How Much Should A Small Business Budget For Google Adwords?

How Much Should A Small Business Budget For Google Adwords?

So you have a small business and are interested in Google Ads to drive sales. But where do you start and how much should your small businesses budget be?

The overall budget required for your business will depend on a number of factors, the industry you are in and the competitiveness around different keywords. However, it is always best practice to start with a relatively small google ads monthly budget, so you can optimize your performance, before scaling up your budget once you know what converts and drives sales. 

Typically, we would recommend a starting budget of $1,000 per month, and this can be scaled up once the account has been optimized and you can move towards a positive ROI (Return on Investment). 

Looking to get started or improve Google Adwords for your small business? 

How Does Google Adwords Work?

Google Ads is a paid online advertising platform from Google. When a user completes a search on google, they will get the results of their query on the SERP (Search Engine Results Page). This will include organic or non-paid results, as well as Google Ads near the top of the page.

Organic listings require extensive SEO strategies and website authority to get listed near the top of the page. While we advocate for SEO in many scenarios – SEO can take time to ramp up.

One solution? A well optimized Google Ads campaign. This allows companies to reach the top of the SERP page quicker, allowing them to acquire leads and conversion.

Are Google Ads Worth Using For a Small Business?

Google Ads can be one of the most efficient ways of acquiring new customers and growing sales, especially for a small business.

People around the world use google to make 3.5 billion searches every single day. Many of these have strong buying intent and lead to sales and conversions. For a small business, it is crucial to be specific in your targeting, as well as starting small and only increasing budgets after continued optimization.

Google Ads can be targeted to specific geographical locations, as your business may only serve certain areas, and this is a great way to optimize who can see your ad.

Keywords and What to Target?

When we talk about a keyword in terms of Google Ads, we’re talking about the words and phrases that people use to search for specific products and pages on Google.

The first step in any Google Ads campaign is keyword research. This means that as an advertiser, we look at the search volume and competitiveness of various keywords. We also look at which keywords most accurately describe your specific product or service. It is also import for the keyword to be visible in your ad and website landing page because this impacts your quality score. More on that below.

We would then separate out different products and services into separate campaigns and ad groups, each with their own keyword list. When choosing keywords we use tools such as Google Trends and Keyword Planner to plan out our keyword lists.

You can select both long-tail and short-tail keywords to target your audience. Long tail keywords with consist of three or more words. Long tail keywords tend to be very targeted to a specific product or service, whereas short-tail keywords are one to two words and be much more generic. A long-tail keyword can be a great way to get a visitor who’s search intent matches your keyword closely, and these visitors often will convert the best and generate the most ROI. Short-tail keywords can be very useful in casting a wider net and getting your ads in front of a larger audience.

Another important aspect here would be to develop a negative keyword list. A negative keyword is a type of keyword that will prevent your ad from being triggered by a particular phrase. An example of a popular negative keyword would be “scam”.

Things to Consider when Looking at Your Bidding Strategy.

Google Ads determines which ads should show with a lightning-fast ad auction, which takes place every time someone searches on Google or visits a site that shows ads. There are 3 main factors in the ad auction that determine which ads appear.

  1. Your Bid: When you set your bid, you’re telling Google Ads the maximum amount you’re willing to pay for a click on your ad. How much you actually end up paying is often less, and you can change your bid at any time.
  2. Quality Score: This is a measure of the quality of your ad. Google uses three metrics to calculate this:
  • Expected CTR: The likelihood that your ad will be clicked when shown.
  • Ad Relevance: How closely you ad matches the intent behind a user’s search.
  • Landing Page Experience: How relevant and useful your landing page is to people who click your ad.
  1. Expected Impact of Extensions: Google Ads estimates how extensions and other ad formats you use will impact your ad’s performance. So even if your competition has a higher bid than yours, you can still win a higher position at a lower price by using highly relevant keywords, ads, and extensions.

There are various different bidding strategies advertisers can employ for each ad group when they are going to this Ads Auction. This will depend on your ultimate goals for your Google Ads campaigns.

Maximize Conversions

One popular bidding strategy is ‘Maximize Conversions’, where google will prioritize getting the most amount of visitors to click on your ad and to convert on your website or landing page. This conversion can be a purchase, email, phone call, lead form that is submitted, or you can create other custom conversions.

Target CPA

Another popular bidding strategy is Target CPA, or Target Cost Per Acquisition. This is another bidding strategy that is based on optimizing for conversions. This method focuses on trying to convert users at a specific Acquisition Cost. While some conversions will cost more, others will cost less and your Cost Per Acquisition should average out over a 30 day period.

Maximize Clicks

When initially setting up a campaign it can be difficult to focus on optimizing conversions, as the account will have very little conversion data, so google will essentially be working in the dark. A recommended strategy initially is to have a ‘Maximize Clicks’ bidding strategy, to focus on driving website visitors. Once these convert we recommend moving to a Conversion based bidding strategy after approximately 30 days.

Manual CPC

Another popular bidding strategy is known as ‘Manual CPC’ or Manual Cost Per Click. With this bidding strategy, we manually set the maximum CPC that we are prepared to pay for each keyword and ad group.

Although this takes more time to optimize, it also gives you the greatest amount of control when optimizing your account. It means that you can look at all of your keywords and see which ones seem to be leading to the most conversions. For these well converting keywords you can then raise your max CPC, allowing us to get more clicks and conversions from that keyword. Similarly, we can reduce max CPC for poor performing keywords.

Manual CPC requires careful monitoring, however it also has the potential to further optimize your campaigns and drive conversions.

Things to Consider before using PPC ads for your small business

  1. Understand your budget limits.

It is important to understand how to set up your initial budget for google ads, as well as how to scale this and what your potential limitations are.

When creating a campaign in Google Ads, you will be asked for a monthly budget total. We recommend approximately $1,000 per month initially, however this will vary from company to company. This works out as approximately $32.97 per day.

If the average CPC in your industry is higher than this, we would then recommend a higher budget. However, budget increases should be scaled up slowly to gather data and optimize as these changes are being made.

Another crucial aspect here is your Advertising Return on Investment. Your campaigns should move into positive ROI after an initial optimization period. The important metric to watch is Cost Per Conversion, or the total cost for each conversion action that occurs due to Google Ads (sale, phone call, web form submission etc.)

For products or services with a low margin or profit, it is crucial that you monitor their cost per conversion, and potentially turn off certain products and services that don’t return a positive ROI.

  1. Keyword research and selection makes a difference.

The types of keywords you chose control who will see your ads. Highly relevant and targeted keywords convert best, and you want your ads to be seen by people who are actively searching for your product or service.

One important aspect to remember is user intent. When conducting keyword research and optimization it is important to remember what the user is trying to accomplish by performing a certain search. For example, a broad keyword like “window washing” the user may be looking for a company to wash their windows or they may be looking for information on how to effectively wash windows.

Search intent matters.

Your keywords should also be used across your ad copy and embedded in your landing pages to ensure a consistent user experience. This will inevitably lead to higher conversions.

  1. Run testing & know what your customers respond to

One of the most crucial aspects of Google Ads is optimization. It is imperative that you test various ad groups, keyword lists and audiences to see what converts the best.

Through this process you can continually optimize your account and improve performance. In terms of ad copy, often the best strategy is to A/B test various forms of ads, and to push whichever ads are converting the best. However it is also important to give google enough time to gather reliable data. So for example, I would optimize ad copy every 3-4 weeks to ensure we have a large enough date range to gather reliable data.

FAQ’s

What is the biggest problem that small businesses run into with Google Ads?

Setting up Conversion Tracking: Enabling conversion tracking is a crucial aspect of any Google Ads campaign. It is imperative that you are able to see what conversions are occurring from your google ads campaigns, in order to be able to accurately track your ROI (Return On Investment).

Some websites will automatically integrate with google ads to track sales, such as a Shopify for Lightspeed based website. You can also set up custom conversion actions on Google Ads.

What percentage of small businesses use Google ads, and how effective is it 

  • Two in five small-to-midsize businesses are running a PPC campaign on Google Ads.
  • More than three out of every four marketers advertise on Google Ads.
  • Small to medium-sized companies spend between $9,000 and $10,000 per month on average on Google Ads.
  • Consumers spend 10 percent more money in a store if they have clicked on the retailer’s Google search ad before visiting

*Source: Digital Third Coast Website: (https://www.digitalthirdcoast.com/blog/google-ads-statistics)

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