Determining Your Monthly Budget for Google Ads: A Guide for Small Businesses, Trades, and E-commerce

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Determining the right monthly budget for Google Ads can be a challenge, as it varies based on several key factors such as industry competition, business size, and advertising goals. Here’s a comprehensive guide to help you figure out the appropriate budget for your Google Ads campaigns.

Industry and Competition

The cost of Google Ads can differ significantly depending on your industry:

• Highly Competitive Industries: Sectors like legal, finance, and insurance typically have higher costs-per-click (CPCs) due to greater competition. Businesses in these industries may need to allocate $1,000 to $3,000+ per month to achieve significant results.
• Less Competitive Industries: For industries with lower competition, effective results can often be achieved with budgets ranging from $100 to $500 per month.

Business Size and Goals

The size of your business and your advertising objectives also play a crucial role in determining your budget:

• Small Businesses: Typically, small businesses spend between $100 and $10,000 per month on Google Ads, depending on their goals and the competitiveness of their market.
• Mid-Sized Companies and Agencies: These organisations often allocate between $7,000 and $30,000+ per month for their Google Ads campaigns.

Your specific monthly budget should align with your advertising goals, whether that's increasing brand awareness, generating leads, or driving sales.

Cost-Per-Click (CPC)

Understanding your industry’s average CPC is vital for budget planning:

• Average CPC: Approximately 61% of businesses pay between $0.11 and $0.50 per click across Google’s ad networks.
• High CPCs: If your industry has higher CPCs, you will need a larger budget to drive sufficient traffic volume.

Recommended Budget by Bobo Digital

At Bobo Digital, we recommend a minimum budget of $1,000 per month for Google Ads to ensure that your campaigns are effective. Here are some signs that indicate you might not be budgeting enough for your search channel:

1. Insufficient Clicks: If your campaigns can't deliver at least 10 clicks per day, you’re banking on an unrealistic conversion rate of over 10% for non-branded search terms.
2. Impression Share Issues: If you’re losing more than 45% of your impression share to rank or budget (especially when using smart bidding), it’s a sign that your budget may not be aligned with auction prices and bidding strategies.
3. High CPA: An uncharacteristically high cost-per-acquisition (CPA) can indicate that your ads are not being shown during prime times due to budget constraints, leading to inefficient ad spend and poor quality clicks.

Signals to Look For

When evaluating your Google Ads budget, consider these signals:

• Conversion Rates: Ensure your campaigns are achieving a reasonable conversion rate. Low conversion rates may indicate the need for better-targeted ads or landing page improvements.
• Ad Performance: Regularly monitor your ad performance metrics such as click-through rates (CTR), conversion rates, and cost-per-conversion. Adjust your budget based on these insights to optimise results.
• Budget vs. Auction Prices: Make sure your budget aligns with the auction prices in your industry. This alignment is crucial for maintaining a good impression share and achieving your advertising goals.

Conclusion

While the ideal budget for Google Ads varies, small businesses can start with $100-$500 per month in less competitive industries, whereas more competitive sectors may require $1,000-$3,000 or more per month. Constantly testing, measuring, and optimising your campaigns is recommended at any budget level. For more detailed guidance, refer to Google's support page on budget planning.

For personalised assistance in setting up and optimising your Google Ads campaigns, reach out to Bobo Digital. Our experts are ready to help you maximise your digital marketing efforts and achieve your business goals. Contact us today to get started!

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