How Much Should I Spend On Google Ads?

Are you looking to start running Google Ads and struggling to know how much to spend? You’re not the only one.

One of the most common questions I hear when it comes to businesses starting Google Ads is ‘how much should I spend?’ and unfortunately the answer is that it depends.

But don’t worry, in this article I’ll break down common mistakes to avoid and how to work out a realistic starting budget.

What's a good Google Ads starting budget?

No matter what some agencies or online videos might tell you there is no one size fits all that works for every business. How much you should spend on Google Ads depends on a variety of factors such as:

• The size of your business

• The industry you are competing in

• The keywords you are targeting

• How much you are willing to risk

  
  

Some Industries are more expensive than others and as a general rule, the more expensive your product/service the more you will be paying per click. Below is a graph from Wordstream that provides average CPCs for both B2C & B2B industries.

With that In mind here's a framework to give you an idea of a starting monthly budget specific to your business and its location.

How to work out your starting budget?

1) Decide on your target location

Your first job is to work out where you want to promote your services. Your target area could be anywhere from a list of local postcodes to the whole of the UK. Make a list of every area you want to show up for and have it to hand for the next step.

2) Come up with 2-3 root keywords you want to target

Depending on how far along with your Ads set up you are, you might already have a list of keywords to enter into Googles Keyword Planner. If not, come up with 2-3 main keywords for the services you wish to target, this could be something as simple as 'Boiler Repair Service'. Once you have your keywords head into Google Ads and over to their keyword planner via tools > planning > keyword planner.

Google Ads' Keyword Planner

3) Work out the average CPC for your keywords

Type your list of keywords into the search bar and make sure your location is set to the areas you listed in step 1. This will give you a more accurate estimation of costs and frequency of searches for your chosen keywords in your area.

Next, scroll to the right of the results and calculate the average for the costs in the 'top of page bid' column. This figure will be your average CPC.

In my example my average figure is £7.

Keyword results on Google Ads' Keyword Planner

4) Calculate your average daily budget

The first few months of running Ads is all about gathering data to allow you to make informed decisions on what's working and what isn't. To help you do this effectively a good daily click target to aim for is 10 clicks a day. So take your average CPC from the previous step and times it by 10. This will give you your daily budget. For me this would be £70/day.

5) Calculate your monthly budget.

Google will take your daily budget and times it by 30.4 (the average amount of days in a month) when working out how much to spend a month. So we need to take our daily budget and do the same. The final number will be your recommended starting budget to allow you to generate enough clicks to optimise your account from day 1. To finish off my example: £70 x 30.4 = £2,128 This leaves me with a starting monthly budget of roughly £2,000.

Do I have to spend that much on Ads?

Once you have your figure there are a couple of things to consider:

Don't spend more than you can afford to lose

Never spend more than you can afford to lose. Running Ads is an investment and its unlikely that you will be profitable for the first couple of months. If you can't afford to lose the money then look at other lower cost or free ways of advertising until you are in a position to afford the required Ad spend.

You can spend more or less than your monthly estimate

This number is an estimate of how much you might need to reach 10/day and is not a requirement to run Ads.

Give yourself enough time to test

A good testing period for Google Ads is 3 months, this gives you enough time to gather data, pause what isn't working and double down on what is. Expecting Google Ads to work perfectly for you within a couple of weeks is unrealistic.

If you are struggling with setting up Google Ads for your service business, I offer a free discovery call to find out more about your goals and how I can help. I also offer free audits for business owners that are currently running Ads but are struggling with performance.