At Ernst Media, we mainly manage PPC campaigns for what I like to call medium-small businesses. When onboarding new clients, many of them don't even have a Google Ads account.

Initial calls often start with the same question...the one that you also want answered.

How Much Does Google Advertising Cost for a Small Business?

The Google Ads pricing isn't related to the size of your business. Some of our clients are big companies with a $10K monthly budget. Others who want to scale small businesses have a monthly Google ads spend exceeding $20K.

You're probably thinking that's nonsense, so let me explain.

A big business may operate with a $100K advertising budget spread across different marketing channels. In the absence of a marketing team and capital for experiments, small business owners often focus on one channel.

They know that Google ads work well for small businesses and go all in.

Does that mean you need a five-figure budget? Not at all...you can start with a couple of thousand and then increase your ad spend or stick with the same amount.


Hi, my name is Evan Ernst. In this blog post, we'll talk about the factors impacting Google Ads cost and how to estimate your budget.


Factors Determining Google Ads Costs

factors that impact the cost of google ads

Your Industry

Industry plays a significant role in determining how much you'll spend on Google ads. In other words, the average cost per click (CPC) is closely related to your competition.

We work with a tech company whose ads cost between $3 and $4 per click. Another client of ours is a small travel agency in Spokane, and their average CPC is below $1.50.

Targeted Keywords

Similar to the law of supply and demand in economics, popular keywords are more expensive in PPC advertising. When working with small businesses, we target related key phrases with high search volumes but lower average CPCs.

For example, the CPC for "Rent a Classic Car" is $1.15, but for "Rent a Vintage Car" is $0.73.

Bidding

Once you pick some keywords, you need to decide how much you're willing to pay for each (keyword bid). The Google Ads auction uses the bid amount and ad quality score to decide which ads to show.

You don't need the highest bid for your ads to be displayed. I'll explain in the next sections.

Ad Quality Score

Google uses this metric to determine the relevance of your ad...How often people click on your paid ads (CTR) and how long they stay on your landing pages.

As mentioned in our Google Ads strategy tips, your ad quality score is very important, especially for a small business. It can lower your average Google ads cost and improve ad placement. Here is how.

Your Ad Rank

Google calculates your ad rank by multiplying the bid amount and quality score. The search ads with higher rankings are the winners...They get the top spot in search results (below Google's LSAs, which are now displayed above everything).

So, how can you increase the ad rank with a limited budget?

Instead of placing higher bids, we optimize Google ads and landing pages to improve the quality score. That's how we get all those glowing testimonials from small business owners who trust us with their PPC campaign management.

Now that you know what impacts Google advertising costs, let's talk about budgeting.


What's a Good Google Ads Budget for Small Businesses?

google ads budget for small businesses

To figure out the Google Ads budget for your small business, you need to determine your goals first. Folks often think it's the other way around, but when I mention this one thing, they get it.

The higher the ROI you want to achieve, the bigger the budget should be!

Google provides a simple explanation of how ROI works, but...If you start looking for information on the ROI of Google Ads, you'll stumble upon different opinions.

Some marketers claim it's 800%. While we've achieved such numbers, this is rare rather than common for most industries.

Others say Google has set the ROI to 100%, or $2 in return for every $1 spent on ads. Being a digital marketer for nearly two decades, for me 100% isn't satisfying.

At Ernst Media, we aim for a 3-4x monthly return. Silvetrac's case study is a great example.

Here is how to estimate a monthly budget for your Google ads campaigns, regardless of the option you choose for promoting your business.


Google Ads Cost (Direct Spend)

Let's say your small business generates $12,000 in monthly revenue, and you aim to scale this by 50% (an additional $6,000 in revenue).

If your average order value (AOV) is $200, you need 30 more sales ($6,000 / $200 = 30 sales).

The next metric to consider is your website's conversion rate. If 5% of visitors make a purchase, you'll need 600 clicks (30 sales / 0.05 conversion rate = 600 clicks).

Finally, you need to add the cost per click. If the average CPC in your industry is $2.00, you would need to budget $1,200 per month for your Google Ads campaign (600 clicks * $2.00 CPC = $1,200).


Google Ads Management Fee

I know this will sound like a sales pitch...but it's also the reality.

Having a budget isn't going to be enough to achieve good results from your ad campaigns. It takes skills and experience. So, if you're serious about growing your small business...you need to add professional services to your Google advertising costs.

Many companies offering PPC management charge a percentage of ad spend, with a minimum set between $1K and $2K. Others base their fees on performance (generated leads or sales).

I don't judge them, but being the founder of a Google ad agency helping small businesses grow, I believe this isn't fair.

As a boutique digital marketing agency, we charge $95 per hour. Even if you double your budget, the amount of work we need to do won't.

Thus, the Google ads management fee will not increase proportionately to your ad spend. That's one of the reasons our clients stay with us for years.

How does our pricing add up to your total Google ads costs?

In the above example, you need to spend $1,200 monthly on Google ads to increase your revenue from $12,000 to $18,000.

We'll spend an average of 2 hours weekly (8 hours/month) managing your PPC advertising campaigns. 8 hours x $95 = $760 in ad management fees.

The total cost will be $1,200 direct ad spend + $760 campaign management = $1,960.

That's why we advise new clients to start with a minimum $2,000 Google ads budget. It allows you to be competitive and generate enough data in the first month.

Then, we can use the data to further optimize and grow your Google ads account.


Ready to take your company to the next level with Google Ads?

work with a boutique digital marketing agency to grow your business

 

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