How does a Google Ads budget work?
People often misunderstand the average daily budget. If you set a budget of €10 per day on average for your campaign, it can spend €17 tomorrow, and €9 the next. But, taken over 30 days you roughly spend €300 per month. Please keep this in mind when optimizing your campaigns.
What is your goal?
The first question that determines your budget is your goal. What is it you want to achieve? Do you want to push a specific product or page and just get eyeballs? Or are you aiming for actual conversions? If it’s conversions, it takes longer and more budget to achieve your goal. This means you should make more budget available.
Do you have brand awareness?
Another determining factor is your level of brand awareness. If you have little brand awareness you will be in competition with better known brands and businesses. This means you likely have to pay more to be visible. Do you have brand awareness? Great, this likely means you get a better Return on Ad Spend more quickly.
What keywords do you want to bid on?
Search campaigns are based on keyword bids. In certain industries and funnel stages, you will pay a premium. B2B keywords are often far more expensive than B2C keywords. Then again, B2C keywords often have higher volume in terms of traffic. Figure out how much you pay per click for your desired keywords and go from there.
What is your current conversion rate?
If you aren’t running Google Ads at the moment, take a look at the number of website visitors. How many of your visitors are actually converting on your site? People underestimate the importance of a functioning website. If your website isn’t user friendly, it won’t convert. No matter how you spend on ads. If you already have some Google Ads data, pick that conversion rate instead.
How quickly do you want results?
I always recommend taking time getting your strategy right before pushing your budgets. But, you might be in a time crunch. If time is of the essence, you are in fact trying to drive more traffic. More traffic is more clicks, which means a higher budget within said timeframe. Please keep in mind that it can be limited by overall search volume for your selected keywords.
How you can calculate a rough Google Ads budget
- Select keywords you want to bid on and take a look at their average CPC
- Take a look at your conversion rate on your website. How many visitors do you have and how many of them convert?
- Figure out how many conversions you want to drive per month
For example:
- You select 1 keyword and its average Cost Per Click is €2.50
- On your website 10 out of 100 visitors convert, which is a 10% conversion rate
- You know you want to drive 20 conversions per month
So How does that turn out?
- If you want to 20 conversions, you need at least 200 visitors with your current conversion rate.
- In order to get 200 visitors you need to have 200 clicks, which are on average €2.50 per click.
- This means you need to invest at least €500 per month for you to achieve 20 conversions.
Please note that this calculation is the most ideal scenario in which each and every click counts. It doesn’t take into account your maximum cost per acquisition for your campaigns to be profitable. It doesn’t allow room for error such as irrelevant search terms and ineffective ads. Neither does it take into account the fluctuations in your cost per click. But, this does give you a starting point.
Get down to the details
There are more metrics you can look at to get a more exact budget. Think of your current CTR, average order value or lead value and so on. A Google Ads specialist can help you set different budgets with different scenarios in which your performance stays the same, improves, breaks even, and becomes profitable. Make sure you share as much data as possible to get the most informed outcome.
Don’t be shy and be clear on your expectations when someone else manages your account. They can let you know what is and what isn’t feasible in your situation.
Need some help setting your own budget? Get in touch with GittaPR for a free consultation. We will point you in the right direction!
