Why is Google Ads more expensive than before? Cost increase guide

There are several reasons why Google Ads has become more expensive than before. Some common reasons for Google Ads becoming more expensive are the rise in demand, intensified competition, regular changes in the bidding system and the impact of automated bidding.

By understanding these dynamics, businesses can strategically adapt their approaches to navigate the evolving landscape of digital advertising costs.

If you would like to learn mainly about reducing costs then head to our detailed post about how to reduce Google Ads cost page.

In this guide, we will talk in detail about reasons for Google Ads bid increase so that you can plan better.

Table of contents:

  1. Rise in demand
  2. Inherent design to make profits
  3. Quality score and ad relevance
  4. Seasonal fluctuations
  5. The impact of automated bidding
  6. Role of Google

Rise in demand

Google, being the epicentre of online searches, has evolved into a prime platform for advertisers to grab consumer attention. As businesses recognise the potential to connect with their audience through Google Ads, the demand for ad space has skyrocketed.

This surge in demand has triggered intensified competition among advertisers, a competition that manifests through the bidding model inherent in Google Ads. The more competitive the landscape, the higher the bids required to secure prime positions in the Search Engine Results Pages (SERPs).

Consequently, the escalation in bidding, driven by heightened demand, stands out as a fundamental contributor to the augmented costs of Google Ads. This phenomenon extends to automated bidding strategies, where the pervasive competition exerts additional pressure, accentuating the overall cost increase within the Google Ads ecosystem. Understanding this dynamic is crucial for businesses aiming to navigate the complexities of the contemporary digital advertising landscape.

Inherent design to make profits

Most of the online advertising platforms are designed to generate significant revenue for the company and Google Ads is no different. The very design of Google Ads’ bidding system has been a substantial influence on the rising costs. Crafted to maximize revenue, the system pits advertisers against each other in a continual bidding war for prominent ad positions.

The unyielding competition in this bidding system leads to a consistent increase in the Cost-Per-Click (CPC) bids, posing a challenge for advertisers who find themselves grappling with elevated costs. This bidding war, deeply embedded in the platform’s structure, contributes significantly to the sustained increase in Google Ads costs.

Even during economic downturns, like the COVID-19 pandemic, where businesses faced closures, the bidding costs did not witness a significant decline, underscoring the resilience of Google Ads’ pricing dynamics.

Quality score and ad relevance

Beyond the dynamics of demand and bidding systems, the quality score of keywords and ad relevance significantly influence the escalation of Google Ads costs. The quality score is a metric that evaluates the relevance and quality of keywords and ads within campaigns. If keywords have a low-quality score, businesses are compelled to bid higher amounts to outcompete others in the auction. Advertisers pay a price for lower ad relevance, as it necessitates increased bids to secure desirable ad placements.

A poor quality score not only means higher costs per click (CPC) but also translates into an accumulated financial burden over time. Businesses lacking in ad relevance and struggling with lower quality scores may find themselves consistently paying more to maintain visibility. This underscores the multidimensional nature of the factors contributing to the overall increase in expenses on the Google Ads platform.

Seasonal fluctuations

Seasonal fluctuations inject a dynamic element into the costs associated with Google Ads. For many businesses, demand experiences periodic shifts based on seasonal trends, impacting the competitiveness and costs of advertising. In peak seasons when demand surges, consumers are often more predisposed to commit to purchases. This heightened intent to engage with products or services can result in a more favourable cost per acquisition for advertisers.

Example: consider, for instance, a heating and cooling service company. During extreme weather conditions, when temperatures are uncomfortably high or low, individuals may be prompted to address issues with their heating and cooling systems. This heightened demand can lead to increased enquiries and conversions at a lower cost. However, during off-peak or average seasons, when the urgency is diminished, users may be more circumspect about taking immediate action.

Consequently, businesses need to be cognizant of these seasonal nuances and strategically adjust their Google Ads campaigns to align with fluctuating demand patterns. Recognising the impact of seasonal dynamics is integral to navigating the variable landscape of Google Ads costs and optimising advertising efforts for maximum returns.

The impact of automated bidding

Automated bidding performs better when you have good conversion historical data. If your campaign has a poor conversion history or launching a new campaign then automated bidding may cost you more.

Without proper data, Google Ads automated bidding may bid higher which can result in higher cost.

It is critical to monitor your campaign performance, especially at the start or when you are not getting the best cost per conversion.

Role of Google

An article published in Search Engine Land, says: Google quietly increases ad prices to meet targets, claims exec.

Need help?

If you need help with managing a campaign or health check to ensure your budget is well spent, request a free consultation with webapex today! Visit our Google Ads cost page to learn more about the pricing in Australia.

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