One of the most common questions I get is, “What should my Google Ads budget be?” It’s a great question, but the answer isn’t always straightforward. There’s no one-size-fits-all solution when it comes to setting a Google Ads budget that will work for your business. Because budget is also related to an other question, that is, How can effective Google Ads budgeting impact my overall marketing strategy?
In this comprehensive guide, I’m going to walk you through the three key factors you need to consider when determining your Google Ads budget:
- Your niche and the competition
- Your business goals and objectives
- Your overall advertising budget and affordability
By the end of this post, you’ll have a clear understanding of how to set a Google Ads budget that aligns with your business needs and helps you achieve your marketing objectives. Let’s dive in!
03 Main Factors to Determine the Google Ad Budgeting
While there are several important factors to consider when setting a Google Ads budget, let me break down the top three key ones for you:
Factor #1: Your Niche and the Competition
The first factor to consider when setting your minimum daily budget for Google Ads is the niche you’re operating in and the level of competition you’re facing. Different industries and niches have vastly different average costs per click (CPC) for Google Ads.
To get a sense of the CPC in your niche, you can use the Google Ads Keyword Planner. This free tool allows you to search for keywords related to your business and see the average CPC for those terms. Similarly, you can use another Google tool called the Google Ads Budget Planner to help set your budget once you know the CPC costs.
Let’s look at a couple of examples to illustrate this point:
Example 1: Weight Loss Meal Plan Business
Suppose you’re running a business that sells weight loss meal plans. You can head to the Keyword Planner and search for terms like “weight loss meal plan.” Here’s what you might find:
- The average CPC for “weight loss meal plan” keywords ranges from $2 to $15.
- The lower end of the range ($2-$3) is for less competitive keywords like “diet plan” or “low-calorie meal plan.”
- The higher end of the range ($10-$15) is for more competitive keywords like “weight loss meal plan” or “healthy meal plan for weight loss.”
Based on this data, you could set a daily budget of $100-$150 for your weight loss meal plan business, which would translate to a monthly budget of $3,000-$4,500. Of course, these are just rough estimates, and you may need to adjust your budget based on your specific goals and the performance of your campaigns.
Example 2: Lawyer Business
Now, let’s consider a different niche: a law firm or legal services business. When you search for lawyer-related keywords in the Keyword Planner, you’ll likely see much higher CPCs:
- The average CPC for “lawyer near me” keywords ranges from $5 to $37.
- When you sort by the highest competition, you can see CPCs as high as $300-$470 for some lawyer-related keywords.
This means that a $100-per-day budget ($3,000 per month) would likely not be enough to get meaningful results for a lawyer business. Instead, you’d need to consider a much higher budget, potentially in the range of $5,000-$10,000 per month or more, depending on your specific goals and the competitiveness of your target keywords.
The key takeaway here is that the niche you’re operating in and the level of competition you face can have a significant impact on the CPC you’ll need to pay for effective Google Ads campaigns. Be sure to research your niche thoroughly and use the Keyword Planner to get a realistic sense of the minimum daily budget for Google Ads.
Factor #2: Your Business Goals and Objectives
The second factor to consider when setting your Google Ads budget is your business goals and objectives. What do you hope to achieve with your Google Ads campaigns?
Are you looking to drive a certain number of sales or leads? Increase brand awareness? Promote a specific product or service? Your budget should be aligned with these goals.
Let’s walk through an example to illustrate this point:
Example: Setting a Budget for a 20-Sale-per-Month Goal
Suppose your goal is to generate 20 sales per month through your Google Ads campaigns, and you know that each sale is worth $100 to your business. You also want to keep your cost-per-sale (CPS) below $50.
To calculate your budget, you can use the following formula:
Desired Monthly Sales x Desired CPS = Monthly Budget
In this case, that would be:
20 sales x $50 CPS = $1,000 monthly budget
So, based on your goals and the desired CPS, you would set a monthly Google Ads budget of $1,000 to achieve your 20 sale-per-month objective.
Of course, this is just a starting point. You may need to adjust your budget up or down based on the actual performance of your campaigns and the CPC in your niche. The key is to have a clear understanding of your goals and use that to inform your budget decisions.
Factor #3: Your Overall Advertising Budget and Affordability
The third and final factor to consider when setting your Google Ads budget is your overall advertising budget and what you can realistically afford to spend.
It’s important to remember that Google Ads is just one part of your overall marketing strategy. You’ll likely have other advertising and promotional expenses, such as social media ads, content creation, email marketing, and more.
When determining your Google Ads budget, you need to consider how much you can realistically afford to allocate to this channel without stretching your resources too thin. It’s generally not a good idea to invest your “last dollar” into Google Ads, as there’s always a learning curve and testing phase involved.
Instead, try to set a Google Ads budget that fits within your overall advertising and marketing budget and that you can comfortably sustain over time. This will give you the flexibility to experiment, optimize, and scale your campaigns as needed.
Putting It All Together: Comparing the Three Factors
Now that we’ve covered the three key factors to consider when setting your Google Ads budget, let’s look at how you can put them all together to arrive at a final budget number.
The process might look something like this:
- Determine the CPC in your niche: Use the Google Ads Keyword Planner to research the average CPC for the keywords you want to target. This will give you a sense of the costs involved.
- Define your business goals: Decide on the specific outcomes you want to achieve with your Google Ads campaigns, such as a certain number of sales, leads, or website visitors.
- Calculate your desired budget: Based on your CPC research and your business goals, calculate the budget you’ll need to achieve those objectives. Remember to factor in your overall advertising budget and what you can realistically afford to spend.
- Adjust and optimize: Once you’ve set your initial budget, monitor the performance of your campaigns closely. Be prepared to adjust your budget up or down as needed to achieve your desired results.
By considering these three key factors—your niche and competition, your business goals, and your overall advertising budget—you’ll be well on your way to setting a Google Ads budget that works for your business.
Conclusion
Determining the right Google Ads budget for your business can be a complex process, but it’s an essential step in ensuring the success of your advertising campaigns. By taking the time to research your niche, define your goals, and consider your overall advertising budget, you can set a Google Ads budget that aligns with your business needs and helps you achieve your marketing objectives.
And if you’re ready to take your Google Ads budgeting skills to the next level, consider any Google Ads management services. You may get a free consultation on Google Ads budgeting from Ecommerce Planner, a digital marketing agency in the UAE. It’s packed with in-depth training, expert insights, and proven strategies to help you master this powerful advertising platform.
Best of luck with your Google Ads campaigns!
