How to Decide Your Google Ads Budget

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When planning your marketing strategy for the year ahead, it’s important to allocate your budget to the different activities and campaigns you’ll be carrying out. Some marketing methods will require little to no investment, whereas others, like Google Ads, require some spending. With a budget in mind for your Google Ads campaigns, you can work toward your goals without spending too much of your marketing budget.

Let’s look at a simple process for deciding how much your Google Ads budget should be.

What are you paying for?

With PPC advertising, you only spend money when someone clicks on your ad. This means less wasted money because you’re not spending when people see your ad but have no interest in it. The price you pay per click will depend on the competitiveness of the keyword you’re targeting. So, determining your budget first requires some keyword research.

Here’s a comprehensive guide on how to do keyword research.

Understanding your cost-per-click

Once you’ve chosen your keywords, you should know the cost-per-click for each one. So, when someone includes that keyword in their search terms and sees your ad as a result, the CPC is the amount you’ll pay if they click on your ad. You may have different keywords with different CPCs.

Calculating your budget from your CPC

To calculate your Google Ads budget, you need to know what your goal is as well as your CPC. Let’s take a simple example – you want to get 100 new visitors to your site per month and your CPC for the keyword you’re using is $0.50. Your budget for the month would, therefore, be $50.

If your goal is to get conversions, then the sum is a little more complicated. You’ll also need to know your site’s conversion rate, which you can find out if you have site analytics. If you want 10 new customers per month and your site has a conversion rate of 5%, then you’d need an average of 200 visitors to your site. Multiply by that by your CPC of $0.50 and you’ve got your monthly budget of $100.

Don’t be afraid to spend on PPC advertising – statistics show that businesses, on average, earn around $3 for every $1.60 spent. It’s a good idea to monitor your Google Ads campaigns and adjust your budget as needed, but don’t jump in too fast when increasing and decreasing your budget.

Do you need help allocating your marketing budget for 2020? We can help you plan your marketing strategy and implement campaigns from Google Ads to social media. Contact us online or by phone to find out more.