How much does Google advertising cost for small businesses?

Google Ads is one of the most effective marketing channels for companies with lower budgets. But before launching a campaign, you need an understanding of average advertising costs for small businesses. And once that’s clear, you should compare Google advertising costs for small businesses to other marketing opportunities. Going in blind can quickly lead to a high ad spend, with little to show for it. So, here’s a breakdown of some average advertising costs for small businesses, as well as tips to get more out of your budget.

Google advertising costs for small businesses: An overview

Google’s PPC (pay-per-click) advertising platform (Google Ads) is an attractive proposition for small businesses. Because PPC ads only charge based on results, small businesses can keep a firm grip on their marketing costs. Google and other search marketing platforms like Bing let businesses decide how much they can afford to spend.

Google Ads for a search on “real estate agents near me” in New York

But how much does advertising cost for a small business? As you probably guessed, the answer is that it varies quite a bit based on various factors. The things that impact Google Ads costs include:

• The industry your business is in
• The keywords you’re bidding on
• Who you’re competing against in the auction
• The quality and relevance of your adverts
• Your bidding strategies
• Audience targeting (location, device, time of day, etc.)

Competitive keywords in industries like finance or law typically carry higher costs per click (CPC) than other sectors. And sadly, Google advertising costs for small businesses are on the rise. According to Wordstream, 61% of industries saw a YoY CPC increase in the period between April 2022 and March 2023. And 91% saw an increase in their cost per lead. So, while Google advertising makes sense for most small businesses, it's worth supplementing with more cost-effective strategies.

Benchmarks for small business Google advertising costs

For small businesses beginning their Google advertising journey, it can be tough to know if you’re getting real value from your ad spend.Over time, you’ll collect data of your own to compare to. But for beginners, it’s handy to know what other businesses in your industry are paying. It is estimated that for the Google Search Network, the average Google Ads CPC across industries is $1-2. The Google Display Network sees an average CPC of under $1. 

The industry with the highest average cost per click across a study on Google Ads and Microsoft Advertising is attorneys and legal services at $9.21. Meanwhile, local real estate business owners can expect a much lower CPC, with an average of $1.55. But clicks are not the same as conversions, so businesses must work out how much it costs to attract a paying customer. Career and employment businesses have the highest average cost per lead at $132.95. On the other end of the spectrum, leads for automotive repair, services, and parts cost a lot less at only $21.12. Choosing Google’s biggest search competitor, Bing (Microsoft Advertising), might save you a little money with 33% lower CPCs than Google Ads. For industries with high CPCs on Google, Bing might be a cost-effective alternative. But there are more ways to use Google to bring down average advertising costs for small businesses than straightforward search ads.

Google allows small businesses to target customers that have already visited their website through display advertising. This ad type is typically cheaper per click than search ads. For service-oriented businesses, Google Local Services Ads are a great way to target locals. It guarantees you’re only attracting customers who are actively seeking your services in your geographic area. And if spiraling advertising costs are too much to bear, you can still get Google traffic with a local SEO strategy.

How to set a Google advertising budget for small businesses

Traditional advertising like television, radio, and print media tends to demand substantial budgets. And it’s not always easy to gauge the effectiveness of this type of campaign. But with Google Ads, small business owners can set their own budgets and see exactly what their return on investment (ROI) is.

A breakdown of Google advertising costs for a small business as shown on the platform itself

To work out how much you should be spending on digital advertising, you’ll need to analyze your marketing data. The better your data, the clearer your understanding of how much it costs you to acquire a customer through advertising. To get that data, you’ll need to commit a reasonable amount of marketing spend to advertising on Google. According to various studies, small businesses can spend between $500 and $10,000 a month on Google Ads. 

However, the lower end of this scale might not deliver enough insight to understand your true cost per acquisition. Businesses with only $500 a month to spend might be better off saving for six months and running a campaign over a shorter period. For specific CPCs and Google advertising costs for small businesses, try Keyword Planner or Semrush’s Keyword Research Tools.

Hidden Google advertising costs to bear in mind

On top of Google advertising costs, small businesses need to factor associated expenses into overall ROI. If you’re not confident in running ad campaigns yourself, you may need to hire a freelancer or agency. A Google Ads expert typically costs $15 –$40 per hour, or they may charge based on a percentage of your ad spend. Expect to pay at least $500 to run a small business campaign. Good Google Ads experts also run A/B tests on your sales process to make sure it’s simple for users to convert. Optimization tools start at around $30 a month, but in the long run, this should lower advertising costs for small businesses.

To tailor the experience to the specific customer query, many businesses build dedicated landing pages. This may require the assistance of a web developer or a landing page platform like Unbounce, which starts at $89 a month. Leveraging analytics, keyword research tools, and ad performance trackers can also reduce advertising costs for small businesses.

A mockup of Semrush’s keyword research tool

Semrush’s paid advertising tools give small businesses accurate data on keywords, including search volume, competition, and average CPC. Plans start at $129.95.

Getting more out of your Google advertising spend

Once you’ve got your small business’s Google Ads account up and running, it’s time to get to work on bringing costs down. Optimize your keyword targeting to focus on higher CTRs (click-through rates) and lower CPAs (costs per acquisition). You’ll probably find that long-tail keywords have lower competition and higher intent than short-tail keywords. Refine your ad copy so it’s more compelling and directly addresses your target audience’s pain points. Use ad extensions (like site links, callouts, and structured snippets) to provide additional information and increase visibility.

A local Google ad with site links

Review the landing pages linked to your ads. Make sure they have a clear call-to-action (CTA) and that the messaging between the ad and landing page is coherent.Use ad scheduling to display your ads during peak times. Also, target the specific geographic locations where your highest-converting customers live.

Use negative keywords to refine your audience targeting and prevent your ads from showing for irrelevant searches. Keep testing different ad variations to identify which elements perform best. Experiment with ad formats, headlines, and visuals. Implement conversion tracking to measure the success of your campaigns accurately. Use the data to make data-driven decisions about your ad optimization. Monitor your ad budget allocation across campaigns and adjust bids based on performance. Experiment with different bidding strategies (like manual CPC and automated bidding) to find the most effective approach.

Try retargeting strategies to re-engage users who have previously interacted with your website but didn't convert. Create tailored ads to encourage them to revisit and complete the transaction. Combine advertising with lower-budget methods like local SEO for better Google exposure. Focus on ranking in the Local Pack and building your average rating with a consistent review generation campaign.

Google advertising costs vs other advertising channels

While Google boasts a powerful advertising platform, there are other channels worth exploring for your next marketing campaign.

Local social media advertising on platforms like Facebook, Instagram, or LinkedIn can offer affordable options tailored to smaller budgets.

A local Instagram ad for a waste management company

According to WebFX, the average CPCs on social media advertising platforms are:

• $0.26 - $0.50 on Facebook
• $0.00 - $0.25 on Instagram
• $0.26 - $0.50 on Twitter
• $2.00 - $3.00 on Linkedin 
• $0.31 - $0.40 on YouTube
• $0.10 - $0.10 on Pinterest

With the exception of LinkedIn, user intent is usually less commercial on social channels. That means exposure is typically cheaper per click than search marketing campaigns.

Local influencer marketing leverages people in your area with a large following to promote your products and services. Influencers are great for brand awareness and can deliver results long after the initial investment. Expect to pay between $500 and $2000 per Instagram post.

Traditional newspaper advertising is still a valuable marketing resource for small businesses. Print media isn’t what it was before the advent of digital marketing, which means you can often get good deals. Local newspapers charge around $12 per inch for black-and-white ad space. A decent banner ad might cost $500 and may include extras like social media coverage.

Flyers are a good way to get the word out about a local business. With platforms like Canva, you can easily create a good-looking design by yourself. You can print 1,000 copies through the platform for around $300, depending on paper quality. Adding a discount coupon is a good way to track their effectiveness.

Outdoor advertising like billboards and posters is still a popular way for small businesses to get eyes on their brand. According to job site Indeed, advertising on a billboard in a small rural area might set you back around $250 a month. However, that can quickly climb to $14,000 in more populated cities. But if it’s Google users you’re looking to target, local SEO should factor into your marketing strategy as well as paid ads. Start with a free audit to begin securing valuable SERP (search engine results page) real estate.