Google Ads can help your business drive leads, but not without a cost.
So how much should you spend on Google Ads? This depends on many factors like your industry, campaign type, and more—which is why calculating how much to spend on Google Ads is a common challenge for growing businesses. With this complete walkthrough, you’ll get everything you need to determine and measure your Google Ads spend with confidence.
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What you need to know about Google Ads spend
Your Google Ads spend will be displayed as “cost” within the platform and it indicates the total amount of money that went towards a given campaign or asset.
Depending on your campaign type and the type of bidding strategy you choose, you will be charged per every click on your ad or one thousand impressions of your ad. Google may spend higher or lower each day to average out close to the daily budget you set at the campaign level.
?Should you be spending more or less on Google Ads? Find out instantly with the Free Google Ads Grader.
Google Ads spend terms to know
Here are some other important terms to know when it comes to calculating and managing your Google Ads spend:
- Average cost per click (CPC): This PPC metric calculates how much you spend on average for an individual click on your ad.
- Average cost per lead (CPL): Also known as cost per acquisition or cost per action (CPA), this metric determines how much you spend in Google Ads for any given conversion. It’s displayed as “cost/conv.” within Google Ads.
- Cost per one thousand impressions (CPM): For Display or Video campaigns, CPM indicates how much you spend on average for one thousand impressions of your ad.
- Return on ad spend (ROAS): Similar to CPL, ROAS calculates your ad spend against your ad revenue to determine the bang for your buck. However, this metric is more commonly used by ecommerce businesses. You have to assign revenue values to your conversion actions for accurate ROAS tracking.
- Conversion value: Similar to ROAS, conversion value determines the average value a conversion is worth to your business. Again, you would need to assign individual values to your conversion actions to get an accurate read, but this can be helpful to determine the value of, say, a conversion resulting in a $50 cart purchase versus a $500 cart purchase.
There are several other spend-related metrics beyond this you can select when modifying your columns in the Google Ads platform, but these are the main ones that can help you understand how your Google Ads spend is being used in your account.
How much should you spend on Google Ads?
Whether you’re new to Google Ads or a seasoned veteran trying a new strategy, you might wonder “how much should I spend on Google Ads?” as you get started. There is no right or wrong answer to this question as what every business can afford varies, but our experts recommend starting with at least $1,000-2,500 per month.
For example, our Google Ads benchmarks found that the overall average cost per click in Google Ads is $4.66. So, if you wanted to get roughly 10 clicks per day at that price, that would bring your monthly spend to about $1,398.
Our latest search ad benchmark report can help you understand what to expect for average Google Ads costs within your industry.
Here are some factors to consider when determining your Google Ads budget. You may end up having to spend more or less on a given Google Ads campaign depending on the following factors.
- Competition: If you’re in a highly competitive niche market, costs per click may be inflated.
- Bid strategy: Some bid strategies bid more aggressively than others, using your budget faster.
- Keyword Quality Score: A high keyword Quality Score is directly correlated to a lower cost per click. If you work to improve your three Quality Score factors (expected click-through rate, ad relevance, and landing page experience) you might be able to rank on the search engine results page at a lower cost.
- Conversion tracking: The number of conversion actions you track, and the values you might assign to those actions, could alter how your bid strategy behaves.
- Campaign goals, objectives, and targets: Google’s machine learning might serve your ads differently depending on the goals or objectives you select, and the target CPA or ROAS you apply to your bid strategy.
- Your account’s campaign mix: Depending on your industry, some campaigns might make more sense to use than others, but could end up spending at a more rapid rate. For example, Performance Max campaigns are a cross-channel approach to Google Ads, so more potential placements with these campaigns might necessitate a higher budget.
How to measure your Google Ads spend
Once you’ve determined how much you want to spend on Google Ads, you’ll want to keep track of your budget. As mentioned earlier, you can view your current Google Ads spend within the “cost” column of the Google Ads platform. You can also modify columns within the Google Ads platform to bring in other related spend metrics like ROAS or CPL. On top of this, you can find other related reports to help you measure your Google Ads spend under the insights and reports section of the platform.
For example, the insights section can give an overview of trends within your account regarding CPA and conversion goals. The report editor and dashboards sections also allow you to build custom reports around key spend metrics. You can also use the budget simulator tool at the campaign level to see spending suggestions for certain goals and time frames.
Tips to maximize your Google Ads spend (without losing clicks or conversions)
Your Google Ads spend might feel like a balancing act to get the most clicks and conversions for the least amount of money. Here are some ways you can lower your spend without having to sacrifice the number of clicks and conversions you can afford to bring in.
?Want to take Google Ads tips like these on the go? Download our free PPC 101 guide for more strategies you can save and refer to at any time.
1. Set a monthly spend limit
You can set an account-level monthly spend limit within the billing section of the platform to cap your overall Google Ads spend. While Google may go above or below your campaign daily budgets from day to day, it will never exceed your monthly spend limit.
2. Consider all your bid strategy options
Try to gain an understanding of which bid strategies are right for your business and how they might impact the pacing of your spend. For example, Maximize Conversions is usually found to spend at a more aggressive rate since it’s prioritizing placements and clicks that are more likely to convert—and may be more expensive because of that.
3. Refine your keyword list to low CPC terms
You can use the Google Keyword Planner and other PPC keyword research tools, like our Free Keyword Tool, to identify which terms within your industry are the cheapest. Try prioritizing keywords that typically have a lower cost per click.
Additionally, brand keywords, or keywords that include your business name, also tend to be cheaper since they’re specific to your brand.
4. Supplement your Google Ads with other marketing channels
If you find you’ve hit your spending limits in Google Ads, you can consider other marketing channels to supplement your campaigns as you continue to scale your search strategy over time.
For example, you might consider more free or low-cost marketing ideas to be able to put more spend towards Google Ads. Alternatively, other solutions like social ads, could yield more stable or even cheaper costs to balance out your search costs.
How much you spend in Google Ads is up to you
Whatever you choose to spend in Google Ads, be sure to set your expectations accordingly. For example, if you can only afford $10 per day, that’s okay! But if your industry’s average cost per click is $10, be ready for your click volume and conversion rates to grow at a much slower pace.
As you collect more historical data over time and continue to build out and optimize your account, you’ll be able to get more out of Google Ads for less.
You don’t have to work towards that alone, either. See how our solutions can help you make the most of your Google Ads spend!
