How Much Should You Spend in Google Ads? Complete Guide to PPC Costs

Google Ads can be a powerful driver of leads for your business, though not without investment. So, what’s the right amount to allocate for Google Ads? The answer hinges on several variables, including your industry, the type of campaign, and more — making it a frequent conundrum for expanding businesses. In this comprehensive guide, you’ll find all the insights needed to confidently calculate and assess your ideal Google Ads budget.

Contents

·????? Essential Insights on Google Ads Expenditure

·????? Determining Your Google Ads Budget

·????? Evaluating Your Google Ads Spending

·????? Strategies to Optimize Your Google Ads Budget

Essential Insights on Google Ads Expenditure

In Google Ads, your expenditure appears as “cost,” representing the full amount invested in a specific campaign or asset.

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Your charges vary based on campaign type and selected bidding strategy — either per click on your ad or per thousand impressions. Google may fluctuate your daily spend, adjusting it up or down to approximate your designated daily budget at the campaign level over time.

Google Ads spend terms to know

Here are some essential terms to master for calculating and managing your Google Ads spend:

• Average cost per click (CPC): This key pay-per-click (PPC) metric shows the average cost you incur for each click on your ad.
• Average cost per lead (CPL): Also known as cost per acquisition or action (CPA), this metric calculates your Google Ads cost for each conversion, labeled as “cost/conv.” in the platform.
• Cost per one thousand impressions (CPM): Primarily for Display and Video campaigns, CPM reveals your average expense for every thousand ad impressions.
• Return on ad spend (ROAS): Comparable to CPL, ROAS measures your ad expenditure against the revenue it generates, often used by ecommerce businesses. Accurately tracking ROAS requires assigning revenue values to your conversions.
• Conversion value: Like ROAS, conversion value indicates the average worth of a conversion to your business. Assigning specific values to different conversion actions allows you to gauge their value, such as distinguishing between a $50 cart purchase and a $500 cart purchase.

Google Ads provides additional metrics to choose from when customizing your dashboard, but these foundational metrics are vital for understanding how your budget is allocated across your campaigns.

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Determining Your Google Ads Budget

Whether you're a newcomer to Google Ads or an experienced user exploring a fresh strategy, a common question arises: “How much should I allocate to Google Ads?” While there's no definitive answer — budgets vary based on each business’s means — experts suggest a baseline of $1,000-2,500 monthly. For example, with an average cost per click of $4.66, acquiring about 10 clicks per day could set your monthly budget at approximately $1,398.

Key factors impacting your Google Ads budget include:

• Competition: High competition can drive up cost per click in niche markets.
• Bid strategy: More aggressive bid strategies can deplete your budget faster.
• Keyword Quality Score: A higher Quality Score can reduce cost per click, as Google rewards optimized ads by lowering costs. Focus on click-through rate, ad relevance, and landing page experience.
• Conversion tracking: The number of tracked conversion actions and their assigned values influence bid strategy and budget use.
• Campaign goals and targets: Google’s algorithms may adjust ad delivery based on your goals, objectives, or target CPA/ROAS.
• Campaign mix: The right blend of campaigns varies by industry, but some campaigns, like Performance Max, span multiple channels and may require a higher budget due to increased reach.

Consider these elements carefully to tailor your Google Ads budget to both market demands and strategic objectives.

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Evaluating Your Google Ads Spending

Once you've established your Google Ads budget, the next step is to monitor it closely. In the Google Ads platform, the "cost" column provides a direct view of your current spend, while additional metrics — like ROAS and CPL — can be added by customizing the columns. Beyond this, the platform offers several reporting tools to help you keep tabs on your spending.

The insights section reveals trends in CPA and conversion targets, offering a broader view of your account's performance. Meanwhile, the report editor and dashboards let you create custom reports that focus on essential spending metrics, giving you granular insights tailored to your campaign needs. And for budget planning, the budget simulator tool at the campaign level provides spending projections based on specific goals and timelines, allowing you to strategize and adjust as needed.

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Strategies to Optimize Your Google Ads Budget

Managing your Google Ads spend can feel like a tightrope walk, aiming to maximize clicks and conversions without breaking the bank. Fortunately, there are several strategies to help lower costs while maintaining — if not enhancing — the volume of clicks and conversions you can support.

1. Establish a monthly spending cap

In the billing section of Google Ads, you can establish a monthly spend cap at the account level, setting a hard ceiling on your overall ad expenditures. Although Google may adjust your campaign’s daily budget up or down to account for daily fluctuations, your total monthly spend will never surpass this predefined limit.

2. Explore all available bidding strategies

Take the time to discern which bid strategies align best with your business goals and how they may influence your spending pace. For instance, the Maximize Conversions strategy typically incurs a more rapid expenditure, as it focuses on securing placements and clicks that have a higher likelihood of converting — often leading to increased costs.

3. Curate your keyword list to focus on low-cost-per-click (CPC) terms

Utilize the Google Keyword Planner alongside other PPC keyword research tools, such as our Free Keyword Tool, to pinpoint the most cost-effective terms within your industry. Focus on prioritizing keywords that generally boast a lower cost per click. Additionally, incorporating brand keywords — terms that feature your business name — often results in reduced expenses, as they are highly specific to your brand.

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4. Enhance your Google Ads efforts with additional marketing channels

If you discover that you've reached your spending limits in Google Ads, exploring additional marketing channels can help complement your campaigns while you gradually expand your search strategy. For instance, consider implementing free or low-cost marketing initiatives that could allow you to allocate more budget to Google Ads. Alternatively, you might explore options like social media advertising, which could provide a more stable or even lower cost structure to help offset your search expenditures.

Ultimately, the amount you invest in Google Ads is at your discretion

Regardless of your chosen budget for Google Ads, it's crucial to align your expectations accordingly and conduct regular audits. For instance, if your daily budget is $10, that's perfectly acceptable! However, if the average cost per click in your industry hovers around $10, anticipate that your click volume and conversion rates will increase at a significantly slower rate.

?As you accumulate historical data over time and work to enhance and expand your account, you'll find opportunities to maximize the effectiveness of your Google Ads while minimizing your costs.

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