How much should you spend on Google Ads to see an impact? How do you know the optimum/minimum amount?
Here are three approaches to answering the question of what you should – or need to – spend on your Google Ads campaign.
1) The Architect
This is the most precise approach, reverse-engineered from the starting point of what you want – or need – to achieve.
First set your target return.
Say you’re looking for PPC to deliver 20 leads per month…
Then – until you have real figures to plug in – estimate your CPC (e.g. $4)
And your conversion rate (e.g. 5%) and calculate….
Target conversions divided by conversion rate (=target clicks…) multiplied by CPC…
(20 ÷ 5%) x 4 = $1600
So at the estimated performance levels, $1600 is what you’ll need to achieve your desired return.
This isn’t a bad approach, but does have its drawbacks.
While it looks reassuringly precise, it does have a tendency to fray when it meets the reality of PPC in the wild. (As Mike Tyson deftly put it, “everyone has a game plan until they get punched in the mouth”.)
What you want to achieve and what the market has to offer may be quite different, for any of the three of the input metrics.
So those numbers are sure to change as you discover real search volumes, CPC levels, conversion rates etc… but it’s a reasonable way to give yourself a starting point for budget levels.
2) The Hobbit
This is how I usually advise relatively small advertisers, or those new to PPC.
It’s one of the major benefits of PPC that you can minimise risk by holding both spend and bids on a tight leash… see what works, and give it more slack if and when you’re comfortable doing so.
In practice this means starting your PPC activity with a limited scope.
Rather than trying to cover all angles of approach, and all the keyword territory that you potentially could – just select the most promising and see where you get with a limited budget.
How much spend that requires will vary, depending on the CPCs in the industry you’re looking at… But with this approach you can still play the game with a budget in single figures per day.
In summary, this approach is to spend what you’re comfortable spending… if that’s low, just don’t try to do too much with it at once.
If you get your limited activity running well, grow it incrementally, carefully – adding more keyword territory – and you’ll soon get a sense of how far you can profitably expand…
3) The Cavalier
Full tilt. Try everything that sounds good. Max out…
80% of the time this isn’t the most sensible starting approach (though once you have a profitable activity in place then you’ll want to max out on it for sure…) but it does have its place.
It will give you:
- Quicker data – allowing quicker optimisation, and a faster path to strong ROI…
- Greater volume… if you’re going to take high CPA / low ROI for a sustained period – you’ll probably want growth and volume in return. This approach trades quality for quantity.
- And of course – it’s simpler just to open the taps to the max… taking one major variable out of the management equation.
If you have existing activity and you’re looking to forecast how much you could increase spend – running the new Performance Planner tool and putting in ‘cost’ as the target metric can give you some useful ideas of how much you can ramp up and how…
Finally if you’re having your account professionally managed, there’s the fee to consider.
If your spend is low this may be a high proportion of your cost, as you’re not likely to find management worth considering for under £500 per month. (Sure there’s low-charging talent out there, but it’s a rare exception. )
There’s no good rule to how much you should pay an agency or freelancer as the impact of professional management can range from net negative to immensely positive… just don’t forget to add it on when considering your actual or expected ROI…
