways to get initial traction to your website. If that is so, then you are exactly at the right place. Google is the largest search engine in the world. As of March 2025, it has 89.7% market share.

And, Google Ads has proved to be effective for millions of new businesses. In fact, 65% of users click on ads while making purchase decisions.

For ecommerce businesses, more than 18% of direct sales come through Google Ads. These stats prove that spending on Google Ads is a golden opportunity for new businesses to establish their brands.

But it does not imply guaranteed results. Many businesses fail at implementing the right strategy. They spend a significant part of their budgets on targeting high-competition keywords for landing pages that don’t align.

For conducting successful campaigns, you need to understand Google Ads pricing structure, bidding strategies, competitors’ strategies, what is trending in the market, and your business’s unique selling points.

Based on these factors, you need to allocate a budget for ads, and keep it flexible based on your returns.

This blog will give you complete information, backed by data, about how much Google Ads cost based on industry, what are the factors affecting the price, and strategies for you to get the most out of Google Ads.

How Much Do Google Ads Cost?

The cost of Google Ads can range from a few dollars to hundreds or even thousands, depending on the type of ads, industry, and region. This cost is measured using CPC, which stands for Cost Per Click. This is the amount you pay for every click your ad gets.

Each keyword has its own CPC. A higher CPC indicates that more advertisers are bidding for that keyword, suggesting it has a higher potential to generate leads or customers. Consequently, competition for this keyword increases.

So, the question is, what determines whether your page ranks for this keyword?

This is where other factors come into play: the quality of your landing page, the relevance of your ad copy, the design of your ad, your bid amount, the geographic area you’re targeting, and the level of market competition.

We will explore all these factors in detail as you read further.

Based on various factors, it’s observed that Search Ads and Display Ads have average CPCs of $2.69 and $0.63, respectively.

For Shopping Ads, the average CPC is $0.66, while Video Ads range between $0.25 and $0.35.

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Further, when we look at the different industries, the keywords related to the legal industry have been found to have the highest CPCs due to the lucrative nature of the business, and keywords in the entertainment domain have lowest CPC, as it’s a leisure related business.

Here’s a detailed chart showing industry wise Global CPCs.

As mentioned before, it is not only the industry type that decides the pricing of Google Ads. There are many other factors that determine the variations. Let’s get into the details of them.

Factors That Impact Google Ads Pricing

Type of Industry

As we have seen, the type of industry influences the CPCs to a great extent. But why?

The answer is directly related to the revenue that an ad can drive to the business.

Considering the chart displayed above, a company operating in legal services, or home improvement will have higher ROI from a google ad compared to an apparel or fashion related business.

Legal or home improvement services can get high revenue generating clients through ads, whereas an online apparel store may be able to only sell a few products.

This is how the nature of business directly influences the CPCs.

Business Size

For smaller businesses it is necessary to focus on local high intent keywords, since they want to establish their brand and then scale.

For large businesses, the intent of spending on Google Ads is more inclined towards brand awareness, retargeting, and hence they focus on broader keywords.

Based on the current stage, a business must decide on how they will be spending on Google Ads.

Here’s a general idea of what typical monthly Google Ads spends can be based on business size:

Customer Lifecycle

Your Google Ads spend also depends on where your customer is in their lifecycle. Are you targeting people who don’t even know about you, or those who are already looking for a solution to a problem you’re addressing?

The first case is like approaching a stranger on the street and trying to pitch your business. Conversions will likely be lower, and you’ll be targeting broader, general keywords with higher CPCs. For example, a bakery might bid on keywords like “best cakes” or “order birthday cake online.” These searches show general interest but don’t guarantee immediate purchase intent.

In the latter case, your target keywords will be more specific, which typically have lower CPCs and higher chances of conversion. Continuing the earlier example, the bakery may focus on keywords like “buy chocolate truffle cake near me” or “same-day birthday cake delivery.” In this case understanding your business proposition is also crucial.

With a well-designed landing page, there’s a much better chance of converting these visitors into customers.

Current Trends

Seasons and market demands also affect Google Ads pricing. If you observe, every year the CPC for the travel industry is higher during holiday seasons. Ecommerce industry sees higher biddings during festive seasons like Christmas, Black Friday, or Diwali.

During Black Friday season in 2024, online ecommerce brand Temu bid on seasonal keywords like “Walmart Black Friday Deals” and “Kohls Black Friday”. Another popular e-commerce website, Shein, targeted “Walmart clothes” increasing the keywords’ CPC by 16 times when compared between Aug 2022 to Aug 2024.

Quality of Your Account

Google rates your account with a quality score based on how relevant your keywords, ads, and landing pages are. The headings of ad copy and content inside the pages should have the same intent as targeted by the keyword. This will result in higher CTR and lower bounce rates. These positive signals are rewarded with a higher quality score.

If your ad copy and keywords lack clear intent, it can lead to lower CTRs and higher bounce rates, which send negative signals to Google.

High quality score means lower CPCs.

How Does Google Determine Your Cost-Per-Click (CPC)?

To calculate your CPC, Google determines two metrics.

• Quality Score
• Ad Rank

Quality Score

Quality Score is a rating given by Google to your account based on keyword relevancy with respect to the ad copy and landing page. The score is given between 1 to 10, where 1 means lowest and 10 means highest.

Ad Rank

Ad Rank is a score that gives an idea of how better your ad will rank in search results compared to your competitors.

This is calculated as

Ad Rank = Quality Score × Max Bid.

Where, Max Bid is the maximum amount you are willing to pay per click.

A lower Ad Rank may mean that your ad is not showing at all.

Final CPC Calculations

The formula clearly infers that if you maintain a higher quality score, your CPC will be less. That means, if you maintain a good quality score, you can beat your strongest competitors with comparatively lesser CPC.

Now, let us see how you can allocate a budget for Google Ads campaigns.

How Google Ads Budgeting Works

To determine your Google Ads budget, you need to ask the following questions.

• What proportion of my website traffic should be from Google Ads?
• What is the CPC of keywords I want to target?
• How much are my competitors spending on Google Ads?

Based on your answers to these questions you will have to arrive at your daily or monthly budget.

When you set out to start a campaign, you will need to enter your daily budget. It will be divided on a daily basis, and used depending on the traffic. Google uses budget pacing strategies to optimize your daily spends.

On the days where traffic is high, Google will spend more than your daily budget. On less traffic days, Google will spend less. But, your overall monthly spending will not cross the budget you mentioned.

You can set a budget for each campaign as well.

Differences Between Daily and Monthly Spending

Now that you know how Google optimizes your budget, let’s break down the relationship between your daily and monthly budgets.

Say, your daily budget for a campaign is $10. Google caps your monthly budget to 30.4 times the daily budget. So, for your campaign, monthly budget will be 30.4 x 10 = $304

So, over the entire month, there will be days, based on the traffic, where your daily budget is more than $10. This is called overdelivery.

But, your monthly budget will remain $304.

Budgeting for Different Campaigns

Try to recollect where all you have seen Ads while browsing across the internet. You might have seen them on Google search results page, on the top, side or bottom of a webpage, in Youtube before the video starts, right? All these are different types of ads where you can promote your business.

Let’s get into the details and understand each one of these.

Search Ads

These are the ads that appear on Google search results page. Here is how they look.

These ads are relevant for your landing pages for lead generation where users can sign up. To target these ads, you will have to bid on the keywords (in the image mentioned above it is “Google Ads campaign tips”). Each keyword has a CPC, Cost Per Click. This is the amount you will have to pay for every click users make on your ad.

The best strategy to run a successful search ads campaign would be targeting low CPC keywords at the start, and then slowly move to high CPC ones. You will also need to maintain a healthy quality score.

Display Ads

These ads appear on the pages of websites that earn through Google ads. The ads are placed within the webpage content and are displayed based on the users browsing history and cookies. This is how they look.

This campaign type is suitable for creating brand awareness, and targeting top of the funnel pages. Unlike search ads, here the bidding is done on Cost Per Impression (CPM) basis. You will be charged per 1000 impressions.

Shopping Ads

These ads are commonly used by e-commerce websites to display specific products. These appear in Google search results page or Google Shopping for transactional searches.

This is how they look.

You can manage them using Google Merchant Center and bid them on a CPC basis. Best practice is to optimize the product page title as per the keywords bid to get maximum CTR and sales.

Video Ads

These ads appear just before, during or after a YouTube video. You can choose between skippable and unskippable ads. The budgeting is done on CPV, that is Cost-Per-View basis, and it is considered one view only if the user spends more than 30 seconds on an ad.

These ad campaigns are perfect for brand advertisement for new product launch or category creation. Keeping the videos short and showing the most value in the beginning helps to get most out of these ads as users generally skip them.

Performance Max

These ads are automated by Google using AI. To run PMax ads, you need to provide all creatives to Google, like texts, images, videos, etc and set your budget. Google will use your creatives and display them based on different factors.

These campaigns are useful for big businesses looking to scale across different channels. Also, if you don’t want the hassle of deciding which ads to run for what purpose, you can use PMax and allow Google to do the rest. But, always start with a lower budget and make sure that you feed high quality information to Google.

If you are running an ecommerce business, here’s a summary of how you can split your budget across ad campaigns for a monthly budget of $10,000. This is only a general guideline, and it completely depends on the type of your business.

Budget Pacing Tips

How you get the best out of your Google Ads spending depends on many factors, and one of them is budget pacing. You need to keep an eye on how Google spends your daily budget. Are you getting results or not?

Although Google provides features like insights tab, comprehensive dashboards, budget reports, custom trackers, and performance planner, it is recommended to adopt some strategies from your side to manage your budgets well.

Here are some budget pacing tips for you,

• Start Slow, Scale Later: You may call it a defensive strategy but if you are new to the market, it is best to follow this. Instead of going aggressive, observe how google algorithm reacts to your ads. See if you are getting enough clicks. Google will also take time to learn your audience. So, start with long tail keywords that have low competitions. If your potential customers are aware of your brand, you can go for branded keywords as well. Once you start seeing enough traction, then target broader keywords with high CPC. Go aggressive. Create templates for your landing pages and scale!
• Set Bid Caps: Bid caps are a way of setting a limit for Google to spend your ads budget. If you don’t set bid caps, there is a chance that Google may go for high CPC keywords leading to less conversions. Setting a bid cap helps you optimize your ad spend. There are two ways you can do this. Manual CPC bidding, and maximize clicks bidding. In manual CPC bidding, you can set the limit on each keyword or a group of keywords. You can micromanage your campaign cost. In maximizing clicks bid, Google will automate the campaigns such that it gets maximum clicks in your daily budget. If you know your target customer profile clearly, we suggest you go for a manual CPC bidding strategy, because more clicks does not always mean more conversions.
• Pause Low-Performing Campaigns: As an ad manager or a business owner, you must be like an eagle surveilling across the dashboard. You must keep tracking metrics like cost per conversion, return on ad spend (ROAS), and conversion rate. If any campaign is not performing as expected, pause them and use the budget to amplify other campaigns that are performing well.

Advanced Budget Optimization Strategies

Once you understand different types of ads, how to split your budget within them, and optimizing your campaigns through budget pacing, you are done with the basics. To further squeeze the best out of your Google ads you need to understand advanced strategies.

Before bidding, you need to segregate keywords based on their intent and create a refined plan for targeting them. The landing pages should be focused on the keyword intent. Any unfocussed content may cause ranking for wrong keywords, and therefore higher ad spend.

Once you have clear keywords and landing pages, the game of bidding starts.

Smart Bidding Strategies

The strategies discussed in this section rely on machine learning algorithms. These algorithms need enough data to learn how users are interacting with your landing pages, by analyzing metrics like bounce rates, on-page clicks, and completed purchases.

In the early stages of a campaign, however, there often isn’t enough data for the algorithm to make accurate decisions. As a result, these smart bidding strategies may not perform well initially. The system may misinterpret user behavior, leading to inefficient budget spending and poor results.

So, adopt them only after you have been running ad campaigns for at least two months.

Target CPA (Cost Per Acquisition)

When you opt for tCPA bidding strategy, Google bids for each keyword differently based on the chances of conversion. The algorithm analyses your historical data to understand the relation between your conversion rates and type of keywords.

This strategy helps you get maximum conversions by staying within cost per acquisition limits. But, for it to work you need to set up clear data tracking.

Maximize Conversions

This strategy focuses on getting maximum conversions. Conversions can be signing up for your digital product or purchasing a product from your ecommerce store.

When you set this strategy, Google decides which keywords to target irrespective of CPC to give you maximum conversions. This strategy is recommended when you are launching a new product and you need more customers to make a purchase.

Target ROAS

In this strategy, Google optimizes your budget to help you achieve better return over ad spend. More than conversions, it will bid on high priced product keywords like “designer handmade bags” instead of “sunglasses at best price”.

The strategy is machined by algorithms by understanding the purchase behavior of your past customers, and in general customer behavior of your industry.

The strategy is recommended for big ecommerce sites which have products of varying types and price ranges.

Bid Adjustments for Cost Efficiency

Another way to optimize your bidding strategy is adjusting the bid price based on time, device, and location. These strategies can be combined with other above mentioned strategies as well. Understanding the pattern and sometimes following your instincts is the key here.

Time Based

Study your Google Ads reports and understand the time of the day when your ads perform the best. Increase your bids during peak hours and reduce the amount during off hours. Start with smaller adjustments at first and go for a minimum risk way.

Device Based

Here, you can adjust your bids based on the best performing devices for your ads. The process of analysing is similar to time based ads.

It is observed that even though mobile users tend to click more on Google Ads compared to desktop users, their conversion rates are lesser. This can be due to their low attention spans. So, CTA based ads perform better on mobile devices and long term ads (those related to B2B industry) can perform better on desktop.

Location Based

This is the most effective bid adjustment strategy that will work if you are aware of the region your target audience belongs to. The copywriting style for ads and landing page designs will greatly vary based on the region and language used. You can prioritize regions and spend more where you see high potential.

Hidden Costs & Additional Expenses

The advertising costs are not only about the direct CPC related costs. There are other expenses also that you have to consider to know a correct estimate of your ROI.

Other expenses include the cost of designing and developing landing pages, tools cost, agency fees, salaries of team members, penalties for irrelevant ads, etc.

Agency and Management Costs

Agencies charge in three ways.

• Flat Monthly Fee: The flat monthly fee can range anywhere between $500 – 5,000+ per month.
• Percentage of Ad Spend: The agencies charging based on percentage of ad spend can ask for 10% to 30% of monthly ad spend.
• Hourly Rates.

If you have complex ad campaigns to run it is recommended to go with agencies as they bring expertise. For easy to manage campaigns building in-house teams will be a more cost effective option.

Third-Party Tools and Software

Most of the tools needed for managing Google Ads work on a subscription model. Few tools have a one time fee. We have listed some tools below. You can go to the pricing page of their website and see for the features you want. Each plan will offer different level access to the features.

Some must have tools to manage your campaigns are:

• Optimyzr: A PPC management software that provides a dashboard for analysis, API integration to make changes to your ads, alerts and notifications to help you stay updated. Annual plan costs $208 per month.
• Google Ads Editor: A free downloadable tool to make changes to your ad campaigns. You can manage multiple accounts and work offline.
• Trueclicks: This tool helps you manage multiple client accounts. It helps you maintain account health by showing the account score. You can quickly make necessary enhancements to improve the account health. The pricing depends on your monthly ad spend. If your ad spend is $100k, it will be $208 per month.
• SEMrush: A popular affordable tool for countrywise keyword research. The tool shows you CPC and PPC values for every keyword. Certainly a must have! The basic plan costs around $140.

Case Study – How Ramona La Rue Grew Its ROAS from 0 to 6.4x

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Let us now understand about a brand that has used Google Ads to grow its business. This case study will help you implement proven strategies and achieve tangible results.

Ramona La Rue is a B2B fashion ecommerce brand selling dresses, pants, accessories, outerwear, and kaftans.

Their goal was to achieve 6x ROAS by implementing realistic Google Ads strategies.

They adopted three steps to achieve this,

• Focused on Branded Keywords: They started with brand search campaigns for keywords like “Ramona La Rue” and “Ramona La Rue reviews”, with more focused on shopping ads than display or search ads. Shopping ads work best for e-commerce businesses.
• Filtered Unnecessary Keywords: Since it’s a fashion brand, the products had words like “alligator”, “vanilla”, and “sunflower” because of the dress design or patterns. But these pages were getting clicks for irrelevant keywords, increasing the budget spend. They added those keywords in the “negative keywords” list. This reduced the impressions and clicks, but improved the conversion rates because the ads started ranking for relevant terms only.
• High Quality Pictures: To further improve the conversions, they also used high quality pictures on their product pages. These pictures enhanced their brand attributes and convinced the readers to trust.

By implementing these three strategies Ramona La Rue was able to generate 6.4x ROAS in just one month.

FAQs on Google Ads Pricing

1. How Much Does Google Ads Cost Per Month?

   The cost of Google Ads depends on the size of your businesses, industry, and CPC of the keywords you are targeting. Generally for small to medium size businesses, it will range anywhere between $1000 to $10000.

2. What Is the Average CPC?

   The average CPC depends on the type of ads. For search ads it is around $2 whereas for display ads it is around $0.5

3. How Do I Reduce Wasted Spend?

   To reduce wasted spend, use negative keywords, automated bidding strategies like tCPA, tROAS, and adjust bids according to device, location, and time of the day. You can also use budget pacing techniques as well.

4. How Much Do Small Businesses Typically Spend?

   Small businesses spend $1000 to $5000 per month on Google Ads. Although it depends on various factors, if you are just starting out, $1500 per month would be a good budget.

5. Is $5 Per Day Enough for Google Ads?

   So, $5 means $150 per month. Such less budget will not give you enough visibility to understand your market and your progress will be very slow. At least have a budget of $25-$30 per day.

Is Google Ads Right for Your Business?

Whether Google Ads is right for your business or not depends on how you optimize your budget and how effectively you use the strategies mentioned in this blog.

Generally, businesses focus more on Google Ads when they are just starting out. Optimized landing pages and clever choice of keywords gives them the initial push they need to bring brand visibility and sales. After they have started getting decent traffic on their website, they slowly deviate towards organic SEO.

Later on they conduct ad campaigns for only new products or categories being launched.

You can also adopt this strategy, provided you have clarity about your business and market demand.

You can use this blog as a guide to test all the concepts for your understanding and then jump in!

Ready to Maximize Your Google Ads ROI?

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We have experts to manage ad platforms, write and design content, We are currently managing monthly ad spend of $2M.

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Hari Gopinath

Director of Digital Marketing

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With over 14 years of experience, Hari Gopinath brings expertise in digital marketing and e-commerce marketing. He specializes in SEO, SEM, and building conversion-focused strategies that drive traffic, sales, and revenue. Hari has successfully led multi-channel campaigns and has worked with global clients across diverse industries to build scalable, ROI-driven digital solutions. In his free time, he enjoys exploring new marketing trends and screenwriting.