How Much Should You Spend on Google Ads?

Last Updated on: 22nd October 2024, 08:06 am

If you’re preparing to launch Google Ads it is important to calculate how much you should spend each month. It’s also helpful to set realistic expectations for the return on investment that you should aim for.

We’ve worked with thousands of clients across hundreds of different industries and have a good sense of what these numbers should look like for you. Join us as we show you how to create an estimate of your Google Ads budget so you can advertise confidently and profitably.

Feel free to click the dropdown arrow on the right hand side to view the Table of Contents and skip ahead to particular sections that interest you. Or just get started below:

How to Create a Google Ads Budget Estimate

The short answer? It depends. Now I know that’s not the answer you are looking for, and we’ve got some frameworks to share – don’t worry. But other factors will come into play here such as the size of your business, your industry, your appetite for risk and the amount of cash you have in the bank for runway.

However, we’ve found there is a few golden rules depending on business sizes: 

• Recommended Google Ads budget for small and local businesses: $1500 to $8000/per month
• Recommended ad spend for mid-size businesses: $7,000 to $30,000/per month
• Recommended ad spend for enterprise-level businesses: $20,000 to $50,000/per month

Sometimes even small businesses spend $10,000 per/month if they work well (and if they need to scale). Enterprise-level organizations may end up spending up to $80,000/month on Google Ads. 

What Determines Your Google Ad Budget?

Your Google Ads costs depend on factors, including:

• Industry (e.g., you own a dental practice or you’re a therapist)
• Target audience
• Customer lifecycle
• Bid and your bidding strategy
• Budget
• Ad rank and schedule
• Ad Quality Score
• Current market trends
• Keywords
• Your PPC strategy
• Risk tolerance
• The amount of cash reserves in the bank

Remember that you have complete control over your Google Ads budget. You can define a daily maximum and Google will adhere to that; so you don’t need to worry about accidentally running over and spending too much. 

Goals, Traffic Cost, and Industry

You can only create a proper advertising budget when you are crystal clear about your goals and customer acquisition costs. Here are some key questions that will help you think about budget size:

• How many customers or clients do you want to acquire each month?
• Do you want the best quality leads? (It’ll cost more)
• Are you able to quickly collect the ad spend back from the sales that you make?
• What can you do to adjust your model or sales process to be more profitable from your ads?
• How long does it take you to breakeven on your ad spend?
• How much does it currently cost you to acquire a customer?
• Are you charging enough for your products & services to turn a profit from your spend?
• How much are your competitors spending on ads?
• Are you focused on increasing brand awareness or generating immediate sales?

Our advice: set realistic goals. For example lets say you want to acquire 40 clients per month for your local business. Once you set a definitive goal you can quickly move to the next step: understanding how much the traffic will cost and what your chances of Google Ads success are.

Estimate your budget based on the cost per click (CPC) for specific keywords. As a Google Ads specialist, I typically use SpyFu to understand what my clients’ competitors are bidding on (and where we have an opportunity to win more top-quality leads). Still, you can use the Google Ads Keyword Planner.

For example, if your CPC turns out to be $2 for relevant keywords, and you have a budget of $1000, that would get you 500 visits.

If your goal is immediate sales you should understand your cost per acquisition, i.e. how much you should spend to acquire one customer and your average conversion rate. 

If you don’t have the numbers ready yet, don’t worry. You’ll learn as you optimize your Google Ads campaigns. But it’s important to start thinking about this from the very beginning.

Perhaps you find that you need 10 clicks on your ads to generate 1 lead for your sales team. If you are selling over the phone and your close ratio is 20% and your Cost Per Click is $2, it means you’d have to spend $100 to acquire one customer. In some industries, this might makes sense.

Always consider your profit margins and increase your Quality Score as much as possible. Increasing your quality score takes finesse and expertise but it will reduce your ad costs and affect profit margins. Google wants to reward advertisers who create a great experience for it’s users and that is why they created quality score as a metric. Keep it in mind, it’s very important.

If your ads are highly relevant to the searchers, you could pay less per click and get better placements. So, if your industry’s CPC is generally high (as is the case for law firms), every cent of CPC that’s reduced can go a long way.

Average Google Ads CPC by Industry

I prepared a handy infographic on average CPCs and how to reduce them here. However, these are the average Google Ads CPCs in 2024:

Industry	Average CPC
Advocacy	$1.43
Auto	$2.46
B2B	$3.33
Consumer Services	$6.40
Dating & Personals	$2.78
E-Commerce	$1.16
Education	$2.40
Employment Services	$2.04
Finance and Insurance	$3.44
Health and Medical	$2.62
Home Goods	$2.94
Industrial Services	$2.56
Legal	$6.75
Real Estate	$2.37
Technology	$3.80
Travel and Hospitality	$1.53

How Much Should You Spend on Google Ads as a Beginner?

For beginners, Google suggests trying an average daily budget of $10-$50. As a Google Ads expert with over 15 years of experience, I recommend starting with a smaller budget, a good understanding of your audience and their keywords and then scaling up as you optimise.

It takes a while for Google Ads to learn about your account and deliver highly-qualified leads on autopilot. Once the learning phase is over, you’ll have more insights into your audience, so you can scale up, down or sideways as needed.

When you increase the ad spend, check your account every day. When the campaign is profitable, evaluate whether it makes sense to increase your budget or apply more Google Ads best practices.

Vetted advertisers prefer not to cap their budgets. However, you need a good plan. Well-planned advertising is possibly one of the best investments you can make. Even if you get a 100% ROI (e.g., deploying $2 and getting $4 in return), the increase in budget needs to be strategically planned.

Make sure to track any budget changes in a spreadsheet. You want to keep control over your account, so you understand how every dollar you invest drives you an increase in revenue.

How to Run Google Ads on a Small Budget 

Stepping into the world of Google Ads is not child’s play. If you want to play it safe initially and keep the budget as low as possible, there are a few things to keep in mind:

• During your keyword research, pick out less competitive keywords, like long-tail keywords. For example, “textile rug cleaning services in Baltimore” is less competitive than “rug cleaning services.” You might also get more qualified leads. 
• Optimise your landing pages. When a searcher clicks on your ad, you want to keep them on your landing page with relevant content. If it’s not relevant, they’ll bounce and decrease your Quality Score. 
• Make sure your Quality Score is high. A high Quality Score makes you pay less and rank higher.

Are You Ready to Try Google Ads?

Ultimately, you don’t have to spend (too) much on Google Ads to make them work for your business. The key is knowing your audience well, so you can intercept them with your ads when they’re ready to purchase from you. 

If you want rapid Google Ads success, get a copy of my best-selling book and launch a profitable campaign in 7 simple steps! And if you’re ready to turn Google Ads into your personal lead generation facility, get in touch with me. I’ve helped thousands of business owners, and I would love to help you.