Short version: because plenty of other advertisers are willing to pay a lot for the people clicking on those ads.
The price you pay per click in Google Ads is set by an auction. What an auction returns depends entirely on who else is bidding and how badly they want the same traffic. In some markets the top of the page costs £1 a click. In others it's £40. Same platform, same ads, completely different economics.
There are five reasons CPCs end up high. Three are about the market you're in. Two are usually down to how the account is being run. Let's go through them.
Paid search has the strongest intent of any channel, and that's priced in
Google Search is the only paid channel where someone has explicitly typed in what they want. They've put in a query like "emergency plumber wandsworth" or "best CRM for accountants" and you can show up at the exact moment they're trying to buy. No other channel comes close.
Display, social, programmatic, OOH, cold email: these are all interruptions. The user wasn't asking for you when you turned up. Search is the opposite. The user is doing the asking, and you're answering. That's why a click on a search ad converts at a rate other channels really struggle to match.
And that's also why it costs more. Advertisers know what a buying-intent click is worth. The whole channel is priced around that.
Bigger advertisers have data, and that data lets them bid higher
If you've spent enough on paid search to have meaningful data, you know which traffic converts. You know which keywords. Which devices. Which audiences. Which locations. Which times of day. Which match types. You can carve out the segments where your conversion rate is twice the account average and bid accordingly.
The formula behind it is simple:
Rearrange it and you get:
If your target CPA is £100 and your conversion rate on a particular keyword is 5%, you can afford to pay £5 a click. If a competitor's conversion rate on that same keyword is 10%, they can afford to pay £10 and still hit the same CPA. They win the click. You don't.
That's why scale matters. The advertisers who've been in the channel longest, with the biggest data sets, have the sharpest view of which traffic is worth real money. They bid accordingly, and that drags the auction price up for everyone else.
It's an auction. More bidders, higher bids.
This one's obvious but worth saying out loud. Google Ads is an auction. The same way that a packed auction room pushes up the price of a painting, a crowded keyword pushes up the cost of a click.
Insurance, law, finance, SaaS, home services in dense cities: these are the categories where CPCs run hottest because there are loads of advertisers competing for the same handful of high-intent searches. There's no clever bid strategy that gets you around the basic maths of supply and demand.
If you're in one of those competitive verticals, your job isn't to win every auction. It's to be sharp about which auctions are worth winning at all.
A weak Quality Score makes you pay more than you should
This is where the cost question stops being about the market and starts being about your account.
Google's ad rank formula is roughly:
What that means in practice: a competitor with a Quality Score of 10 can bid £2 and have the same ad rank as you bidding £4 with a Quality Score of 5. They win the same position for half the cost. Multiply that across thousands of clicks and the gap is enormous.
Quality Score is Google's way of rewarding you for making Search a better service. Tight ad groups, relevant ad copy, useful landing pages, sensible match types, regular negative keyword work: these are the things that push QS up. Most accounts I audit are bleeding budget here without realising.
The irony is that a lot of what Google's own "best practice" recommendations push you toward (broad match everything, automated bidding with no targets, single asset groups stuffed with anything that moves, "let the algorithm figure it out") can actively hurt Quality Score. The recommendations tab is optimised for Google's auction revenue, not your CPCs. Following it blindly is one of the fastest ways to inflate what you pay per click.
Over-aggressive bid strategies are quietly burning your budget
The last one is the one I see most often.
Setting a Maximise Clicks or Maximise Conversions bid strategy with no target, paired with a budget the algorithm has plenty of room to spend, is effectively telling Google: "find a way to spend all of this". And it will. It'll find ways to spend the budget on the most expensive clicks it can win, because that's literally what "maximise" tells it to do.
Two simple fixes:
- Add a target. Maximise Conversions becomes Maximise Conversions with a target CPA. Maximise Conversion Value becomes Target ROAS. That gives the algorithm a constraint to optimise within instead of a blank cheque.
- Drop the budget. If a budget is constantly being fully spent without hitting performance targets, lower it until performance settles. You'll pay less per click and the campaign will start optimising toward winning the right auctions instead of all of them.
So why is Google Ads expensive?
Because it works. Because the people you're competing against have data you don't. Because the auction is crowded. And because most accounts are paying a Google tax on poor account hygiene and lazy bid strategies.
Three of those are out of your hands. Two of them, you can fix this month.
If your CPCs feel painful and you're not sure whether it's market dynamics or your own account, get in touch. I'll take a look and tell you which it is.