Figuring out how much you should spend on Google Ads is hard, especially if you aren’t experienced.
In this article, you will learn how Google Ads budgets work and our proven method to figure out what your Daily Google Ads budget should be.
How does Google Ads budget work?
Google Ads lets you set an average daily budget. If you are new to advertising this might seem a little strange. Why not just give Google the total budget for your campaign?
The reason is that an average daily budget gives you as an advertiser a lot more flexibility. If you need to boost traffic over the weekend you can bump up your daily budgets those days and turn them down on other days.
One thing to remember is that the daily budget you are giving Google to spend is AVERAGE. A lot of people might be surprised to see that their campaign might be spending double the amount some days, but other days spend close to nothing. That’s because Google tries to help you get as many conversions as possible, so they will use more one day if it seems more likely to be beneficial for you.
You won’t spend more than your daily budget x 30.4 (the average number of days in a month). So if you see your campaign overspending or underspending there is no reason to worry about your bill.
3 steps to determine your Google Ads budget
Now, let’s dive into our proven method to figure out how much you need to spend on Google Ads to get the results you need.
Step 1: Determine the goal of your Google Ads Account
This is an important, but often overlooked step in a lot of Google Ads budget strategies. What your goals are will hugely affect your budget strategy.
Here are some common examples of goals advertisers have for their Google Ads account:
- We want to fill our clinic with 20 more customers each week
- We want as many subscribers to our SaaS product as possible
- We want as much revenue as possible at a 300% ROAS.
As you can see all these goals are quite different and would need a different approach to budgeting. Goal 2 and 3 could be way more flexible than goal 1 because here we need to figure out how much to spend to get 20 customers each week.
So, take a few minutes to think about the goal of your campaigns and write them down.
Step 2: Select your test budget
Most Google Ads budget strategies use estimates from tools like Google Keyword Planner to help you determine the budget. That’s not a stupid strategy, but here is an even better one: The test budget campaign.
You should not jump in with large budgets in Google Ads, you should test the waters. This is what the test budget campaign is about. Choose a budget that will get you enough data to run for about two weeks. For example, if you are a small local business maybe you should try with something like 15$ a day, if you are in a highly competitive niche you should be looking at somewhere around 100-200$ a day.
Initially don’t expect this campaign to be profitable or break even. The goal right now is to get some proper data, not just estimates to help you figure out what your budget should be.
After running this campaign for a week or two you should start having a data set that will help you determine what your budget should be.
You will now have information about how much you spent, how many clicks you got and how many conversions you got. This information will be vital in the next step.
Step 3: Calculate your budget
Now is time to bring back those goals you wrote down and find the data from your test campaign.
Let’s use the goal of getting 20 new clients a week to your clinic as an example. To figure out the needed budget you can use this formula:
BUDGET = CPA X GOAL
After running the test campaign we found out that after spending $200 we got 8 conversions. That gives us a CPA (cost per acquisition) of $25. Meaning that right now we need to pay $25 for each new client to the clinic. That’s giving us the following calculation
BUDGET = $25 X 20
That puts our starting budget at $500 a week to meet our weekly goal. Don’t forget that this is based on numbers from your test campaign, so your CPA should improve a lot once you start getting rid of keywords that don’t convert along with other optimization tactics.
Now it is time to turn your budget into a daily budget. This is super easy. In your estimates, find out how much you need to spend every month and just divide on 30.4 (the average number of days in a month). For our clinic, it would be:
$2000 ($500 x 4 weeks) / 30.4 = $65
Optional step: Ditch your budget
This is our favorite thing to do when it comes to budgeting. When you have figured out the right formula you should spend as much as you possibly can. Because, if you know that for every $1 you invest in Google you get a profitable return, why wouldn’t you spend as much as possible?
The only reason not to have “unlimited” budgets is if you have some kind of constraint about how many clients you can serve or products you can sell.