Is Google Advertising Right for Your Business?

We know that most of your have heard of Google Adwords but still have many questions about how it works and how effective it is when it comes to advertising your business. That is why we were happy to come across WordStream’s THREE one-minute videos that explains how Google Adwords works, how much Google advertising cost and Google adwords performance benchmarks by the industry.

These videos are a TOTAL of 3 minutes long. A quick introduction to learn about how google advertising works. We added in quick summaries below each video in case the videos aren’t quick enough for you!

How Does Google Adwords Work?

The Short Answer:

When a user searches for something in Google, Google picks through the Adwords advertisers and determines if there will be an auction. If there is one or more advertiser that is bidding on keywords that are releveant to the search query (specific keywords ie. “Womens Perfume”, might be entered into auctions for a wide range of search queries such as “perfume for women” or “gifts for women”), then the auction is triggered!

Advertisers choose keywords that they want to bid on and how much they want to spend. Then group these keywords and pair them with Ads. Google will then enter the keyword that is most relevant from your account into the auction with your maximum bid and the paired ad.

Your Ad Rank is determined by your Cost Per Click Bid (CPC) and Quality Score (see below for “How Much Does Google Adwords Cost?”). If your ad is clicked on, you pay the minimum amount that you can for the position you won.


USERS find ads relevant to what they are looking for –> ADVERTISERS reach out to potential clients for the lowest price possible –> GOOGLE grows their revenue and swims in billions of dollars!

How Much Does Google Adwords Cost?

Take Away Points:

  • There is NO EASY answer; it’s NOT one-size-fits-all
  • It depends on several variables listed below:
    1. Quality Score – Adwords is an auction based system that will reward businesses with a better ad placement and lower cost IF you have relevant ad campaigns.
    2. Adwords Budget – You can have complete control over your budget and use helpful tactics to keep it lower with ad scheduling, device targeting and geotargeting.
    3. Ad Placement – On Google’s Search Network, the average Cost per Click is $1 – $2. On the Display Network it is under $1. (The more popular a keyword is, the more expensive it will be. See “Fun Facts” at the bottom for the “Top 10 Most Expensive Keywords”).
  • Giant retailers spend up to $50 million/year with Adwords.
  • Small businesses on average spend $100,000 to $120,000/year on Google paid search campaigns.
  • Adwords is a level playing field – just because you have the most money, it doesn’t mean you have the most influence.
  • Cost Per Click Bid x Quality Score = Ad Placement Rank

***TIP*** Focus on Long-tail keywords to keep your cost down —> they actually account for the majority of Web Searches.

Google Adwords Performance Benchmarks by Industry

Search & Display Adwords Averages Across ALL Industries

  • Click-Through Rate (CTR): Search = 1.91% Display = 0.35%
  • Cost per Click (CPC): Search = $2.32 Display = $0.58
  • Conversion Rate (CVR): Search = 2.70% Display = 0.89%
  • Cost per Action (CPA): Search = $59.18 Display = $60.76

***TIP*** If you are at the lower end of these numbers, then that means there is plenty of room for improvement!

The Top 10 Most Expensive Keywords are:

  1. Insurance
  2. Loans
  3. Mortgage
  4. Attorney
  5. Credit
  6. Lawyer
  7. Donate
  8. Degree
  9. Hosting
  10. Claim

Call Us or Email Us if you want consulting on how to improve your adwords accounts, setting up an adwords account or have any other questions about Google Adwords. One of our Google Adwords Managers will be happy to help!