A Comprehensive and Easy-to-Digest Guide to Google Ads Budgeting

Budgeting is always a tedious task. Whether you are saving bucks to pay your rent for an overpriced apartment or paving your way to the internet realm, or both at the same time, it pushes the average person into a strenuous situation.

While there are some ways to lighten this insanity, there’s no way to avoid budgeting appropriately without crippling yourself in the future entirely. That’s particularly the case with Google Ads, where each click either represents your business growth or your hard-earned money turning into paper.

Moreover, unfortunately, there are scarce resources that take a comprehensive approach to Google Ads budgeting. So it means you will have to fathom it yourself.

This guide will discuss everything you need to know about proper PPC budgeting strategy from scratch. To make things a bit easier, we have divided this entire guide into three easily digestible parts:

1. Deciding your initial Google Ads budget
2. Allocating spend across different search campaign types
3. Budgeting for everything else Google Ads offers

So without wasting another moment, let’s dive into the details, shall we?

1. Deciding Your Initial Google Ads Budget

Let’s say you have handed over your credit card details, funded your Google Ads account, and have also installed Google Ads Editor. But what next?

Now you have to ascertain your total expenditure in the first quarter. And by that, we don’t mean month, week, day, or even hour. We mean the first click on your ad.

While deciding your initial Google Ads budget, you should ask yourself these primary questions:

• How do Google Ads fit in your existing marketing strategy?
• What and where are your competitors spending their budget currently?
• What is the cost-per-click of the keywords you are bidding on at the moment?
• Which key performance indicators do you care about the most?

Once you find answers to all these questions, you will be all set to jump into the different types of campaigns, their optimization, and ultimately expansion. Keeping this in mind, let us dive into these questions now.

How Do Google Ads Align With Your Existing Marketing Strategy?

In case your business is the local community’s basic necessity or enjoys a thriving online presence (i.e., you’re a thought leader in your industry bringing loads of organic traffic to your website with good SEO and content), there’s a high probability that your leads will arrive at your door themselves willing to purchase. On the contrary, a business in the making that has its finger on its target audience’s pulse can accomplish something similar via a diehard social following. Moreover, this organic traffic is essentially “free of cost,” aside from the time and efforts of whoever leads these efforts, of course.

Also, think about the different marketing channels you use with the purpose of growing your business. These channels might include commercials, radio ads, billboards, and so on.

Write down all the marketing channels you employ and ask yourself: is the goal of my Google Ads account to reinforce my current efforts or supplant them?

What and Where Are Your Competitors Spending Their Budget Currently?

Go ahead and perform a Google search for your brand’s name right away. What appears at the top of the search results page?

Unless you are new to Google Adwords, your answer should be our optimized-to-the-gills branded advertisements. Nevertheless, if you happen to be a novice, a gambler would bet that the SERP is filled with your competitors.

Other than your branded keywords, there are several tools (such as Google Keyword Planner) you can use to get a sense of what and where your competitors are spending their advertising budget.

With this data at your disposal, you can quickly build strategies to dethrone your competitors’ ads from the top positions in the search results and discover (less expensive) keywords that no one else was intelligent enough to bid on before you turned up.

What Is the Cost-per-Click of the Keywords You Are Bidding on at the Moment?

Remember the tools we mentioned in the above section? Well, it’s time to put them to use once again.

One of the most elementary ways to decide your advertising budget is to weigh up the CPC of the keywords you are bidding on currently. Is this information enough on its own when it comes to determining a budget? Of course, not. But it does give a good starting point.

Visit Google Keyword Planner and in the left interface, fill in one of your landing pages. Modify the rest of the parameters, including location, industry, terms to avoid, etc., accordingly and browse through the lists of potential keywords together with their comparative popularity and advertiser competition.

Now try the same with the pages that relate to all the products or services your business offers. It will undoubtedly unveil some underrated search phrases that you can place your bids on next. Preferably, you want to search for as many high-traffic and low-competition keywords with commercial intent as possible. That’s how you’ll find your sweet spot.

We will take a deeper dive into this in some time. But it all comes down to this: keywords suggesting affinity or urgency tend to convert more compared to terms that don’t. Moreover, a branded search term communicates more intent than a competitor term. For example, the search phrase “cab from boston to brookline midnight” conveys way more urgency (and is hence more valuable) than “cab service,” although its search volume might be notably lesser. 

Which Key Performance Indicators Do You Care About the Most?

As they say, save the best for the last. This is the most crucial question you need to ask yourself. A key performance indicator can be defined as a measurable value that allows an individual or business to measure performance. As a matter of fact, not all businesses give the same level of importance to the same thing.

For some businesses, cost per acquisition is the lifeblood. You wouldn’t believe the number of initial calls that starts with a cost per acquisition plucked out of thin air. If you are confident that this is the key performance indicator for your business, fix a goal rooted in logic. However, if something more concrete suits your style better, you can ascertain, on average, how many conversions it takes to result in an actual customer (tracked via Google Ads) and figure out your real cost per acquisition. However, you can also leverage your current cost per acquisition from other channels, set it as a goal for paid search and accordingly increase or decrease as you get your hands on more data over time.

Additionally, businesses utilize several other key performance indicators as barometers for effective Google Ads campaigns. So, in the end, it’s up to you to figure out which one is best for your business.

Once you answer all four of these questions successfully, check out your discoveries. To decide your budget, you will want to consider the key performance indicators that you plan to judge your performance on, along with the number of leads or sales you are hoping to gather from Google Ads. Check out the other marketing channels you are employing and try to implement any related goals you have set as your starting point for Google Ads. At last, weigh up the CPC of keywords that you will probably bid on by analyzing the ones that your competitors have picked already (and also the ones they haven’t yet).

Key Takeaways:

• Leverage data from your existing marketing efforts in order to inform the structure and budget of your Google Ads account.
• Use keyword research and competitor analysis to decrease your learning curve and get the ball rolling.
• Ascertain your budget by determining the key performance indicators that matter the most to you and working in reverse from the figures representing profitability.

2. Allocating Spend Across Different Search Campaign Types

In general terms, all your Google Ads search campaigns will come under one of these five categories: research, top performers, high intent, competitor, and branded. While all these classifications are adaptable, some of them are outright liquid.

Logic says that you should feed most of your Google Ads budget to your top-performing search terms. But what about the remaining of them?

Top-of-the-Funnel Keywords

Often, a novice will build PPC campaigns targeting top-of-the-funnel keywords. For example, an enterprising yet acutely under-informed chartered public accountant will bid on the keyword “chartered public accountant.” And it sounds logical, right?

But unfortunately, in the majority of the industries, such keywords will mostly cost you a fortune. For some terms, the price can easily be more than $50 a click! However, that’s not necessarily the case with all industries and keywords. Now that we have made our point, you need to find out if your vertical is overflowing with soaring CPCs. However, the biggest problem with such keywords is not even the price; it’s the intent.

To provide you with a little context, let’s suppose you are a disorganized upstart in the business card industry which happens to be extremely competitive. When you look for keywords with the most average monthly searches, you find the search phrase “business cards” at the top position. But think about the users searching for this term – most of them will be wantrepreneurs who will never complete an order. So instead of spending those couple of dollars here, you will want to spend them on keywords that communicate intent better, such as “buy business cards” or a bit more costly but more commercial “order business cards.”

Nevertheless, this doesn’t mean that top-of-the-funnel terms are necessarily expensive or worthless. Such keywords are undoubtedly an incredible way to generate brand awareness and incorporate more prospects into your remarketing list. So if you do choose to bid on these, make sure you do it smartly. Pick a less pricey keyword such as “free business cards,” add the prospects to your list and remarket to them.

Branded Keywords

For some confusing and unfathomable reason, using branded keywords is usually disputed. But that’s silly.

Although your site must be the first thing that appears in the organic search results when a user Googles your business, there’s also a massive piece of real estate above the organic listings that your competitors are free to claim, if, of course, you don’t do it first.

Think of this: your competitors are made to pay a premium if they want to bid on your brand, but the cost-per-click you will see for the same keywords will be much cheaper. That’s because your landing page ad copy and domain are going to be hyper-relevant to the terms, leading to maximized Quality Score and thus lower CPCs.

Long story short, though branded keywords should in no way be the only terms you bid on, allocating spend to secure SERP domination is necessary.

Competitor Keywords

Recall everything we discussed regarding branded keywords. Now the opposite stands true when it comes to bidding on competitor keywords. What we did with the top-of-the-funnel keywords is exactly what you will want to do here – make use of research and common sense to make sure you are not merely burning your Google Ads budget on terms that won’t ever convert.

One of the biggest blunders that advertisers often make here is that they bid on the wrong competitor keywords. When picking competitor keywords to bid on, as a rule of thumb, ensure that you select actual competitors that you’re truly contending against. Pick competitors who you believe you have a competitive edge over, whether it is – better features, prices, quality, or anything else.

High-Intent Keywords

If top-of-the-funnel keywords are an expensive wild goose chase, think of high-intent keywords as golden eggs dropped into your lap.

High-intent terms are available in two flavors – “buy now” and “product/service.” You will want to make sure that you’re using the largest chunk of your Google Ads budget to bid on keywords that come under one of these classifications (extra points if you are able to unveil keywords that exist somewhere in the middle).

In general terms, “buy now” keywords are the ones that suggest that a potential customer is prepared to make the final decision about your product/service. They have either completed their research or been referred by a close friend, and now it is time to purchase. Usually, these “buy now” terms consist of top-of-the-funnel keywords joined with terms such as buy, free shipping, discount, coupon, deal, and so on.

For more clarity on how research is different from the intent to buy, pick any random keywords, say “summer dresses.” Check out the keyword “summer dresses,” followed by the various “buy now” iterations.

Needless to say, the search volume for “summer dresses” will be dramatically higher compared to the other terms. But those other terms convey more intent to purchase.

On the other hand, the “product/service” terms comprise:

• Branded searches
• Particular products/services (Samsung TV, car maintenance)
• Categories of products (winter outfits, travel accessories)
• Top
• Best
• Cheapest
• Comparison
• Affordable, and so on

While this is a much wider category, not all types of product/service terms will turn into a top-converting keyword for you.

Having said that, the only way to ascertain what does not work for your business is to try out everything as consciously as possible. If something drains your account, stop it right away, but if it converts at a CPA (cost per acquisition) considerably below the account average, you have got your hands on the best converter.

Top Performers

After operating your Google Ads account for at least a month, you will get a good sense of the keywords that are and aren’t worth spending your budget on. The middling keywords for which your ads show up consistently but never appear to acquire clicks illustrate opportunity. Zero in on producing a decent ad copy for such terms. Introduce a few modifications to your landing page. And double, triple-check your ad extensions. In case, after a couple of weeks, you still don’t get any clicks (or even worse, you get clicks but no conversions), eliminate those keywords.

Transferring your top-performing terms into their own ad campaign(s) will help you gain increased control over how much portion of your overall budget is used up for keywords that have performed well earlier. Wondering what the advantage is? The single converting term will no longer be thrown in with ten other keywords that do nothing except draining your budget.

Caution: By removing a keyword from its original ad group, you lose. Since, in this scenario, the Google Ad account is rather new, it sounds more logical to transfer your underperforming terms into new campaigns.

Now, the main question is: how exactly are you going to divide your paid search budget among these campaigns?

Ideally, you should spend most of your budget on those terms with the best shot at converting. Here branded keywords are the exception. Even though branded terms illustrate intent (familiarity), they have alow ceiling and don’t inevitably reflect “brand new” customers. Therefore, when it comes to your branded keywords while dominating your competition is crucial, owing to the relatively lower search volume and maximized Quality Scores, your overall Google ads budget should be most deliberately focused on those high-intent “buy now” and “product/service” terms.

Also, keep in mind that these categories are liquid (as mentioned earlier). While high-intent keywords should ideally be your top performers, that might not be the case always. Each ad account, each niche is different. Whenever in doubt, check out your existing data carefully and then make changes accordingly.

Key Takeaways:

• Concentrate most of your budget on high-intent terms, including branded keywords.
• Top-of-the-funnel keywords can dig a hole in your pocket. Remember, there are much better and affordable ways to reach a broader audience.
• Fine-tune your budget allocation every week to secure maximum return on investment (ROI).

3. Budgeting for Everything Else Google Ads Offers

While the search is the heart and soul of most Google Ads accounts, the platform does provide the advertisers with some other alternatives as well, including the display and remarketing (often via display, though remarketing on search can be fruitful too).

Based on your respective vertical, these options can complement or even entirely replace traditional search advertising. In any case, these can dramatically affect how you spend your money on Google Ads. To clarify, let’s dive into the details.

Display

While the clicks here are cheaper compared to traditional search, with the substantial drop off in direct conversions, the real question is: Is the GDN worth it?

Short answer – yes, a million times, YES!

Remember everything we talked about “intent” previously in this post? When using the GDN (Google Display Network), users viewing your ads don’t really have much of it. The display is much more similar to conventional advertising (imagine billboards) than traditional search, but of course, with the added advantages of on-demand analytics and better ad targeting.

Apart from remarketing, the GDN has three primary functions – generating brand awareness, displaying your product, and supporting a long sales process. It also makes loads of targeting options available to you. Wondering what’s the catch here?

However, the lack of conversions that can be directly attributable to the Google Display Network can make it hard to justify, particularly for small businesses that have limited budgets. With that said, there are still a few ways you can get started with GDN without setting your hard-earned money on fire.

When trying to dip your toes in the GDN, it is recommended to start with in-market audiences or managed ad placements. Long story short, this enables you to display banner creative on particular sites or to users whose web browsing history suggests that their interests align with what you are offering.

Once you get successful in this, you can then employ some other strategies and expand your Display budget to build the ideal complementary network strategy.

Remarketing

Remarketing is indeed a vital element of Google Ads. All businesses regardless of their vertical, can benefit from using it.

One of the best and easiest ways to ascertain your initial remarketing budget is to evaluate the percentage of total conversions originating from returning website visitors and then allocate the same percentage of your budget to remarketing. Sounds too abstract? No worries, let us take a look at an example.

Suppose you own an online clothing store. Last week, you collected 1000 clicks and sold 100 summer dresses on Google Ads. As per findings, 10 of those dresses were bought by returning site visitors. Now allocating 10% of your search budget to remarketing provides you with the opportunity to drive those remaining 900 non-converting visitors back to your site.

However, some account managers are against remarketing simply because, at the core, it means paying money to drive the same people back to your website numerous times. But don’t you think that it is better than the given people never converting or, even worse, purchasing something from your competitor instead? In addition to this, returning visitors tend to convert more than the new ones.

Key Takeaways:

• Remarketing (dynamic remarketing in particular) isn’t optional. Make the most out of your budget by persuading more site visitors to convert.
• Allow the GDN to take care of your top-of-the-funnel work so as to save your search budget for more qualified leads.

Wrapping It Up

Finally, this comprehensive guide to Google Ads budgeting has reached its end.

By now, you have efficiently figured out your starting point and consciously allocated spend to different search campaigns, and started expanding your overall budget to include everything that Google Ads offers you.

Apart from the eventual optimization, which is essential if you wish to get the most out of your Google Ads budget, you can also extend your advertising efforts to other platforms. Even though opting for Bing Ads sounds like the most logical step to take next, you may find Facebook or LinkedIn Ads pretty beneficial for your business as well.

That was all you needed to know about proper Google Ads budgeting. So what are you waiting for now? Go ahead and get started with it!

Happy advertising!