How Much Should I Spend on Google Ads?

5 years ago

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Google Ads is a powerful channel for advertising and selling your products and services. The right strategy with this tool can help you get a massive ROAS. However, it can get scary when you learn there are advertisers out there spending over six figures on a monthly basis.

You would think that you need a fortune to advertise on Google. Thankfully, this is not entirely true. Advertising on search engines is not like advertising offline. There are not really fixed amounts here, and I’ll be honest, that can be either an advantage to your strategy and wallet- or a nightmare. Let’s look a the bright side! One of the best things about advertising with Google is that you will always have full control over your budget and how it’s spent.

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By now, you know each keyword has a cost. You probably know Google Ads works by auctioning your ads against other advertisers’ ads, and of course, you understand that most of the time you’ll pay each time your ads get clicked.

So, what is the ideal spend on Google Ads, you ask? Well… it depends.

OK, don’t panic, I’m not leaving you only with that answer. When it comes to setting a budget for online advertising, math can get tricky. As a Strategic Marketing Analyst, I come up every day with creative solutions to tackle down our client needs within their desired advertising budgets, so I’ll share my tips and tricks to come up with your ideal budget.

Factors Determining Your Budget

Contrary to regular advertising, PPC budgets vary per industry, location, keyword intent, campaign type, and sometimes, even by audience type. Among all these factors, there is one that will mark the difference: keywords. Every keyword combination that you include in your campaigns have an intent and based on that you would either increase or decrease your average CPC. It’s important to understand what people are doing at the different levels of research since the users will have different terms to do so. Let’s look at an example:

Keywords high in the sales funnel are usually more expensive than keywords at the bottom of the funnel. Top funnel keywords usually contain a huge amount of traffic but leads are usually low quality (meaning they are probably just doing random research).

Mid-funnel keywords are cheaper, and average monthly traffic is not huge but neither limited. Nonetheless, people are still unsure of what they want.

Finally, low funnel keywords are often long-tailed keywords that people ready to convert are using. Since these keywords are rich on intent and are composed of three or four keywords, traffic volume is limited to a couple of people per month. All these influence average CPC, and make them much more cheaper.

Is all of this too good to be true? Yes, it is. Sometimes, advertisers are already bidding on low funnel keywords. Why would you not bid on terms that are more likely than not to become a sell?

Since (1) low funnel keywords are cheaper, (2) not many users are looking for them, (3) and the ones that are looking for them are ready to give you their money, advertisers will bid higher on them because they are more valuable, which will frequently lead you to these keywords having higher CPC, and high competition.

My Monthly Budget

Before giving you a number, let’s take a step back. You need to be clear of what you want to accomplish. Is it brand awareness or are you going after sales? Where do you want to be seen, Search Network or Display Network? Are you running shopping campaigns? How aggressive are your competitors and how aggressive do you want to be?

I have to admit, I believe in the power of Search Ads. They are great to lift brand awareness, to influence consideration, and even to get you a sell. If you believe it too, and want to launch a search campaign, establish your minimum monthly budget by taking your average CPC and setting a minimum of clicks expected per day. They shouldn’t be lower than 10-15 clicks, and multiply it for 30.4 days (average length of a month).

Usually, my recommendations with this formula will range from $1,000 to $10,000 as a minimum monthly budget. At White Shark Media, we suggest our clients three brackets and provided with a list of suggested campaigns to invest that budget. Pretty cool, right? Our partners think so too 😉

Do Not Forget!

Don’t get frustrated. The first months are for you to test, fail, learn, and optimize. However, your budget shouldn’t just be a random number you happened to like. Remember that above all, advertising on Google can be profitable if you are competitive. Budgets will vary per industry and location, so please overcome the temptation to use benchmarks as your final data for making decisions. Keep control of your budget with tools like Google Analytics. Remember, the bigger your budget, the more opportunities to grow and data to optimize your camping you will have.