Here’s a question we get all the time – how much do Google ads cost?
And more importantly, how much should you budget to spend on Google ads?
If you ask 10 different people, you will probably get 10 different answers.
But as a Google Partner that’s actually certified in this stuff, we are going to give you the agency answer to help you determine your Google ads budget.
We’re going to tell you what we do for the hundreds of Google advertising accounts that we manage.
These same strategies helped us generate tons of conversions for our clients.
Today, we’re going to walk you through how to set your Google ads budget.
And later in this post, we will also give you a secret that will help you SLASH your Google ads costs.
According to Google, you can spend as much or as little as you want on Google Ads.
What’s not so clear is how much those ads actually cost you.
We will get to that in a moment but let’s first look at how Google ad budgets work.
Regardless of cost, you can set a daily budget or lifetime budget for your campaigns inside of Google ads.
For example, if you wanted to spend $300.00 on Google ads on a monthly basis, then you would simply set a $10 daily budget.
This would mean that your ads will no longer appear on Google once your $10 daily budget has been exhausted.
And it also means that you will not exceed your monthly budget of $300.00 since $10 per day times 30 days per month is equal to $300.00.
That’s how daily budgets work.
A lifetime budget allows you to put in your total spend for a campaign.
So for example, let’s say you are running a holiday ad that is only running for a specific period of time.
You can use the lifetime budget to enter your total budget for the campaign.
And once that budget is exhausted, your ads will no longer run on Google.
So that’s how you can set your budget inside of Google to virtually spend however much you want to spend.
But how do Google ads work? And how much do you actually get for your money?
How much do Google ads really cost you?
Let’s discuss this and then we will figure out how much you should be spending on Google Ads.
The True Cost Of Google Ads
In order to understand the real cost of Google ads, you must understand how Google charges its advertisers.
The most common way that Google charges advertisers is on a pay-per-click basis, also known as PPC.
With PPC, you are only charged when someone clicks on your ads.
No clicks? No pay.
This means that if 1,000 people saw your ad, and no one clicked it, you would pay absolutely nothing to Google.
This also means that if 1,000 people clicked your ad, you would pay the costs associated with every click.
For instance, if each click costs $10, you would pay $10,000 for 1,000 clicks.
Now, a common concern that our clients typically have is what would happen if the number of clicks exceeded what they can afford.
If that’s you, then no need to worry about this. Remember, you can control your costs by setting a daily budget.
And once that budget is exhausted, your ads will no longer run.
This also means that you will no longer get any more clicks that could increase your Google ads cost.
Another common concern is the cost per click. A lot of people want to know what their estimated cost per click is going to be.
Here’s how to get an idea of your cost per click, or CPC.
The first thing you need to know is that CPCs vary based on the keyword that you’re targeting.
For example, the average CPC for the phrase “landscaping company” is $3.52.
Meanwhile, the average CPC for the phrase “car accident lawyer” is $400.00.
That’s $400.00 for a single click.
As you can see, these CPC costs range greatly based on the industry and competition level.
Now, of course, you need to keep the lifetime value of your customers in mind when looking at CPC costs.
For example, a landscaper might make $200 off of a project and a car accident lawyer might make $20,000 off of a case.
So you should measure the risk against your reward when deciding on which keywords to use for your business.
Oftentimes, there are hidden gems that you can find that are far less competitive than other words.
For example, the phrase “motor vehicle lawyer” has an average CPC of $144.83.
That’s over a 200% decrease in cost from the “car accident lawyer” phrase.
A good PPC agency should be able to do keyword research and identify the best keywords for you to target based on cost and effectiveness.
And if you need help with this, then contact us and we’ll be happy to help.
Anyway, if you’re going to go at this solo, then you can do your keyword research for free by using Google Ads Keyword Planner.
You can type in any keyword that you’re interested in and it will show you a list of words to sift through.
There are also additional paid tools you can use to do more advanced keyword research and even spy on your competitors.
For example, our agency has used SEMRush and AHREFs for some of our clients.
These tools will help you select the best keywords to target and estimate their costs per click.
If you want to know more about it, we have some great keyword research tips here that you can read next.
And once you have your estimated CPCs, it’s time to figure out how much you should spend on Google ads.
How Much You Should Spend on Google Ads
Setting your Google ads budget is like a double-edged sword.
On one hand, if you spend too little, you risk not getting enough clicks to generate conversions.
Sure, you can spend $100 and get 10 clicks.
But that’s probably not going to change your life or even generate a single lead.
On the other hand, if you spend too much, you risk wasting your money.
We’ve seen people spend $10,000 on ads from their small business marketing budget that weren’t even going to the right URL.
And others, where they spent a ton of money on low-performing keywords.
The list goes on and on.
So this is what you need to do, and is exactly what we advise at our agency.
Spend enough money to generate your first 100 clicks.
This is going to look different for every business based on the average cost-per-click in your industry.
But normally, at a minimum, you need to spend more than $600/month for most industries.
After your first 100 clicks, look at your campaign performance and optimize.
Then spend enough to generate your second 100 clicks, whatever this costs.
Look at your performance, analyze, and optimize.
Then spend enough to generate your third 100 clicks.
Look back and analyze.
Eventually, you should have 300 clicks from your Google ads.
If each click costs you $5, then that would mean you would have spent $1500 over 3 months.
If each click costs you $10, then that would equate to $3,000 over 3 months.
After about 3 months or 300 clicks, you can look at yourself in the mirror and ask yourself – is this working for my business?
And by working, we aren’t talking about leads and sales that are busting through the roof.
No, 300 clicks are likely not going to make your business explode.
What we’re looking for is some indication or some type of positive movement towards success.
A few leads or sales would help point you in the right direction of the best optimization steps to take with your PPC campaign.
With 300 clicks and a mere 1% conversion rate, you would have 3 conversions.
So if you have this, we would say that you’re moving in the right direction.
Then you can continue to make tweaks to your campaigns to increase your conversions to a level where you eventually breakeven.
And once you’re breaking even, aim for some higher returns on your investment.
So that’s what we recommend that you do to set your Google ads budget.
In one sentence, you need to spend enough to generate enough traffic to start seeing some conversions trickle in.
300 clicks would be the minimum. Any less and you’re probably not generating enough traffic to measure impact.
Now, when it comes to Google ads cost, this is basically how it works.
But there is one thing that you can do to dramatically lower your Google ads costs.
How You Can Lower Your Google Ads Costs
You can lower your Google ads costs by increasing your ad quality score.
This is coming directly from Google themselves. Higher quality ads can lead to lower prices and better ad positions.
Now here’s the thing – every ad you run already has a quality score. Your quality score is reported on a 1-10 scale.
The higher your score is, the more relevant your ads are according to Google.
Your quality score is based on things like your:
- clickthrough rate,
- ad relevance, and
- landing page experience
We work on these things for our clients to help them cut their CPCs and boost their return on ad spend (ROAS).
And if you’re working on your own ad campaigns, then be sure to closely monitor your quality score so you don’t miss future opportunities to increase your campaign performance.
With that said, let’s go ahead and wrap up today’s post.
Today, we answered two questions:
1. How much do Google ads cost? and
2. How much should you spend on Google ads?
In terms of Google ads cost, remember that Google charges you on a cost per click basis.
Your exact ad costs will vary based on the exact keywords you are targeting.
You should carefully do your research on keywords that present the highest opportunity at the lowest cost for you.
In terms of how much you should spend on Google ads, you need to make sure that you spend enough to generate traffic.
Think of traffic like the engine that starts your car. If you don’t have it, you will never start your vehicle.
Once the car has started, you can figure out the best way to navigate the road ahead. But you have to crank up the engine first.
So try to get at least 300 clicks to crank up the engine, and check your performance after every 100 clicks to make sure you’re on the right track.
And if you have to choose between spending more and spending less, spend more.
The more traffic you have, the more opportunities you will have to generate conversions.
But if you want results-driven ad campaigns, then check out our PPC management services today!