How to Determine Your Google Ads Budget?

Leads & Sales | 5 MIN READ
TOPICS: Marketing Strategy

How to Determine Your Google Ads Budget?

Google AdWords is a powerful marketing tool for anyone looking to expand the reach of their business, but getting started can be daunting. There’s a big learning curve for beginners, but careful planning and research is key. It’s easy to throw hundreds or even thousands of dollars a month at your Google Ads budget and hope for the best, but that method doesn’t guarantee results.

If you aren’t sure where to start when it comes to your PPC budget, these steps can help.

Terms to Know: 

CPC: Cost per Click. This is the amount you’re spending for each click on your Google ad.

CPA: Cost per Acquisition. This could also be displayed as “Cost per Result.” Simply put, this is the amount you’re spending for each “result” as determined by the goals of your ad. For most PPC ads, this is the cost per new customer.

Conversion Rate: A conversion is the completion of a specific goal on your website.

This might be filling out a form, downloading a piece of content, or making a purchase, for example. Your conversion rate is the percentage of people who complete this goal out of your total site visitors.

Customer Value: How much revenue does an average customer bring to your business? Understanding this number will help you determine a good target CPA.

Take a look at these terms and try to gather your current conversion rate and customer value data. This will help you determine your Google ads budget.

  

Step 1: Set Your Goals

It’s important to have goals when it comes to your marketing strategy. Goals that are specific and measurable will prevent you from throwing away money on ads you can’t be sure are working. You may want your Google ads to generate 100 new customers each month, for example. Follow these tips when setting your Google ads budget and goals:

  • Be specific. “More customers” isn’t a good goal, but “5 new customers each week” is something you can easily track and scale.

  • Make your goals realistic. Start small and be prepared to scale up; otherwise, you might be setting yourself up for disappointment.

  • Decide how you’ll track your goals. Website purchases can be directly attributed to ads, for example, but you may need special tools to track whether an ad leads to someone entering your store or making a phone call.
 

Step 2: Explore your keywords.

What keywords are people using to search for your product or service? Google AdWords allows you to create keyword-targeted PPC ads—that’s Pay Per Click. Some keywords will have a higher CPC (Cost Per Click) than others, depending on their search volume and competition.

  • Start with research. Make a list of potential keywords and figure out their CPC. We recommend tools like Keywords Everywhere to give accurate search volume and CPC estimates.
  • Try to come up with a mixture of high- and low-volume keywords. High-volume keywords might cost a little more, but you might also find some “low hanging fruit” in the form of less popular niche keywords with a higher conversion rate.

Step 3: Understand your site’s conversion rate.

How often does a website visitor become a customer? If you aren’t tracking conversions on your website, you’re missing out on valuable data that can help you make the most of your Google ads.

  • If you haven’t already, make a list of possible conversions on your website (store purchases, form submissions, etc.) and determine the best way to track them. Google Analytics is one useful tool for tracking web conversions in the form of Goals you set up.

  • Find the percentage of site visitors that convert into customers or leads. Try to gather data from at least 30–90 days to get the best estimate.

 

Step 4: Do the math.

Using math for your marketing job? Your teacher probably warned you about this back in high school.

 

  • First, use your site’s average conversion rate to figure out how many visitors you’ll need to reach your goal. Your Goal ÷ Conversion % = Site Visitors Needed

    • For example, if you want 50 conversions this month, and your site’s conversion rate is 10%, you’ll need 500 site visitors.

 

  • Next, take your site visitors and multiply by the highest CPC in your keywords list.

    • For example, if your highest estimated CPC is $1, your budget will be $500 to get your desired number of customers this month.
    • Keep in mind: CPCs are estimated and may fluctuate! It’s a good idea to round up if you can.
    • Alternatively, you can calculate your budget using the highest amount you’re willing to spend per click, or your CPA.

 

Congratulations! 

You’re ready to get started planning your Google AdWords budget. Take your time and don’t skip the research—planning is the most important part of creating a successful PPC campaign.

If you’re curious about how PPC ads can be part of an inbound marketing strategy, let’s talk! 

Make an appointment today for a free marketing consultation!

Schedule a Consultation 

Mary Fonvielle
About Mary Fonvielle

Mary is the Content & Marketing Specialist at Nu. Her work at Nu includes a combination of content strategy, SEO, and data analytics. Mary's passions include storytelling, mixing data with creativity, and good syntax.

Nu Insider Tips

Market smarter and stay in the loop with insider tips that work.

By submitting this form, you agree to receive email updates from Nu. You may unsubscribe at any time. For more info, check out our Privacy Policy.