How Much Does PPC Cost?

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Alex Fleming
By Alex Fleming

All marketing efforts come at a cost, and that includes PPC (hence the “Pay” in Pay-per-Click). But how much are these efforts going to cost your business? The beauty in PPC is that you make your own budget and can be as flexible as you would like when setting them. Due to this, it can be tough to determine an exact amount that PPC advertising will cost you, but there are certain factors within your strategy that can have a major effect on what you will be spending.

Brand Vs. Non-Brand

The types of keywords that you would like to bid on play a huge role in what your PPC advertising costs are going to be. Branded keywords are typically your bread and butter and come at a much cheaper cost. The main reason for this is that branded keywords will have much higher quality scores than non-brand keywords. Quality score mainly focuses on ad relevance, expected click-through-rate (CTR), and landing page experience. Branded keywords, in nature, will be strong in these three aspects.

Your ads will be relevant because they will contain your brand name in them (at least they should) along with the search term that a user is typing into Google. Ads won’t get much more relevant than that. Competitors, who can’t have your brand name in their ad copy, will have a lower quality score making them easier to beat in the ad auction.

Expected CTR should also be higher on your branded keywords. Users are aware of your brand, which is why they searched for it, and are much more likely to click on your ad than if their query didn’t contain your brand within it. Landing page experience is a little more of a crapshoot but, in theory, should still be strong. Google crawls your website attempting to locate keywords that are related to what the user searched for, meaning that your brand name should be all over the page. While loading time and overall site speed play a role also, your page content should be enough to bolster this piece of quality score.

Related: 4 Ways to Monitor Your PPC Competitors

Non-brand keywords face much tougher challenges and can be more of an uphill battle. For starters, the competition is much higher for non-brand keywords. If you think they’re good to bid on, chances are your competitors feel the same. While competitors may also be bidding on your brand terms, their ad copy won’t feature your brand name (if so, cease and desist asap), so you’ll have the edge there. Your CTR will generally be lower as well, as the user may be in the information search stage and are browsing the multiple options that appear when they make their search. These factors will force you to set higher bids and ultimately accrue an overall higher cost-per-click. A higher CPC means, you guessed it, higher overall costs.

Match Types

The match types you select for keywords, whether that be broad, broad match modified (BMM), phrase or exact will factor into the costs that you’ll face. Exact match keywords will usually have the lowest CPC’s as there is less competition for them. Intuitively, there are less competitors bidding on the exact query, word for word, that you are bidding on. With broad match keywords, which I include BMM and phrase, the doors open to a whole new set of queries that can trigger your ad and the same happens for your competitors.

This new set can be completely irrelevant, which will then hurt your CTR and quality score, and brings in added competition from unrelated industries. While broad match keywords are beneficial for casting a wide net and discovering new keywords to bid on, they come with additional costs.

How Do AdWords’ Policies Play A Role?

Google has recently announced, more like whispered, that your daily budgets are no longer the cap on spend that they used to be. Straight from the horse’s mouth:

Starting October 4, 2017, campaigns will be able to spend up to twice the average daily budget to help you reach your advertising goals.”

This essentially means that Google can spend double what your set budget is on any given day (we’ve already been witness to this) if they deem that the extra clicks will provide you with better results. It puts a lot more control into the hands of Google and their claims that they know best with their “big data”.  While your monthly budget will still hold firm, the dynamic of your campaigns can drastically change.

RelatedKeyword Research Tips for the PPC Beginner

It’s best practice to spread your budget out consistently throughout the month, and this new policy has a major effect on your ability to do so. If Google deems that certain clicks are more valuable to you and blows through ⅓ of your budget two weeks into the month, you could have some major issues on your hands. If those clicks didn’t turn into conversions, then your short on your lead or sales goals and almost out of budget.

Your monthly spend will now be maximized and it is just about guaranteed that you’ll hit that threshold. This policy is a safe bet that you’ll consistently hit your monthly budget, but if faced with the situation from above, you may be inclined to raise budgets to reach your lead goals.

Wrapping Up

Your advertising costs will vary depending on industry and the stage that your business is in.  For example, startups will face more costs as they try to build brand awareness and drive conversions than a well-known business whose brand markets itself. The amount you spend on PPC advertising is wholly up to you and if you know what your doing, dollars will be spent efficiently.

Paid search is intent based, so discovering a fixed amount that it will cost you is nearly impossible. If no one is searching or clicking on your ads, then you’re not spending. Looking at the factors above, however, can give you a sense of how PPC costs are accrued and can help you gauge what your costs will be.

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Alex is a Paid Media Project and Account Manager at Power Digital. A recent graduate in Marketing from San Diego State University, he began his digital marketing career as an intern at Power Digital where he quickly caught interest in the fast paced, dynamic landscape of PPC advertising.