How to Choose the Right Starting Budget for Your Google Ads Campaign

When you're starting a Google Ads campaign, it's important to choose the right budget. You don't want to set your budget too low and not be able to get the results you want, but you also don't want to set your budget too high and waste money. Let's talk about how to choose the right starting budget for your Google Ads campaign.

There are two main reasons to have a starting budget for your campaigns:

One, you will explore your benchmark for your Ad performance, so that you can know what to expect. This will help you make sure that your Google Ads are profitable before you spend more money on them. As an agency, we would argue that Google Ads can be profitable for any business, but it takes some experimentation to get there, and that's why starting a budget is important.

The second reason is that you need to "train" the algorithm on what good clicks and conversions are, meaning those that lead to a potential customer taking a desired action on your website or making a purchase. Before Google Ads has enough data your results could be hit and miss, but once you've "trained" the algorithm, you can start increasing your budget without hurting your profitability.

How to calculate a starting budget for your first Google Ads campaign?

Let's walk backwards from two goals we want to achieve. One is to have 50 recorded conversions to train the algorithm, and the other is getting at least 10 clicks a day for a month. If we focus on the clicks for the next 30 days, conversions should take care of themselves, or you have a website problem and that is a different topic.

The cost of a click will be very different based on your industry, location and a few other factors, and can range from ￡0.01 to over ￡20. To get a good prediction, head to the Google Keyword Planner tool inside your Google Ads account.

Give the planner a few starting keywords (phrases your customer would put in Google Search that you'd want to advertise on) and make sure to select relevant language and geography for your business.

Once you get your results look at the keywords with sufficient volume (how often these keywords are searched) and look for Medium to Low competition (how hard it is to compete for these keywords) as you are starting. This will help you see an estimate of a bid you'd pay for clicks on these keywords.

Let's say you've identified that a low bid for your clicks is ￡1 and a middle bid is ￡5. Then you apply the following formula:

Daily Budget per Campaign = (a low bid + a middle bid) / 2 * 10 clicks

So in our example, the daily budget is (1+5)/2 * 10 clicks, which is ￡30 per day.

We then multiply that by 30.4 (average month duration) and get a starting monthly budget for this Google Ads campaign of ￡912.

Disclaimer #1: Remember that your digital marketing strategy will involve different campaigns, the example above shows the calculation for a single one. The final number of campaigns needed for your business will depend on your niche and other factors. As a guideline, one service or product (or a very closely related group of products) = one campaign.

Disclaimer #2: This calculation is also made for a standard Search campaign. Display campaigns for remarketing or Brand Awareness would have a different calculation. As a rough suggestion, they can start with a budget of ￡6 to ￡12 per day.

There you have it - this is how you calculate your starting budget for Google Ads.

If you are thinking of launching Google Ads for your business and need help with calculating your starting budget, our team would be happy to guide you.