Budget for Google Ads: How Much Should You Spend? [2024 Truth]

"Google Ads is expensive" might be the most poorly generalized statement in digital marketing (perhaps surpassed only by the number of channels and tool categories that have been declared as "dead" about a billion times before.)

If you are considering Google ads, but you're not sure if your budget allocations are enough, this is the right place to be because in this article, we're discussing everything you need to know about Google Ads, how it fits into the landscape of an average budget, and what you need to do to make your Google Ads strategy a success.

Keep reading and find it more.

Minimum amount to spend on Google Ads in 2024

While Google Ads does not enforce a strict minimum spending requirement, setting a realistic budget is crucial for campaign effectiveness. Starting with a modest budget can offer insights into ad performance and pave the way for more significant investments.

There is no minimum entry budget for Google Ads -- advertisers can set a daily budget as low as $1. However, it is recommended to spend at least a few dollars per day so you can get statistically relevant data and optimize your campaigns for better performance. In 2024, with the increasing competition and rising costs of ad placements, it is advisable to set a minimum daily budget of $5-10.



Recommended daily budget for Google Ads

The recommended budget varies significantly between businesses, depending on objectives and market competition. A strategic approach involves setting a budget that aligns with your advertising goals, while also being flexible to adjust based on performance.

Google says their ads bring in an average ROI of 800% -- so for every $1 spent, companies get $8 in profit. This statistic can guide budgeting decisions and give a rough estimate of how much you should spend on Google Ads.

For example, if your business aims for an ROI of $50,000 per month from Google Ads, then the recommended daily budget would be around $6,250.

Thinking in terms of revenue goals will allow you to plan your future ad spend range and set weekly spend and daily ad spend limits in line with your purpose.

Of course, you have to factor in other variables such as your industry, competition level, and the type of ads you're running.

For instance, businesses in high-demand industries like finance or insurance may have a more generous Google Ads budget to outbid competitors for top ad placements.

Should you increase your Google Ads budget?

Evaluating the performance of your campaigns is essential before deciding to increase your daily or your monthly budget. Key performance indicators (KPIs), such as conversion rate and cost per acquisition (CPA), can guide this decision.

There's no "rule" regarding when you should increase your daily budget limits or make budget reductions. Generally, if your business can afford investing more in Google Ads and you have found a strategy, daily spend, and cadence that works, you'll want to increase your budget to scale.

Keep in mind that even if you do increase your Google Ads budget, it doesn't have to stay the same forever. Budget resets and flexible budgets (having a lower budget for weekends, for example).

Pro tip: before you increase your budget, talk to a real Google Ads expert. Working with the wrong agency? Check out our list of the best vetted Google Ads agencies.

How much will your cost per click be?

Although not all clicks become conversions, your cost per click (CPC) is one of the most important indicators of how much you're spending on Google Ads. The average CPC varies by industry, keyword, and specific type of ad, but it's essential to track this metric and optimize your account for a lower cost per click.

For example, an eCommerce business looking to sell luxury watches may have a higher CPC compared to a blog promoting book reviews. This also means that their monthly budget limits will have to be closer to the higher threshold.

Understanding your industry's average CPC can help set more realistic budget expectations. Yes, budget constraints are needed, but you also want to make sure that whatever monthly or daily budget allocations you do make towards Google Ads have maximum odds of success.



(Source: Search Engine Journal)

CPC in buying intent keywords vs informational keywords

Another important factor to consider when calculating your average CPC is your keywords -- and their intent. Essentially, there are four types of intent for keywords:

• Buying intent: when a user is actively looking to make a purchase, such as "buy luxury watch"
• Informational intent: when a user is looking for information or answers, such as "best luxury watches"
• Navigational intent: when a user wants to reach a specific website, such as typing in the site's name
• Transactional intent: when a user is ready to take action, such as "sign up for free trial"

Typically, buying intent keywords have a higher CPC compared to informational keywords. While bidding on buying intent keywords may lead to better conversion rates, it's essential to also include informational keywords in your strategy to reach a wider audience and potentially reduce CPC.

Google Ads: investment vs expense

Truth be told, Google Ads can end up eating a large part of your budget (not without offering tangible results, of course). However, it's important to view Google Ads as an investment rather than an expense. By setting a strategic budget and continuously optimizing your campaigns, you can expect a return on your investment in terms of increased website traffic, leads, and conversions.

Once you reframe your perspective and view Google Ads as an investment, you may find it easier to allocate a higher budget for this marketing channel. Think of it this way: whether you run Search ads, Display ads, or Shopping ads, Google allows you to rent online real estate.

That means that for a certain budget, you can show your ads to relevant users and potentially attract them to your website. If your cost per click is, say $1.2, 5% of the people who land on your website convert, and your average product value is $80, you can make up to $800 in sales by just spending $240 (200 clicks x $1.2). This is an oversimplified example, but it highlights the potential return on investment with Google Ads.

How to create a Google Ads budget estimate

If you want to start running Google Ads, you might want to have a rough idea of how much you should spend. Your budget estimate is based on a multitude of factors, including some related to the type of business you run:

Small and local businesses

For small and local businesses, Google Ads budgeting behaves a bit differently, primarily due to the scale and specific goals of these enterprises. The focus here leans towards maximizing visibility within a local context and driving foot traffic to physical locations or local online services.

Thus, the budgeting decisions often prioritize geographical targeting and locally relevant keywords, which may have lower competition and hence, potentially lower CPC.

This strategic approach allows small businesses to achieve a competitive edge in their local markets without necessarily requiring large advertising expenditures.

Furthermore, utilizing Google Ads' location-based ad extensions can enhance ad performance, making each dollar spent more effective in reaching the intended local audience.

Mid-size businesses

For mid-size businesses, Google Ads budgeting becomes a bit more complex. These companies are often at a stage where they're looking to expand their reach, enter new markets, or aggressively compete against larger players.

Consequently, their Google Ads strategies require a more nuanced approach to budget allocation. Here, it's not just about maintaining visibility but also about strategic positioning and capturing market share.

Mid-size businesses may need to allocate a higher budget to compete on more competitive keywords, invest in broader geographic targeting, and employ more sophisticated ad formats and targeting options.

This is to ensure that their ads are seen by a more diverse audience, across different stages of the buyer's journey. Additionally, mid-size businesses may benefit from segmenting their budget across different campaigns or product lines to better understand which areas yield the highest ROI.

Optimizing for a cost-effective spend while maximizing reach and conversion becomes the balancing act. It may also involve experimenting with different ad types, such as display ads, shopping ads, or video ads, to see which resonates best with their target audience.

Hence, a flexible and analytical approach to budgeting—grounded in performance data and market insights—is crucial for mid-size businesses utilizing Google Ads.

Enterprise-level businesses

For enterprise-level businesses, Google Ads budgeting embodies a different paradigm altogether. Such organizations typically have more substantial resources and a broader market presence, enabling them to leverage Google Ads at scale.

The focus here often goes beyond simply acquiring new customers or maintaining visibility. It encompasses brand reinforcement, expansion into new markets or demographics, and even influencing market dynamics.

Enterprise businesses might allocate significant budgets to dominate competitive keywords or to ensure omnipresence across various Google platforms, including YouTube and the Google Display Network.

The flexibility of a larger budget allows these companies to experiment with innovative ad formats, advanced targeting options, and comprehensive remarketing strategies to engage users at every touchpoint of the customer journey.

Additionally, for these businesses, Google Ads budgeting is often integrated into a more extensive, omnichannel marketing strategy. This requires a high degree of coordination with other marketing activities and channels to ensure a cohesive and unified brand message.

The analytics and insights derived from vast data available to enterprise-level businesses also play a critical role in refining and optimizing ad spend for maximum impact and efficiency.

Thus, while the budget may be larger, the expectation for a measurable return on investment (ROI) remains, necessitating a strategic, data-driven approach to Google Ads budgeting.

What factors influence your Google Ads budget?

Aside from how much money you can afford to put into Google Ads and aside from the technicalities (such as the type of ad you choose to run), there are several other factors that could influence your Google Ads budget:

Industry

The industry in which a business operates significantly impacts its Google Ads budget due to variations in keyword competition and cost per click (CPC). High-competition industries may require a larger budget to achieve visibility and reach potential customers effectively.

Audience

Understanding your target audience, including their online behavior and preferences, is crucial in determining your Google Ads budget. This knowledge helps in crafting more effective ads and choosing the right keywords, ultimately leading to a more efficient use of your budget.

Customer journey

The customer's path to purchase, from awareness to conversion, impacts your budgeting for Google Ads, as different stages may require distinct strategies and funding.

Recognizing where your audience is in their customer journey enables more targeted ad spending, optimizing for either broad reach or specific, conversion-driven tactics.

Your bidding strategy

Your bidding strategy directly influences how much you spend on Google Ads and how effectively you can compete for ad placement.

By choosing the right approach—be it cost-per-click (CPC), cost-per-mille (CPM), or cost-per-engagement (CPE)—you can optimize your spending to achieve your specific marketing objectives.

Your marketing/advertising budget

Your overall marketing and advertising budget should also factor into your Google Ads budget. This ensures that you are allocating a realistic amount of funds for Google Ads, considering how it fits into your broader marketing efforts.

Market trends and competition

Keeping an eye on market trends and competitors' activities can provide valuable insights into how much to spend on Google Ads. Changes in the competitive landscape can affect how expensive your Google Ads are.

Seasonality can also affect the cost and impact of your ads, so it's essential to monitor and make adjustments to your budget accordingly.

Your Google Quality Score

Your Google Quality Score is a crucial metric that influences your ad position and cost per click (CPC). In doing this, your Quality Score affects your ad spend as well, because it can make your job easier (or not), depending on how your existing ads are performing.

Essentially, this score assesses the relevance and quality of your ads, keywords, and landing pages, affecting how competitively your ads can perform in the auction process.

You cannot "control" your Quality Score, per se -- but you can do everything in your means to increase it:

• Improve ad and landing page relevance and overall user experience
• Increase click-through rates (CTR) with more enticing CTAs
• Enhance your site's or landing page's mobile-friendliness

By continuously improving these factors, you can positively impact your Quality Score, potentially lowering your Google Ads spending in the long run.



(Source: LinkedIn)

Your Ad Rank

Your Ad Rank is another critical metric that determines your ad's position and cost in Google Ads. It takes into account your Quality Score, bid, and expected impact from ad extensions, among other factors.

Thus, optimizing for a higher Ad Rank through improving your Quality Score and bidding strategically can lead to better ad performance while potentially reducing spending.

Your objectives

The goals you set for your Google Ads campaign will ultimately drive how much you spend on it. For instance, if your goal is to increase brand awareness, you may allocate more budget towards impressions and reach.

On the other hand, if your objective is to drive conversions, you may focus more on targeting specific keywords and optimizing for a lower cost-per-click.

Your overall PPC strategy

Ideally, your Google Ads strategy is part of an overarching advertising strategy: one that takes into account all of your other marketing efforts. This ensures a holistic and unified approach to budgeting, avoiding overlaps or conflicts between different channels and platforms.

The keywords you go for

Some keywords are more competitive than others - and that means they are more expensive. While broad, high-volume keywords may seem appealing, they can also be more costly and less effective than long-tail, specific keywords that better target your audience.

Average Google CPC per industry in 2023

Understanding the average CPC within your industry provides a benchmark for budget planning, ensuring that your spend is aligned with industry norms and competitive.

Here's some of the latest data on Google Ads, according to WordStream. As you can see, the average cost per click can vary quite a lot from one industry to another - and, in general, those with a higher CPC also tend to have a higher product value.

Keep in mind these are just benchmarks - figures meant to give you a broad idea of what you may expect. Your actual CPC will depend on many factors, including your industry and audience, as we've discussed above.

Can you run Google Ads on a tight budget?

Yes, in theory, you can run Google Ads on a tight budget. You can start on a small budget and scale, you can maintain your budget smaller, or you can seek out lower-volume, longer-tail keywords with less competition to keep your costs down.

However, a low budget means that it may take more time and effort to see results from your campaigns. Additionally, reducing your budget too much could limit the effectiveness of your ads and hinder your chances of reaching potential customers.

Best practices for Google Ads on a dime

Even with limited financial resources, strategic choices and optimization can yield substantial benefits from Google Ads, emphasizing the importance of efficient budget allocation, smart bidding, keyword selection, targeting, and continuous campaign evaluation.

Here are some of the best Google Ads tips for teams dealing with budget reductions and tight marketing spend ranges.

Focus on high-intent keywords

High-intent keywords are those that indicate a strong intention to make a purchase or take another valuable action. By focusing on these keywords, even with a limited budget, you can ensure that your ads are seen by users who are closer to making a purchase decision, potentially increasing your return on investment.

Utilize geo-targeting to limit spend

Geo-targeting allows you to limit your ads to appear only in specific geographic locations. This is particularly useful for local businesses or campaigns targeting specific markets. By focusing your spend on areas where you're most likely to find your target audience, you can more efficiently use your budget.

Leverage ad scheduling to maximize impact

Ad scheduling, or dayparting, enables you to specify the days and times your ads are shown. This is useful for targeting users when they're most active or more likely to convert, based on your data. Effective use of ad scheduling can help optimize your budget by focusing spend on the most opportune times.

Optimize for Quality Score to reduce costs

A higher Quality Score can lead to lower costs and better ad positions - a perfect combo for teams facing budget constraints. Focus on improving your ads' relevance, landing page quality, and click-through rates to boost your Quality Score. This not only helps you save money but also improves the overall effectiveness of your campaigns.

Experiment with ad extensions to increase visibility

Ad extensions expand your ad with addition information, giving potential customers more reasons to choose your business. They can improve your ad's visibility and click-through rate at no extra cost. Using the right ad extensions can make your ads more appealing without increasing your spend.

Maximize conversions with the right expert

There's a reason Google ads is still reigning supreme among marketers. Even on a tight initial budget, Google Ads can still show amazing results.

Need someone to help you ou? Contact Mayple and allow us to connect you with the best Google Ads specialist for your niche!