One of the most common questions we get is: how much money should I spend per month on Google Ads (FKA, Google AdWords)? For obvious reasons, this is a key question for clients who are both new to Google Ads, as well as clients who have been using Google Ads for years. But setting your budget should NOT be a mysterious process, and so we laid out a 3-step questionnaire you can use to decide the perfect Google Ads budget.
- First, ask yourself: how aggressive do you want to be? Or, more specifically, what are you trying to achieve with your Google Ads campaign? Do you need to generate 1,000+ new customers per month, or 1,000+ new customers per DAY? The answer to that question is going to be a huge determining factor in your perfect budget.
- The second question builds on the first question: do you care more about volume or efficiency? Both are smart priorities, but you should think about which one matters more to you. If you are a VC-backed tech company that just finished raising a series B funding round, I can answer for you: you care about volume, and not efficiency, and if you don’t understand that, then the VC on your company’s board is probably going to fire you. But if you are like most companies, then you probably need to spend some time thinking about which matters more. If you are in a highly competitive space, or if you have a limited time to launch a new product, then you might pick volume. But if you want steady, methodical growth, you should lean towards efficiency. The answer will help us determine your budget in the steps below.
- The third question starts to get more technical: who is your audience and what is the pain point they are relieving with your product? In other words: what is the keyword universe that we should use for Google Ads. For instance, if you run an e-bike rental company in the DC-area, then we can quickly map out the basic keyword universe using the Google Keyword Planner in order to determine a floor and ceiling for your budget.
Here’s how it works (using a fictional e-bike rental company as an example):
If you are the owner of an e-bike rental company, and you tell us that you want 10 new leads per month, you care about efficiency over volume, and your target audience is people who want to ride an e-bike for short, 2-hour rides in the DC area, then we would use the Google Keyword Planner to pick highly selective keywords to plan a low budget campaign for you. First of all, in order to get 10 new leads a month, we would assume a 10% conversion rate, which means we need a bare minimum of 100 clicks per month, which requires 2,000 impressions per month (assuming a 5% click through rate), and given the focus on efficiency vs. volume, we should only pick the very best keywords to start with.
Once we have gone through the exercise above (aiming for 2,000 impressions in order to get 100 clicks and 10 conversions), we need to use the Google Keyword Planner to estimate the cost-per-click, and to find the actual keywords for the campaign. For instance, if you look at the screenshot below, you’ll see that some keywords are generic (“ebike rental”) and other keywords are much more specific (“electric bike rental dc”). For an “efficient” campaign, we start with the geo-targeted phrases, which tend to convert at a higher rate, and cobble together a projected 2,000 impressions per month. Then, we use the same Google Keyword Planner data to see the projected cost of the 100 clicks per month (see the “high range” in the final column to the right).
In this fictional example, you would arrive at the absurdly low budget of $97.50 per month in Google Ad spend — which would be perfect for a client that wants to prioritize efficiency, get 10 new leads per month, and only wants to target DC area e-bike rental prospects.
I hope that this post is helpful to you, because I understand that determining your level of investment in Google Ads is one of the most stressful questions for any business owner or marketer, but if you follow this process (starting with the three questions above), it should become a little less mysterious.
AdWords Keyword ROI Calculator
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