Why is Google Ads so expensive?

Why is Google Ads So Expensive in Australia?

Google Ads can be a significant investment for businesses in Australia, and several key factors contribute to the high costs associated with running these campaigns. Understanding these factors can help businesses better strategise and manage their advertising budgets effectively.

Highly Competitive Industries

Certain industries, such as insurance, legal, finance, and real estate, tend to have extremely high costs-per-click (CPCs) on Google Ads due to intense competition. For instance, the average CPC for insurance keywords in Australia is around $13.37. These industries are highly competitive, driving up the bidding prices as multiple businesses vie for the same ad space.

Commercial Intent Keywords

Keywords that indicate a high commercial intent, meaning they suggest a user's intention to purchase, tend to have much higher CPCs compared to informational keywords. Advertisers are willing to pay more for clicks that are more likely to convert into sales or leads. This is particularly true for keywords that directly relate to buying decisions or high-value services.

High Search Volume Keywords

Popular keywords with very high search volumes also drive up costs through increased competition and demand. While these keywords can generate a lot of traffic, they can also be very expensive. Businesses might find more economical options by targeting less competitive, long-tail keywords that still attract relevant traffic but at a lower cost.

Quality Score Impact

Google's Quality Score system evaluates the relevance and quality of your ads and landing pages. A low Quality Score can lead to higher CPCs even if you bid the same amount as your competitors. Improving your Quality Score through better ad relevance, user experience, and landing page quality can help reduce costs.

Auction-Based Bidding Model

Google Ads operates on an auction-based pay-per-click model where advertisers bid against each other for ad placements. This bidding system inherently drives up costs, especially for the most desirable ad inventory. The more businesses that bid on a keyword, the higher the price becomes.

Strategies to Mitigate Costs

To manage and potentially reduce Google Ads costs, businesses can implement several strategies:

• Strategic Keyword Selection: Focus on targeting long-tail keywords that are less competitive but still relevant to your business.
• Quality Score Optimisation: Enhance your ad and landing page quality to improve your Quality Score and reduce CPCs.
• Tight Campaign Structure: Organise your campaigns and ad groups effectively to ensure high relevance and performance.
• Smart Bidding Strategies: Use automated bidding strategies that optimise for conversions and cost-efficiency.

Are There Specific Times of the Year When Google Ads Costs Are Lower in Australia?

Based on the information provided, there are no specific mentions of times of the year when Google Ads costs are generally lower in Australia. However, several factors could potentially influence seasonal cost fluctuations:

• Competition Levels: Costs are heavily influenced by competition levels for certain keywords and industries. During off-peak seasons for some businesses, competition and ad spend may decrease, potentially lowering costs temporarily.
• Consumer Demand: Higher consumer demand periods, such as holidays or peak seasons, could drive up competition and ad costs as more businesses increase their ad spend to capture that demand. Conversely, slower periods may see a dip in costs.
• Promotional Periods: Some businesses may ramp up advertising during big promotional periods like Black Friday and Christmas, increasing competition and costs around those times. The periods just before or after major promotions could potentially see lower costs.
• Geographic Factors: Costs may vary geographically, with local campaigns in less competitive regions potentially being cheaper than national or urban-centric campaigns.

Monitoring and optimising campaigns based on cost trends, competition levels, and performance metrics is essential to capitalise on any potential cost fluctuations throughout the year in Australia.

Conclusion

Google Ads can be expensive for businesses in Australia due to factors such as intense industry competition, high commercial intent keywords, high search volumes, low Quality Scores, and the auction-based bidding model. By understanding these factors and employing strategic measures, businesses can better manage their Google Ads campaigns and optimise their advertising spend.

For personalised assistance in setting up and optimising your Google Ads campaigns, reach out to Bobo Digital. Our experts are dedicated to helping you maximise your digital marketing efforts and achieve your business goals. Contact us today to get started!

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