How to Calculate Your First Google Ads Budget

Google Ads allows businesses to promote their products or services to their intended target audience.

Before you go down the path of starting your Google Ads campaign and establishing your budget, there are a couple of things to consider first.

In this article, we will cover how your marketing goals will impact your Google Ads campaign, the different types of Google Ads available to businesses and how to calculate your budget.

Google Ad Objectives & Why they Matter

Before setting a budget for Google Ads, define what you want your campaign to achieve for your business, whether it’s to generate leads, increase online sales or drive more website traffic. Google Ad objectives are chosen at the beginning of your campaign and should correspond to this.

They help Google understand the outcome you are after in order to assist building your campaign by recommending campaign types, features and settings.

Having clear objectives in place also allows you to track the performance of your ads. Measuring your campaign can improve ad placement and your bidding strategy as it provides you with information to see where it’s performing well or needs improvement.

Alternatively, if adjustment needs to happen, this can prevent you from spending money in the wrong places and make your budget more effective.

Different Google Ad types are designed for different objectives; therefore, by defining your business’ goal, you can choose the best type for your campaign.

Different Types of Google Ads

Google Ads offers eight core campaign types to help businesses achieve their different goals. These include:

Search Ads

A text-based ad which appears at the top of Google’s search results when people search for unique keywords you’ve optimised your ad for.

This campaign is more tailored to increasing website traffic, lead generation and immediate sales.  

Performance Max (Pmax)

An AI-driven campaign which projects a single campaign across all Google channels such as:

• YouTube
• Maps
• Search
• Display

Pmax is for businesses with conversation-based goals, improving store visits and online sales.

Display Ads

An interactive banner ad that appears across Google’s Display Network through different websites and apps.

Display ads focus on the goal of direct response, conversion and leads, by measuring clicks and traffic.

Video Ads

Video ads are hosted primarily on YouTube and Google’s video partners and are shown at the start or during a video.

This campaign is directed more towards increasing brand awareness and consideration through storytelling.

Shopping Ads

Shopping ads are product-focused ads used to showcase photos, prices and store details.

Businesses with a sales goal should consider this campaign type as it targets high-intent shoppers through visuals and clearly presenting a price.

Demand Gen

Demand gen is a visually engaging video or image ad campaign that is used across YouTube, Discover feed and Gmail.

This campaign type is directed towards creating long-term brand awareness and educating audiences on the product.

App Campaigns

An automatic ads campaign used to drive mobile app installs and engagement across Google play, Search and YouTube.

This is tailored to businesses with the goal of app promotion and is broken down into three sub-goals:

• App installs – increasing the volume of downloads
• Pre-registration – generating sign-ups and awareness before an app is launched
• App engagement – re-engaging existing customers and encouraging purchases or subscriptions

Local Service Ads

An ad campaign designed to connect local brick-and-mortar businesses with nearby customers.

Local service ads are tailored to businesses whose goals are focused on increasing conversions, such as calls and messages from local, high-intent customers.

Not every campaign will work for every business as they are focused on different outcomes. Working out your budget will help you find the best campaign available to achieve your goals.  

How Much Should I Spend on Google Ads?

The amount you spend on Google Ads is dependent on your objectives and how much of a role you want Google Ads to have within your marketing strategy.

There is no one figure that will work for every business; each business needs to consider multiple factors before setting a budget.

As a rule of thumb, your budget should allow for a minimum of ten clicks a day and, therefore, 10x your CPC.

You also need to consider the objectives selected for your business. If the objective is to increase the number of conversions, sales and leads, investing more of your budget into Google Ads may be worthwhile.

Flexibility is also key to maximising the benefits from Google Ads.

By measuring your campaigns, you’re able to see where conversions and leads are being generated. This way, you can adjust your budget to invest more into these areas and potentially see an increased ROI.

What is Your Conversion Rate?

(Conversions ÷ Total Website Visitors) x 100 = Conversion Rate (%)

Conversions are when a customer completes a desired action, whatever your objective is. This could be downloading an app, a purchase or signing up to a newsletter.

Conversion rates can be influenced by multiple different factors, some of which include:

• Audience targeting
• Landing page setup
• Pricing
• User experience

The higher a conversion rate is, the more things you are doing well. If you aren’t achieving your objective, then evaluate your Google Ads budget. You may need to invest more or adjust the campaign slightly to ensure you’re getting the most out of it and increase the likelihood of improving the number of conversions.

Google Ads Campaign Budget Planner

Whether you already have a Google Ads campaign or are about to start out, use this Google Ads Campaign Budget Planner to help you work out your spend.

This planner will show what your marketing budget could be capable of, how many leads you should be generating or if you should invest in a conservative, moderate or aggressive approach to achieve your goals.