There are many reasons why Google Ads has become more expensive than before. Some common reasons are a rise in demand, excessive competition, regular changes in the bidding system, and a core design aimed at making profits.
It’s important to note that although prices have gone up, Google Ads is still profitable for most businesses.
However, if you’re looking to cut down costs, check out our detailed post on how to reduce Google Ads costs.
Table of contents:
- Rise in demand
- Increased CPC cost
- Inherent design to make profits
- The impact of automated bidding
- Seasonal fluctuations
- Improved targeting options
Rise in demand
As more businesses go online, Google Ads demand has soared. Companies compete for the limited ad spots, thus driving up prices. It’s like a digital gold rush, with everyone competing for a piece of the action.
One main reason for the spike in Google Ads cost is the increased online competition. Businesses research their competitors’ Google Ads budgets and strategies, aiming to outshine them, which has led to a rise in cost per click (CPC), as we’ll discuss next.
Increased CPC cost
Google Ads operates on an auction-based model, where businesses battle for visibility. CPC is a key factor in determining if your ad will show up or not.
Businesses aim to rank high in Google Ads to make a strong impression on potential customers. This bidding war has caused CPC to skyrocket. It’s like a high-stakes poker game, where the highest bidder gets the best spot, there are a few other factors but CPC is the main one.
What is CPC, and how is it important for companies?
CPC, or Cost Per Click, is a pricing model used in Google Ads to charge advertisers each time a user clicks on their ad. It’s a crucial metric for advertisers because it directly impacts both the cost and effectiveness of their advertising campaigns.
Companies bid for higher CPC positions to increase their rankings on Google. In Google Ads, this is a common strategy to enhance visibility and drive more traffic to their websites.
By bidding higher, companies can secure top positions in search results, which typically leads to higher click-through rates (CTRs) and more potential conversions.
Inherent design to make profits
Online advertising platforms are there to make money, they have more data than anyone else about the industry pattern, CPC cost, user behaviour, advertiser budget and more.
They regularly make changes to adjust their needs to make profits.
Google Ads is no exception. While they do consider user and advertiser needs, their changes over the years show a clear focus on profit.
An article published in Search Engine Land, says: Google quietly increases ad prices to meet targets, claims exec.
The impact of automated bidding
In the early days of Google Ads, manual bidding was the norm. Advertisers had control over their CPC bids. But now, it’s all about automated bidding. It’s the system that calls the shots on how to bid.
While manual bidding is still an option, it might not deliver excellent results due to automated bidding’s dominance.
On the bright side, automated strategies like Target CPA or ROAS can yield impressive outcomes if your campaign is well set up. They work well as they use historical data to target the right audience.
Seasonal fluctuations
Seasonal increases in demand can significantly impact CPC for certain industries.
For example, during the holiday season, retailers experience a surge in competition as they compete for consumer attention, leading to higher advertising costs.
The National Retail Federation predicts that holiday sales can increase by up to 8%, with 82% of people planning to shop for Cyber Monday 2023. This created a rise in the CPC by up to 8%, showing just how much CPC can increase during peak shopping periods like Black Friday and Cyber Monday.
Similarly, industries such as travel and tourism see fluctuations during peak vacation times, such as summer or spring break.
All this shows that consumer intent varies from season to season, and advertisers fight for a spot amidst the competition to achieve high rankings. This obviously leads to higher CPC costs but is an asset when the reward is more conversions and sales.
Improved Targeting Options
Google Ads is always on the move, refining its targeting options to help advertisers capture their ideal audience. This precision targeting means you can speak directly to the audience most likely to be interested in what you’re offering.
But here’s the catch: as targeting gets better, Google Ads becomes more tight with advertisers. Everyone wants a piece of the action, which naturally drives up the costs.
It’s a classic case of supply and demand. The more valuable the tool, the more people are willing to pay for it.
So, even though you might be spending a bit more for your ads, you’re also getting a lot more bang for your buck. Your ads are reaching the right people at the right time, which can lead to higher conversion rates and a better return on investment.
FAQs
Is Google Ads more expensive now?
Yes, as discussed above, the rise in demand, increased CPC, automated bidding etc has made Google Ads to be more expensive than before.
Need help with Google Ads cost management?
Struggling to keep your Google Ads budget in check? We’ve got your back. At webapex, we can help you set a realistic budget and optimise it for the best returns.
Book a free consultation with us today! Visit our Google Ads cost page to learn more about pricing in Australia.
