Google Ads can be a great way to generate leads and sales for your business. 

But if you’re not careful, you can quickly blow through your budget without seeing any return on investment. 

In this blog post, we will discuss some strategies for spending your Google Ads budget in a way that will maximise your ROI. 

We’ll cover topics like how to target the right audience, how to use different bidding strategies, and how to create effective ad campaigns.

Determining Your Initial Google Ads Budget

A budget in Google Ads is how much you would like to spend each day on a campaign over the course of a month. 

Whilst your daily budget may fluctuate, your overall budget will never be exceeded. 

When it comes to determining your first Google Ads budget, there are four key questions you should ask yourself:

  1. How do Google Ads align with your current marketing strategy?
  2. What and where are your competitors spending?
  3. How much are the costs-per-click (CPCs) for the keywords you want to bid on?
  4. Which KPIs matter the most to you?

When you have these answers, you’ll be able to jump into campaign types, optimisation and expansion. 

Let’s take a look at each of these questions in a bit more detail…

How do Google Ads align with your current marketing strategy?

If you run a local business or have an established online presence (you’re a thought leader who attracts organic traffic to your site with great SEO and even better content), leads are likely to arrive at your doorstep eager to buy. 

A passionate social following, on the other hand, may help a young company stay on top of its target consumers. And aside from time and the wages of whoever leads these initiatives, this organic traffic is “free.” 

Also consider the other marketing channels you employ in an effort to grow your business and list these out. 

Then determine whether your Google Ads account is to support these existing efforts or to replace them.

What and where are your competitors spending?

Outside of your own branded terms, you may use tools such as Keyword Planner or SEMRush to see where your competitors are investing their Google Ads budgets. 

By gathering this data, you can devise strategies to beat their position in SERPs and find cheaper keywords that no one else has bid on until you came along.

How much are the CPCs for the keywords you want to bid on?

You may use the Google Ads Keyword Planner to get a list of keywords that are relevant to your landing pages. 

On the left side, under “Google Ads,” type one of your landing pages. 

Adjust the remaining settings as necessary (industry, location, terms to avoid, etc.) and prepare to scroll through long lists of possible keywords with its popularity and competition. 

You should attempt to acquire as many high-traffic, low-competition phrases (that also indicate commercial meaning) as feasible.

Which KPIs Matter The Most To You?

Not every business will care about the same thing. 

For some, the cost per action (CPA) can be the be-all-end-all. 

However, you can figure out how many conversions it takes on average to result in a genuine customer and determine your actual CPA. 

Of course, there are many other KPIs that determine the success of your Google Ads campaign, such as click-through-rate or cost per click.

How to Set a Google Ads Budget

Learning how much to spend on Google Ads requires some research into your business, goals, and audience. 

Here’s 4 tips on how to set a Google Ads budget that suits your business.

Use Keyword Planner

When you create a Google Ads campaign, the first thing you must do is choose which keywords to target and how much you’re prepared to pay for each click on your site. 

You may already have a general sense of the terms you want, but don’t create campaigns based on assumptions. 

Instead, use Google’s Keyword Planner to research the keywords you’re thinking about and find other keywords to target. 

Do this for each of the products or services you want to promote to determine the most effective keywords for you.

Run Test Campaigns

If you’re new to Google Ads, you won’t really know what works and what doesn’t until you’ve run a few tests

But keep in mind that there is a chance that these test campaigns will not be profitable. 

However, you may view any money you lose throughout this process as an investment in your PPC campaign as a whole and plan to recoup it once you’ve launched optimised and tested PPC ads. 

To get started:

  • Select Your Keywords: these keywords should reflect your overall goals for your campaign. Paste the URL of the page you want to advertise, and you’ll see a list of keywords that can be targeted. This tool aids in keyword discovery by showing words that might have been overlooked in your initial research – we recommend testing at least 10 keywords to begin with.
  • Determine Your Bids: once you have chosen the keywords you want to target, you need to figure out how much to pay for each click to your site. Google does offer some guidelines for setting bids, and it’s a good idea to stay close to this, but also consider how much you can expect to earn back from each ad too. For instance, if Google recommends a bid of £10 for a product that costs £20, you would have to convert 50% of the traffic to that page to break even – and that’s hard – so you may want to skip that keyword.
  • Set a Test Budget: as mentioned earlier, you shouldn’t expect your test ads to bring in profits. But that also means you don’t want to overspend your budget when running them. On the whole, you’ll want at least 100 clicks on each ad to work out if it converts well for your business. For example, if you’re testing 10 ads for different keywords with an average CPC of £2, you should plan to spend around £2000 on tests. Of course, if you’ve never ran any Google Ads before, you can set a smaller budget, but keep an eye on its results – if there are not any conversions, pause the ad before you spend too much for no results.

Optimise Campaigns

From running test ads, you’ll be able to gather a wealth of data you can use to your advantage to create more effective ads moving forward. 

The more campaigns you run, the more you’ll be able to use this information to optimise your ads for the best ROI. 

There are 3 components to focus on before launching more ads:

Click through rate (CTR):

CTR is important because it affects your quality score – the higher your score, the more chance you have of it getting in front of your potential customers. 

And it is calculated by dividing the number of clicks each ad receives by the total number of impressions. 

You can discover which of your keywords had high enough bids to show to customers and which ones were clicked by looking at the data. 

This allows you to make a more informed decision about which keywords and bids to continue using in your campaigns. 

Cost per conversion:

You also want to take a look at the percentage of people who converted after clicking on each ad. 

Generally, you’ll want to keep ads with a cost per conversion that is lower than the sales it generates. 

However, if you find keywords with a high CTR but low conversion rate, you’ll need to identify any possible causes. 

For instance, if you’re running an ad for “nail polish”, many of these people searching for this might be very early on in their buying process. 

So, you may want to run ads for specific nail polish brands and colours instead. 

In contrast, if there are keywords that do demonstrate clear intent but still no conversions, it may be that your landing page needs to be optimised. 

Negative keywords:

The final step is to add negative keywords based on the non-converting traffic you received from your test ads; negative keywords help to prevent your ads from showing up in search results for unqualified keywords. 

For example, if you’re a dentist running a campaign for “cosmetic dentistry”, you don’t want to spend your budget reaching users who are looking for “free cosmetic dentistry treatments”. These users will not become patients, but their clicks will still cost just as much

Adjust Budget Based on Overall Strategy

Once all campaigns have been optimised, you should be seeing a positive return on each ad. But the trick is to regularly monitor and optimise campaigns in order to increase ROI. 

Even though setting a budget will ensure you do not spend too much, if you have room in your budget, increasing your ad spend may be a great way to improve your returns and generate more revenue. 

Essentially, if you have an ad that produces positive ROI each month, you can be rest assured knowing that each pound you invest will return to you, in the form of sales. 

However, you’ll need to take your overall marketing strategy into account – looking at your marketing budget as a whole before deciding how much of it will be allocated to Google Ads. 

You may do this by calculating the ROI for each of your tactics and allocating a greater percentage of your budget to the channels that provide the highest returns. 

As obvious as it sounds, if your SEO strategy is providing greater results, you won’t want to cut your SEO budget and put more into Google Ads. 

But if local newspaper ads are not generating any returns, you may find that investing more into Google Ads can be a great way to get the most out of your marketing budget.

Wrapping Up

By following the steps above, you can be sure that you’re making the most out of your Google Ads budget and achieving maximum ROI. 

Remember to focus on quality over quantity – it’s better to have a few well-optimised campaigns than a huge number of poorly performing ones. 

And finally, don’t forget to monitor your ads regularly, making changes and adjustments as necessary to ensure that you’re always getting the best results possible.