This is one of the most common questions I get is, “how much should I spend to see results?” 

And like a lot of other questions, I give the ol’ “it depends” as an answer. 

Determining your initial Google Ads investment can be tricky, but I’ve broken it down for you into a couple of steps, so you can start to develop a budget framework. 

This can help you if you’re already running Google Ads, or if you’re thinking about doing it sometime in the future. 

Let me throw out some questions, to get the ball rolling. 

  • Who is your target market? 
  • What keywords will you be bidding on?
  • How many keywords are you going to test?
  • What is you conversion rate? 

Now let’s break this down. 

Who is your target market? 

One of the most common mistakes I see being made while people are already running paid ads (or marketing of any kind!) is that there isn’t a clear ideal customer defined. This can be a really easy one to skip over, believe me. It’s hard sometimes to “do the work” and nail down one perfect ideal customer for your biz. ‘specially if you have an amazing product or service that you think “everyone would love!” (trust me, I’ve been there). 

However you really do need to understand your ideal customer before even thinking about starting paid ads, especially Google Ads. 

Why? 

Because Google Ads rely on you using ‘keywords’ to reach your ideal customer. How the heck will you know what to bid on, if you don’t even know who you’re trying to reach! 

Before moving forward with some keyword research, have a good think about just who you want your ad to get in front of. 

What keywords will you be bidding on? 

Google Ads is a form of pay per click advertising, which means you don’t pay for the ad, unless someone clicks on it. Click costs vary wildly depending on industry and competition, so there is no ‘average’ click cost that will apply to everyone. 

Obviously the amount that you are charged for a click on one of your ads, is critical to understand before setting your test budget. 

If you have a monthly budget of $100, but a click in your industry costs on average $20, then you can expect to only get 5 clicks per month from your test budget. 

On the other hand if you have $100 to spend each month and your industry averages $1 per click, this will generate a lot more traffic for you each month. 

Before going any further, I want you to do some keyword research, to understand what it (on average) costs for your keywords. You can use Google’s free keyword planner tool inside your Google Ads account. If you don’t have an account, it’s free to join, and you don’t need to commit to spending any money to use the tool. 

I have filmed a training video for you, which you can see inside my free Facebook group, Smart Online Marketing. You can request membership here, if you’re not already part of it. 

>> training video here

How many keywords are you going to test?

If you have a small-ish budget, I recommend testing around 10 keywords at a time. Anymore, you won’t have enough budget to allocate to your keywords, and you will find it hard to generate conversions and spot the ‘profitable’ keywords. 

Using the keyword planner tools from the previous question, start to build a list of keywords that are relevant and specific to your biz. You want to strike a balance between volume and profitability. And what I mean by that, is that you want a keyword to have search volume behind it (which means people are typing it into Google) but you also want to make sure that it’s profitable for you. 

If you go too broad in your keywords (think bidding on the keyword “clothes” when you sell high end women’s fashion) you will waste money on people that aren’t your ideal customers. This will leave you annoyed that you’ve spent money without generating any sales. 

On the other hand, if you go too specific, your keywords won’t be triggering any impressions, because no one is bloody searching for what you’re bidding on (for example bidding on “sustainable women’s cloth smock with embroidered neckline”). 

It’s about balancing volume and profit. 

What is your conversion rate? 

It’s a good idea to understand your conversion rate, so you can get an idea about how the people that click on your ads are going to perform once they get to your site. 

It’s really a numbers game. 

For example: 

If your conversion rate is 2% and your average click cost is 80 cents

1. Out of every 100 clicks, you will get (on average) 2 sales.

2. Those 100 clicks will cost you approximately $80, therefore your cost per sale is $40

3. If you set your daily budget at $500 a month, you can likely expect to get around 12.5 sales ($500/$40)

The goal is to find keywords that have a higher average conversion rate, so you’ll get more sales, from the same budget. But that relies on constant optimizing, which is a whole separate topic. 

I hope this has helped. I would love to know what industry you’re in, and if you’ve researched your average click cost. 

Chat soon,

Kaity

p.s. the training video is here

Kaity Griffin