Budgeting for your ads is one success strategy you want to work on. Google ads budgeting may not be too much fun because it’s so restrictive. But if you could spend an unlimited amount on ads, you wouldn’t know how to optimize for best results 😊
As a marketer you’re probably constantly trying to figure out how much to budget and how to get the most out of the budget you have. Many marketers also keep one eye on their competition to see how much they’re budgeting which helps them double check their own work. Budgeting for any platform including Google ads, is something that’s never complete. And it’s a challenge.
But, fortunately, as you gain experience with Google ads budgeting, the faster you’ll be at setting them up. You’ll become a whiz at optimizing mid-stream which helps you gain more value from every dollar spent💲
Find Your Benchmarks
If you don’t determine your benchmarks, you’re playing in the dark. And you can’t see too well in the dark!
Benchmarks help you set your goals. Look at your average past performances for CTR, CPC, CVR, and CPA for both search and display ads. Run reports to find out your numbers for year-over-year and month-over-month.
But that’s not your KPIs. (Don’t you just love these abbreviations?!) KPI means key performance indicators.
Because you’ve learned so much during the past few years, if your business is that old or older, then you use those older numbers as your minimum benchmark. Use those numbers to calculate how much better you can do. Keep a record and let that be your guide.
Now for the competition! Do your research here as well.
Find out benchmark reports for several industries. You want to know the CTR for millions of clicks and impressions. Usually, you can find someone else who’s figured all that out already, but you can ask specific businesses yourself as well. But do use those reports to your advantage.
Research Google Ad Cost
Your Google ads budgeting strategy must include researching how much other people are paying for ads. There is no price sheet for Google ads, (wouldn’t that be nice and simple), because there are so many things that can cause the amount to fluctuate.
Here are a couple of variables that will impact your ad spend 💰
- Google Ads is based on an auction system. This system rewards businesses that have high-quality ad campaigns with lower cost and better ad placement.
- You can control your Google ads budgeting using tactics like ad scheduling, geotargeting and device targeting.
Do your research and keep a spreadsheet of what other companies are spending. And use your benchmarks. This will help you set your KPIs.
More on Ad Scheduling, Geotargeting, and Device Targeting
- You can schedule your ads to specify when you want your customers to see them. They still go through the auction process, but you can still tell Google when to display them.
- This means you can spend more of your budget on specific geographical areas. It gives your ads priority to display in certain areas. You can choose from a state or province, or a 5 block radius from your store.
- Mobile searching has grown immensely. Consumers are searching the web with numerous devices. And you may want to target which device your most valuable leads are coming from. If mobile leads are more valuable to you, then you can specify to have more of your budget go to mobile 📱
It’s good to be aware of how you can use these targeting 🎯 guides to affect your ad spend.
Set S.M.A.R.T. Goals
Before you start paying for ads, you’ll have to set some goals and determine how much you are able to pay for CPC, CPM, etc.
If you’re going after leads, you want to know who you’re going after because this will affect the cost. Two things will help you determine the leads you want. One is quality and the other is where are they in the buying cycle. If you target top of funnel leads, it will cost a lot less than bottom of funnel leads!
Once you’ve figured that out, it’s time to set S.M.A.R.T. goals based on the type of customer you’re targeting.
- Specific: Have your amount set for every goal.
- Measurable: Set up a good tracking strategy.
- Achievable: Don’t set yourself up for failure. Look at your benchmarks here.
- Realistic: Your goal might look like you can achieve, but is it realistic. Be sure you have everything to hit your KPIs.
- Timely: Set a timeline. Track your progress and make changes when you need to.
Use Keyword Cost To Get Started
Use Google Ads Keyword Planner to find out how much you will pay for the keywords you want to use. The lowest you can pay for a keyword is 5 cents. But the highest, well that depends on what type of business you’re in. Insurance companies probably pay the highest. That’s because they have high customer lifetime values. They would pay $50 or more per keyword.
So, it all depends on what type of business you have. If you’re a giant retailer or insurance company, you could pay up to $50 million a year. But the average small business owner spends between $10,000 and $20,000 a month.
If you have a great Quality Score, you are rewarded with low CPCs.
Depending on the market competition, this will also determine the cost of a keyword. You want to know how competitive your keywords are before building your campaign.
And you want to know the value of your CTRs. They could be high, but not converting. Is that possible? Oh, yeah!
When you have a high CTR but low conversions, this is costing you more than you want to pay, because you’re paying for every click! Without a conversion, it’s just a waste of money 🤑
Shift Your Budget
It can take about a month to see what is working in your campaign. You can then shift your budget to your top-performing keywords. When you check your keywords, you’ll see which ones have the greatest chance of converting.
If you notice a keyword with a high CTR, but you’re not getting any conversions, something has to change. You may be targeting the wrong keywords in that scenario. Or there’s a mismatch with your landing page.
So, you want to find your high CTR keywords. It’s easier to find them than it sounds! You have to use custom filters.
Remember to use a 30-day date range to get a good indication of the performance of your keywords.
- Go to Adwords UI
- Go to the keywords tab
- Click “Columns”
- Click “Modify columns”
You want to filter based on these 4 things:
- CTR greater than the account average
- Conversion rate greater than the account average
- Cost per conversion less than your target CPA
Once your filters are in, label it and keep referring to these keywords to stay on top of your account’s most valuable terms. From here you can find new keywords that are like your strong ones. You can also optimize high CTR but low conversion keywords 📜
Think of your Google ads budgeting the same as any other type of budgeting. You start out with a certain amount you can afford and give yourself some leeway for minor or major changes.
Start by budgeting for each separate campaign. Each campaign should have its own daily budget. You can also control the filters for each one as well. You may have certain campaigns that have a higher priority as well. Then you want to have a higher budget for those types of campaigns.
If you’re new at this, start with a few campaigns and calculate the daily budgets for each one. It won’t be long and you’ll get the hang of Google ads budgeting 😃