Google Ads are a staple of the digital advertising universe and the backbone of Google’s revenue. According to its 2020 annual report, Google Ads generated $147 billion in revenue for Alphabet (Google’s parent company). The bottom line is that businesses are spending a considerable chunk of marketing dollars on Google Ads.
But how much money should your business devote to your Google Ads budget?
The answer to that question is complex, as your ideal budget can depend on your specific industry, campaign goals, geographic targets, keyword search volume, local competition, and more.
This article will help you define your Google Ads goals and provide an essential guide to help you navigate campaign budgets, bidding strategies, and more.
Start by Setting Goals for Ads Leads & Revenue
Like a road trip, you have to know the destination before choosing your route. Start by setting Google Ads goals for your campaign. Do you want to see an increase in web traffic, hit a specific sales number, or get your name in front of your target audience? Once you define your goals for leads or increased revenue, you can start to examine your budget and bid strategy.
Pro Tip: We shared a formula that makes calculating your ROI with Google Ads easy. Check out our previous article on tracking ad performance for more.
How Google Ads Campaign Budgets Work
Google Ads budgets determine the spending limits for the campaign, which is calculated by day – not by month or year. If you want to determine your monthly budget, Google Ads recommends you multiply your daily budget by 30.4 (the average number of days in a month).
It’s important to note that setting a budget does not guarantee that your campaign will spend the exact amount, and your final costs may be lower depending on your bidding strategy.
Based on your goals, you can set a shared budget for several campaigns or set an average daily budget, which is the amount you’re willing to spend per day of your campaign.
An example of an average daily budget
If you’re running a campaign for 30 days and have a total spend budget of $1,000, your average daily budget would be $1,000/30 days = $33.33 per day.
An example of a shared budget across multiple campaigns
Let’s say you’re running two campaigns with a shared daily budget of $50. If one campaign only spends $10 of that daily allocation, the other campaign may spend the leftover $40. Google recommends shared budgets if you have several campaigns with a shared goal.
Why You Might Consider Starting with a Smaller Daily Budget
It’s hard to be sure about campaign budget performance until you see it in action. Google recommends trying out a small average daily budget ($10-$50) and checking the account to view performance and make adjustments. Starting small can help you determine the best campaign budget strategy.
How Google Ads Bidding Works
We’ve all seen auctions shows where the product goes to the highest bidder, and money is the only thing that matters in these types of auctions.
But with Google Ads, it’s not all about being the highest bidder. Google Ads auctions use the bid amount PLUS the quality of your ad to determine your position. This means that while someone may bid more than you, you could actually rank in the top ad position because you used relevant keywords and created a quality ad.
While your maximum bid for a keyword might be $50, you may end up paying less because you’re only charged the minimum required to hold your position.
Google Ads Bidding Strategies
Depending on your campaign goals, you can set bids with several strategies in mind. A few of the main bidding strategies businesses use are:
“Maximize Clicks” allows you to set a daily budget, and Google Ads runs an automated strategy to bring your ad as many clicks as possible.
“Manual CPC” allows you to be hands-on and manage maximum CPC bids for different ad groups or keywords. You can use keyword research to find popular searches and an estimated cost for your targeted keywords.
Get Started with Google Ads! Chat With M&R Marketing’s Digital Experts.
What’s the proper Google Ads budget for your business? Our team can help you determine those numbers and set achievable goals to grow your business. M&R’s in-house digital team is experienced in creating successful Google Ads strategies and providing easy-to-understand ad data for businesses.
If you’re ready to get started, give us a call at 478-621-4491.