How Much Does a Click Cost?

Every time someone searches on Google, AdWords runs an auction to determine which of the ads will show on the search results page, and their rank on the page. In order to place your ads in this auction, you first have to choose how much you'd like to bid.  The most commonly used bidding strategy is the cost per click bidding option, which means they only accrue costs based on the clicks that the ads generate.

Google uses a measurement called Quality Score as an estimate of how relevant your ads, keywords, and landing page are to a person seeing your ad. Higher Quality Scores typically lead to lower costs and better ad positions.  Other factors that could affect the cost of a click include historical data and trends.

Generally the Quality Score and cost per click is calculated on the following factors:

Keywords:
How popular are the keywords being targeted?  Very broad and frequently searched phrases will have more competition with bidders willing to pay more for a click.  A keyword like "home" may be searched regularly, but will also have a lot of competition that may not relate to what you are offering.  If you only offer home sales you wouldn't want to be targeting searches that include long term letting and vice versa.

Ads:
Do the ads match the search?  Ads should accurately match the keywords and subsequently the search being performed.  If a search being performed for homes for sale, does your ad effectively highlight this?  Ads that include the terms being searched are highlighted accordingly and are more likely to draw attention to themselves, compelling the click through.

Landing Page:
Does the landing page relate to the keywords and advertisement being returned?  The better the relevancy of the page to the ads and keyword being targeted the higher your Quality Score will be.  Your landing page should accurately reflect that which was actually being searched if the search was for homes for sale, does this page accurately portray this?

Historical Data:
Google generally rewards better performing ads with a lower cost per click.  Ads that are seen to generate a good number of click throughs (higher click through rate) are seen to be of a good quality and as such Google tries to return them in higher positions often at a lower than expected cost per click.

Trends:
Much like keywords, popularity and trends can play their part in determining a cost per click.  As a service or product becomes more popular competition increases and bidders are willing to pay more per click.  This is noticeable in the long term letting market where certain times of the year see an increase in activity and a flurry of bidding ensues with websites trying to draw as much of the possible traffic to their listings.

So how much does a click cost?

As you can see with many factors involved there is no fixed cost per click.  The actual cost per click is however often less than maximum cost per click permitted because with the AdWords auction, the most you'll pay is what's minimally required to hold your ad position and any ad formats shown with your ad, such as sitelinks.