How much should I spend on Google AdWords?

Figure out your starting Google AdWords Budget 

Google Ads, formerly known as Google AdWords, is not your ordinary channel of advertising. It is built as an auction marketplace, making it so the amount you spend depends on your industry and the popularity of its keywords. Which poses the question: How much should you spend on Google AdWords? Although planning your PPC budget can be time-consuming and quite challenging, it is essential to plan it well if you want your advertising strategy to be successful and profitable.

When you first start with Adwords, you should keep in mind that you’re making an investment. The less you decide to spend, the more limited your opportunities will be. The important thing is to focus on your ROI and not the cost of your ads. This way you will be testing the real profitability of your campaigns. Eventually you will be able to know what keywords are bringing you conversions as well as which landing page messages are working best to convert clicks into leads and customers. To do this, you have to make sure you are tracking your conversions and the value of each one individually. By doing so, you are able to know which of your ads are bringing the most conversions and which are yielding the greatest value. Once you know this, you can go even deeper with your analysis and see which country, age, keyword, landing page, etc. is the most valuable. By following this advice, you will be able to focus the majority of your budget and spend on those specific groups in order to make sure that your money is well spent.

How should you start?

Now that you’ve asked yourself how much you should spend, you will need to figure out how to start. 

When it comes to deciding the amount spent on Adwords, there is no set method to abide by. It really depends on your business, your goals and your capability. If you are an owner of a small ecommerce business, you might want to start with a smaller budget. However, you should make sure that the amount spent is high enough to gather enough data. You might also want to avoid limited exposure of your ads to potential customers through “Limited by budget” alerts. You’ll find that the data you collect is very important for your advertising efforts. It’ll help you focus your investment on the right audience, the one that is bringing you more value.

How does the recommended Google AdWords budget work?

In most cases, Google will recommend a budget that could fit your store. There are two cases in which Google won’t display a recommended budget for your business:

  • You don’t usually reach your daily budgeted spend
  • Your campaigns have limited data

When Google recommends a budget, this amount has been estimated in order for your ads to be shown more often for your current set of keywords. 

Recommended budgets are based on the following factors:

  1. Recent campaign performance
  2. Current campaign budget
  3. Your keywords
  4. Campaign targeting settings

Why might costs exceed the average daily budget?

You might have noticed that on some days you spend more than your daily budget’s set amount. This is because Google decides to spend more on days with higher search traffic to improve your performance and increase your ROI. On Google Adwords,

Dipping into your daily budget for other days in the month helps to optimize the performance of your campaigns and helps make sure that your ads can run a little more on days when they’re very popular”.

This amount will then be balanced out by other days that will have a lower spend for the same reason. Google is going to allocate your budget throughout the months in such a way that your total amount spent won’t exceed the amount that equals your daily budget multiplied by the average number of days in a month (30.4).

online shop budget

Source: Google Support

What is a shared budget?

online shop budget

 

 

On Adwords, you can use a shared budget to allocate an amount of money among multiple campaigns. If you don’t have enough time to manage the budget of each campaign individually, then choosing a shared budget will be the perfect solution for you. When you are choosing an amount to be spent across multiple campaigns, Google will adjust the way your money is spent in order to increase your return-on-investment. Read here for more tips on how to increase the ROI of your AdWords campaigns.

If at some point you no longer wish to use a shared budget, you can easily go back to an individual campaign budget for full control over how much you’re spending on campaigns.

online shop budget
Source: Google Support

To Wrap Things Up

I can understand that small business owners who are just starting their journey might be a bit skeptical when it comes to investing part of their budget on Google Ads. The truth is, if you want to get your store to the goals set out, then investments must be made on its behalf. Google Ads can be a very profitable channel for this, and if your business is unknown then it’s even more essential to use it. 

Start with small steps, keep everything under control, plan well, measure your results and then optimize! One of the best ways to lower your costs on Google Ads is improving the quality score of your ads. The key for improving the quality score of your ads is relevancy. Your ads, keywords and landing pages should all be relevant for the user and should always land on a page where they will find exactly what they are looking for.

Optimization is a key factor to spending less on AdWords. Make sure you are being wary when setting your budget as you could be spending an unnecessary amount of money. By optimizing you’ll discover what is working, and what is not. From there you’ll be able to make educated decisions for the betterment of your store. I hope you learned a thing or two, and best of luck down the road!

 

 

angeliki zeaki

Angeliki

Angeliki Zeaki is a product manager for our Slack and Microsoft Teams integrations. During her free time she enjoys making pottery, tasting exotic cheeses and wine, and can't go too long without spending time at a beach ❤️ #slack #microsoftteams #ecommerce #cleverads

  1. The article is very rich and best option to go for successful eCommerce. It analysis the need o figuring out the starting budget on Adwords and eplained clearly how shared budget works. thank you for this information.

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