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Home Blog What is the PPC Cost Formula?

What is the PPC Cost Formula?

Understanding the PPC cost formula is essential for optimizing your online marketing efforts. This guide explains how to calculate the cost of your pay-per-click advertising, helping you measure the effectiveness of your campaigns and improve your return on investment (ROI). Whether you manage a small business or a large enterprise, mastering these calculations can significantly enhance your campaign strategy and budget allocation. Read on to learn more about effectively managing your PPC costs.
What is the cost of PPC
TABLE OF CONTENT

Pay-per-click (PPC) advertising is an online marketing model in which advertisers pay a fee each time one of their ads is clicked. The PPC cost formula is calculated by dividing the total advertising cost by the number of clicks, helping advertisers measure the effectiveness of their campaigns and their return on investment (ROI).

This article covers PPC management costs from agencies and freelancers, monthly spending, and platform-specific costs. We also look at pricing models, costs by company size, and how to optimize your PPC budgets.

How Much Does PPC Management Cost?

The cost of PPC management from an agency typically ranges from $500 to $5,000 per month, while freelancers charge between $50 to $200 per hour or $500 to $3,000 per month. Agencies offer comprehensive services and expertise, often suitable for larger campaigns. Freelancers provide flexibility and affordability, making them a good option for smaller businesses or niche needs.

The cost of PPC management is heavily dependent on the industry in question, the specifics of the campaign being run, the goals set for the campaign, and many other indicators, such as ad copy or ad quality.

Each industry comes with its own set of competitive benchmarks and cost-per-click rates, which can drastically affect management costs. For instance, based on WebFX’s report “PPC Pricing: How Much Does PPC Cost in 2024?”, 16% of large enterprises allocate over $250,000 for PPC advertising. In addition, around 24% of mid-sized businesses have substantial budgets for PPC advertising, with monthly expenditures ranging from $10,001 to $50,000.

How much does PPC management cost from an agency?

The cost of PPC management from an agency typically ranges from $500 to $5,000 per month. According to WebFX, 36% of businesses pay $501 – $3,000 per month for PPC management from an agency. This fee is influenced by several factors, including the agency’s expertise, the scope of services provided, and the complexity of your campaign. Agencies offer a comprehensive range of services, including campaign strategy, keyword research, ad creation, bid management, and performance reporting.

Higher-end PPC agencies, which often have more experience and offer more personalized services, may charge even more. For example, top-tier agencies working with large corporations might charge upwards of $10,000 per month. These costs can also include additional fees for creative development, landing page optimization, and advanced analytics. According to WebFX, the average cost for small to medium-sized businesses is around $1,000 to $3,000 per month.

How much does PPC management cost from a freelancer?

The cost of PPC management from a freelancer varies between $50 to $200 per hour. WebFX states that 26% of businesses pay $1,001 – $3,000 per month for PPC management from a freelancer. Freelancers offer more flexible pricing based on their experience and the specific needs of the campaign. The total cost will depend on the freelancer’s level of experience, the complexity of your campaign, and the amount of time required to manage your PPC efforts effectively.

Hiring a freelancer can be advantageous because it allows for a more personalized approach, and freelancers often provide more flexibility in terms of working hours and project scope. However, it’s important to vet freelancers thoroughly to ensure they have the necessary expertise and a proven track record. The hourly rates of PPC specialists offering their services on Upwork average around $70, making it a cost-effective option for businesses managing their expenses.

How Much Does PPC Cost Per Month?

The cost of PPC per month for small businesses typically ranges from $1,000 to $10,000, while larger enterprises might spend between $50,000 and $100,000, and up to $250,000. This amount can vary widely depending on industry, competition, and campaign objectives.

Small businesses invest in ads on platforms such as Google Ads, Microsoft Advertising, and social media platforms like Facebook and Instagram. With often tighter budgets, small businesses need to optimize their PPC campaigns for maximum ROI.

For example, a local restaurant might spend around $1,000 to $2,000 per month focusing on local search terms and geo-targeted ads. On the other hand, an online retailer looking to expand its reach might allocate $5,000 to $10,000 per month to capture a larger audience.

Medium-sized businesses often have more substantial marketing budgets and more complex online advertising needs, such as targeting multiple geographic regions or running concurrent campaigns for different products or services.

For instance, a regional chain of fitness centers might spend $20,000 per month on PPC to attract new members, while a mid-sized B2B software company could allocate $30,000 to $50,000 per month to target specific industry keywords and generate qualified leads.

Large enterprises frequently run extensive campaigns across multiple platforms, targeting a wide array of keywords and audience segments. They also invest heavily in advanced analytics and continuous optimization to maximize their ad spend.

A national retail chain, for example, might allocate $100,000 or more per month to maintain a strong online presence and drive both e-commerce sales and in-store traffic. Similarly, a multinational corporation could spend hundreds of thousands of dollars monthly to support global marketing initiatives and competitive positioning.

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Industry and Competition Impact on PPC Costs

The industry and level of competition play a significant role in determining monthly PPC costs. Highly competitive industries like legal, finance, and insurance often have higher average CPCs, which can drive up overall monthly spending. According to WordStream, the average CPC in the legal industry is around $6.75, while in the e-commerce sector, it’s about $1.16.

In contrast, niche industries with lower competition might see lower CPCs and overall monthly costs. For example, a specialized B2B manufacturer might spend less on PPC compared to a consumer-focused e-commerce brand due to lower competition for keywords.

Geographic Targeting and PPC Costs

Geographic targeting also impacts monthly PPC costs. Ads targeting densely populated urban areas or multiple countries generally require higher budgets due to increased competition. Conversely, campaigns targeting specific regions or less populated areas might see lower costs.

For example, a PPC campaign targeting major cities like New York or Los Angeles will likely cost more than one focusing on smaller towns or rural areas. Additionally, international campaigns targeting multiple countries will have higher costs compared to campaigns focused on a single country.

Campaign Objectives and Strategies Affecting PPC Costs

The specific objectives and strategies of a PPC campaign also influence monthly costs. Campaigns aimed at brand awareness might focus on high-volume, low-cost keywords, while lead-generation campaigns might target high-intent keywords with higher CPCs.

For instance, a brand awareness campaign for a new product launch might allocate a significant portion of the budget to display ads and video ads across various platforms, while a lead generation campaign for a B2B service might spend more on search ads targeting high-conversion keywords.

How Much Should I Pay for PPC?

You should pay for PPC based on your marketing goals and budget, typically allocating 5-10% of total revenue towards marketing, with 20-30% of that specifically for PPC. This general guideline provides a balanced approach to immediate visibility and long-term marketing efforts. For instance, if your annual revenue is $1 million, you might allocate $50,000 to $100,000 for marketing, with $10,000 to $30,000 earmarked for PPC campaigns.

There are five key factors that influence how much you should pay for PPC ad campaigns:

  1. Business Goals and Objectives. Your specific goals, such as driving brand awareness, increasing traffic, generating leads, or boosting sales, will impact your PPC budget allocation.
  2. Industry and Competition. Highly competitive industries often have higher average CPCs. For example, the legal sector can see CPCs as high as $6.75, while e-commerce averages around $1.16.
  3. Geographic Targeting. Advertising in densely populated areas or multiple countries generally requires a higher budget due to increased competition.
  4. Seasonal Trends. PPC costs can fluctuate based on seasonal demand, such as retail spending during holidays or travel bookings during peak seasons.
  5. Historical Performance Data. Analyzing past campaign performance metrics like conversion rates, cost per acquisition, and return on ad spend through tools like Google Analytics helps determine effective budget allocations.

What is the PPC Management Cost Calculator?

A PPC management cost calculator is a tool that helps businesses estimate the total cost of their PPC campaigns, taking into account various factors like average cost-per-click (CPC), monthly clicks, and management fees. Such tools can provide valuable insights into budget planning and ensure that businesses allocate their marketing funds efficiently.

To use a PPC management cost calculator, input variables such as your monthly ad spend, average CPC, estimated number of clicks, conversion rate, and management fees. Calculators add these up to give you your total PPC costs. Many calculators also calculate ROI by taking into account your conversion rate and average order value so you can see the potential financial impact of your PPC campaigns.

Examples of PPC cost calculators:

  • DifferentDigital PPC Pricing Calculator
  • Pear Analytics PPC Budget Calculator
  • upGrowth SEO & PPC Cost Calculator
  • Capterra PPC Bid Calculator

PPC Costs by Platform

PPC costs can vary significantly across different advertising platforms; for example, Google Ads typically charges between $1 and $2 per click, and Facebook Ads have an average cost of around $1 per click. On the lower end, Twitter Ads cost approximately $0.38 per click, and Amazon PPC averages about $0.81 per click. Understanding these unique cost structures can guide your investment strategy for each platform.

How Much Does Google PPC Cost?

Google PPC costs range between $1 and $7 per click for the Google Search Network and less than $1 for the Google Display Network, according to WebFX’s “How Much Does Google Ads Cost in 2024?”. Prices per click can vary significantly across industries, with an average of $6.40 in the Consumer Services field and approximately $1.43 in Advocacy. Another report from WebFX indicates that 61% of respondents pay $0.11 to $0.50 per click, and 56% of respondents pay $0.51 to $1.00 per 1000 impressions on average.

How Much Does Microsoft PPC Ads Cost?

Microsoft PPC ads cost on average $0.11 – $0.50 per click for 24% of respondents, and $0.51 – $1.00 per 1000 impressions for 20% of respondents. These lower costs compared to Google Ads make Microsoft Advertising a cost-effective option for many advertisers.

How Much Does Bing PPC Cost?

Bing PPC costs are similar to Microsoft Ads, priced at around $1.5 per click, according to Ngoc Nguyen from Mega Digital agency. The average cost per click is lower than Google Ads, making it an appealing option for budget-conscious advertisers.

How Much Does Amazon PPC Cost?

Amazon PPC costs less than $1 per click on average. According to Brian Connolly from JungleScout, “You can expect to pay anywhere from $0.05 to $10 per click for PPC campaigns”. The actual amount you pay depends on the competitiveness of your niche. While the cost varies by product category and competition, Amazon PPC is usually a worthwhile investment because of its high conversion rates and strong purchasing intent of users.

Is Amazon PPC Worth It?

Amazon PPC is worth it for many sellers, as it can lead to high conversion rates and increased sales. According to Brian Connolly, 79% of Amazon SMB sellers advertise their products on or off Amazon, with 77% using Sponsored Products ads, 39% utilizing Sponsored Brands ads, and 30% deploying Sponsored Display ads. Many report a positive return on investment, making it a powerful tool for increasing sales and visibility on the platform. Amazon PPC is particularly effective for driving sales due to its ability to target users actively searching for products.

How Much Does Facebook PPC Cost?

Facebook PPC costs an average of $0.715 as of May 2024, as indicated by Revealbot’s “Average CPC for Facebook Ads.” However, this cost varies depending on the industry. The finance and insurance sectors tend to have higher CPCs, around $3.77, while the apparel industry experiences lower CPCs, around $0.45, according to Laurence Plante from Solocom Marketing. Filip Matekovic’s report “How Much Do Facebook Ads Cost? (2024 Benchmarks)” mentions that the average cost-per-click falls within the range of $0.30 to a few dollars. For conversion objective campaigns, the cost varies between $0.42 to $3.89. This shows a significant range in Facebook PPC costs.

What are the Different PPC Pricing Models?

PPC advertising offers various pricing models including Cost-Per-Click (CPC), Cost-Per-Thousand Impressions (CPM), Cost-Per-Acquisition (CPA), Flat Rate, Bid-Based, and Enhanced CPC (ECPC). Each model suits different campaign goals, such as driving traffic, increasing brand visibility, or generating specific actions.

  1. Cost-Per-Click (CPC) is the most common PPC pricing model, where advertisers pay each time a user clicks on their ad. This model is ideal for driving direct traffic to a website and is used by major platforms like Google Ads and Facebook Ads.
  2. Cost-Per-Thousand Impressions (CPM, cost per mille) charges advertisers for every 1,000 times their ad is displayed, regardless of whether it is clicked. This model is often used for display advertising and brand awareness campaigns.
  3. Cost-Per-Acquisition (CPA) charges advertisers only when a user completes a specific action, such as making a purchase or filling out a form. This model is highly performance-based and is ideal for conversion-focused campaigns.
  4. In the flat rate pricing model, advertisers pay a fixed fee for a set amount of advertising. This model is less common in PPC but can be found in certain niche platforms or direct advertising deals.
  5. In bid-based models, advertisers compete in an auction to have their ads displayed. The highest bidder for a particular keyword or audience segment wins the ad placement. This model is commonly used by platforms like Google Ads and Facebook Ads.
  6. Enhanced CPC is a hybrid model that adjusts your manual bids for clicks that are more likely to lead to conversions. This semi-automated strategy aims to get more conversions at the same CPC.

Selecting the right PPC pricing model depends on your campaign goals, budget, and the nature of your business. For direct traffic and engagement, CPC is often the best choice. For brand awareness, CPM can be more effective. Conversion-focused campaigns might benefit from CPA, while businesses seeking predictable costs may prefer flat rate models.

How Do Agencies Price Their PPC Services?

Agencies price their PPC services using models such as a flat rate, a percentage of ad spend (usually 10-20%), or performance-based fees. The choice of pricing model depends on the agency and the campaign’s requirements.

Flat rate pricing is a fixed monthly fee for PPC management services. This is simple and budgetable. The benefits of flat rate pricing are predictable costs, simple contracts, full service but potential drawbacks are overpaying if campaigns require less management in certain months and no flexibility for changes in workload and campaign complexity.

The percentage of ad spend model charges a percentage of the total ad spend as the PPC agency fee, usually 10-20% of the monthly ad budget. This aligns the agency’s interests with the client’s, performance-driven management, and scales with the campaign. However, it can increase costs as ad spend grows and requires careful tracking to verify charges.

Performance-based pricing ties the agency’s fees to specific performance metrics, such as conversions or sales. This outcome-focused approach motivates agencies to deliver tangible results and reduces the risk of paying for ineffective campaigns. However, it can also mean higher fees to compensate for the risk and effort, require detailed contracts, and may mean a short-term focus over a long-term strategy.

Some agencies charge an hourly rate for their PPC management services, which is common for consulting, training, or ad-hoc support. This model is flexible and transparent, businesses pay for exactly what work is done and can track the time spent on tasks. But can mean unpredictable costs and overruns if projects go over estimated hours.

Many agencies combine the above pricing models to create a hybrid approach for the client. For example, an agency might charge a flat rate plus a performance bonus if the client exceeds specific KPIs. This is a balanced approach that combines the predictability of a flat rate with the performance incentives of the other models. However, hybrid models can mean complex contracts and more administrative work to track multiple pricing elements.

What is the Cost of Remarketing Campaigns?

The cost of remarketing campaigns ranges from $0.66 to $1.23 per click on average, according to Analyzify and WebFX.

Remarketing campaigns can cost up to 50% less than regular PPC campaigns. For example, Google Ads remarketing can range from $0.25 to $0.60 CPC, as stated in E-Commerce Nation’s article “What is the cost of a remarketing campaign?”. Due to their targeted nature, these campaigns are generally more cost-effective than standard PPC advertising models.

Various factors, including the following influence the costs of Google remarketing:

  • Your bid, which indicates how much you’re willing to pay per action, click, or 1000 impressions.
  • Your bidding strategy and target action such as clicks, purchases, or downloads.
  • How and when you target your remarketing audience through ad scheduling.
  • The user experience on the landing page.
  • Click-Through Rate (CTR), which is calculated by dividing the number of clicks by the number of views.
  • Frequency limit settings that cap how many people see your ads in a given time to avoid oversaturation and increase trust.
  • The duration of audience membership based on their purchasing cycle and behavior.

Though Google Ads doesn’t specify how each factor directly affects cost, aspects like a higher CTR and a well-optimized landing page experience can significantly reduce Cost Per Click (CPC). By focusing on these elements and targeting your campaigns effectively, particularly at the local level when applicable, you can improve your conversion rates and reduce overall costs.

Remarketing allows businesses to reach a vast audience through the extensive ad network and create hyper-focused campaigns for better targeting, improving clicks, conversions, and ROI. Additionally, it offers cost-effective strategies with a variety of ad formats, including text, photo, and video, increasing sales opportunities and brand recall while enjoying the low costs of remarketing campaigns.

To reduce remarketing campaign costs, use strategies like audience segmentation to create more targeted ads, balance ad frequency to prevent ad fatigue, and regularly update and test ad creatives.

What is a Good Cost Per Click?

A good cost per click (CPC) is one that aligns with your business goals and delivers a profitable return on investment (ROI). The ideal CPC varies widely depending on the industry, competition, target audience, and the specifics of your campaign.

Different industries have different benchmarks for what’s a good CPC. For example, highly competitive industries like legal services, finance, and insurance have higher CPCs due to the intense competition for high-value keywords. E-commerce and retail have lower CPCs.

Here are the average costs per click (CPCs) by industry for search network, as reported by Ryan Maake in WebFX’s article “How Much Does Google Ads Cost in 2024?”:

  • Legal Services: $6.75
  • Finance and Insurance: $3.44
  • E-commerce: $1.16
  • Healthcare: $2.62
  • Technology: $3.80
  • Travel and Hospitality: $1.53
  • Real Estate: $2.37
  • Education: $2.40

When embarking on a cost effective PPC campaign, it’s essential to keep in mind that these benchmarks serve as a useful reference point. However, the actual CPC that is considered “good” for your business might vary due to specific factors related to your campaign and the prevailing market conditions.

How Much Does PPC Cost by Company Size?

PPC costs by company size vary, with small businesses spending $1,000 to $10,000 per month, medium businesses $10,000 to $50,000, and large enterprises $50,000 to $100,000+ per month.

What Percentage of Your Overall Marketing Budget Should You Allocate to PPC Advertising?

You should allocate 20-30% of your overall marketing budget to PPC advertising. For example, with a $100,000 marketing budget, $20,000 to $30,000 should be dedicated to PPC to ensure a balanced marketing strategy.

What is the Cost of a PPC Package?

The cost of a PPC package ranges from $500 to $5,000 per month, depending on the level of service and complexity of the campaigns. These packages often include setup, management, optimization, and reporting.

Is PPC Cheaper than SEO?

PPC is not necessarily cheaper than SEO; it provides immediate visibility but can be more expensive over time. Search Engine Optimization, while slower to yield results, offers sustainable traffic at a lower ongoing cost. According to Ahrefs, the long-term cost of ranking organically is significantly lower than maintaining a PPC campaign for the same keywords.

How is PPC Charged?

PPC is charged based on clicks (CPC), impressions (CPM), or specific actions (CPA). The model chosen depends on the campaign goals and the advertising platform used.

What Does an Aggressive PPC Campaign Cost?

An aggressive PPC campaign can cost over $100,000 per month. These campaigns involve high daily budgets, extensive keyword lists, and premium ad placements aimed at quickly gaining market share.

Is PPC Free or Paid?

PPC is a paid advertising model in which advertisers incur costs each time their ad is clicked. While platforms like Google offer free credits to new advertisers, there are no truly free PPC advertising options.

Is PPC Cheap?

PPC is not necessarily cheap but can be cost-effective if managed well. The cost-efficiency depends on industry competition, campaign effectiveness, and careful budget management.

How Can Landing Pages Improve Cost of PPC Advertising?

Landing pages improve the cost of PPC advertising by enriching user experience and lifting conversion rates, directly improving campaign efficiency and ROI. They serve as the crucial first contact for users following PPC ads, where relevance and design quality play pivotal roles in encouraging desired actions like purchases or sign-ups. This effectiveness not only boosts conversions but also elevates Quality Scores with platforms such as Google Ads, resulting in reduced cost-per-click (CPC) and lower overall advertising expenditures.

The best landing page builder is Landingi, which is highly regarded for its comprehensive suite of features aimed at optimizing landing pages and enhancing PPC campaign results. Among its offerings, A/B testing stands out by allowing the creation and comparison of different landing page versions to identify the most effective elements for conversion. Landingi also offers campaign scheduling to automate and time your landing page deployments perfectly with your PPC ads, ensuring they are always timely and relevant. The Smart Sections feature lets you craft reusable content blocks, ensuring consistent design and messaging across multiple pages, which streamlines management while maintaining brand trust. Additionally, Landingi’s EventTracker tool is invaluable for monitoring real-time user interactions on your pages, providing insights to further refine and optimize your landing pages for better performance.

Summary and Final Thoughts on PPC Costs in 2024

In 2024, PPC remains a critical component of digital marketing strategies. Understanding the various costs associated with PPC – from management fees to platform-specific expenses – enables businesses to budget effectively and optimize their ROI. With strategic planning and proper management, PPC can drive significant growth and visibility in competitive markets.

To optimize PPC efforts, use a landing page builder like Landingi. With its intuitive editor, enhanced by features like A/B testing, campaign scheduling, and real-time interaction tracking, you’re not just saving on your PPC costs – you’re actively driving your conversion rates up. Take advantage of the no-cost trial to uncover the incredible value Landingi can add to your marketing strategies!

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Magdalena Dejnak

Content Writer

Magdalena Dejnak is a marketing content expert with more than 4 years of experience in digital marketing. Her expertise lies in creating landing pages, managing social media, branding, and optimizing conversion rates. She has been a significant contributor to Landingi platform since the year 2020. Magdalena holds a Postgraduate Degree in E-marketing from the Akademia Górnośląska im. Wojciecha Korfantego. Currently, she is under the mentorship of Błażej Abel, CEO of Landingi, a leading company in landing page technology.
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