How to Decide on your Google Ads Budget

New clients or prospects often ask ‘how much should we spend?…’ Where do you find the answer?

How do you decide on your overall budget for a Google Ads account?

It’s a deceptively tricky question to answer – especially when you’re starting out and don’t yet have any history to work with.

And there’s no single, generally accepted approach to answering it.

Define the question

The first thing to note is that ‘what should our budget be?’ can have multiple meanings as a question, depending who’s asking, and why.

It can mean something like how much can we spend?… focusing on the size of the opportunity….

Or it might come from a place of asking what do we need to spend?… i.e. ‘what’s the least we can spend to make our Google Ads activity worthwhile or profitable’?

So if a client is asking how much to spend… the first step is to understand where their question is coming from… (and remember that it’s likely to be coming from a place of not understanding how PPC works in the way that you do.)

I’ve broken it down into 6 different ways to look at – and answer – the budget question.

  • The Opportunity approach
  • The Defensive approach
  • The Optimum Spend approach
  • The Trial approach
  • Split Budget (funnel)
  • Split Budget (phase)

Which one makes most sense depends on your client’s angle of approach, and on your assessment of the status, health and prospects for the account.

These are all explored and fleshed out in detail in the last unit in the paid search optimisation course Google Ads Level Up – on how to set your budgets…

But here (and in the video above) we’ll dive into one of them. One that’s particularly easy for clients to buy into when this process is part of a proposal.

The trial approach

For small to medium-sized clients the best interpretation of the budget question is often this:

While protecting their investment, what will it take to establish Google Ads as a profitable channel for them?

This is the simplest and often most sensible way to approach the initial decision – and one I tend to use when I can.

This way, you’ll approach the early stages of account management as a trial (many clients will already see it this way in any case) and you’ll ask: ‘what’s the highest spend that’s likely to be needed before we start seeing clearly positive results’…

Assume a few weeks of trial and error that will probably be unprofitable. Factor in the offer, the product price point, your experience of the industry in question, and whatever you know about the client’s past and current results. Use results from other channels as a guide if there’s no history with Google Ads.

Then to arrive at an initial monthly budget, split that total figure into two or three depending whether you want to treat it as a two or three-month trial (which you may or may not be explicitly calling it).

As with any approach you take, this involves assumptions and estimates. That’s fine. There’s no alternative. Just keep your assumptions as grounded as you can.

The main thing you’ll want to make sure you get a good handle on is CPCs, because they are a direct multiplier in this equation… and the one that you can usually estimate the most confidently.

e.g.

If you think it will take about 2000 clicks to establish an initial benchmark performance level (a reasonable number in most cases) – then – if you expect CPCs to be around £2 – that’s £4000… which you can split into 2 months of £2000 or three months of £1333 spend each.

For an in-depth look the topic as a whole, and to go through each of the six methods I recommend for deciding on a starting budget, access the full unit by joining Google Ads Level Up.

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