(Part One) The Minimum Budget

The Perfect Google Ads Budget for Optimal Results

If you’re planning to advertise on Google or create a new campaign, you might be wondering what the ideal budget for your ads should be.

The answer depends on various factors. In this post, and the one tomorrow, I’ll share my approach to determining the right Google Ads budget, which I’ve developed over six years as a PPC consultant.

Spoiler alert – there’s not a “perfect” number; instead, there’s a range between a minimum and a maximum budget. The minimum budget is based on how many results you want and need to generate. The maximum is based on the search volume for your offering.

Today, let’s explore how to find your minimum budget. Tomorrow’s post will reveal how much you could spend if you had unlimited funds – the maximum budget.

Technically, you can advertise on Google Ads with as little as $1/£1/€1 per day. If you have a very limited budget or a niche offering with minimal search volume and/or are only advertising locally, a single-digit budget might be suitable. However, this is not ideal, as you won’t be able to take full advantage of Google Ads’ potential. You need sufficient data to gain insights and make optimization decisions. Running ads on low budgets is possible, but you’ll need to rely on exact match keywords, manual bidding, and assumptions for your optimizations.

To use automated bidding and other powerful Google Ads features and gain insights from your campaigns, you need to generate a certain number of conversion events. This requires a budget that is big enough to achieve sufficient conversions.

To calculate your minimum budget, you need two numbers:

1. 1. Your conversion rate: Use the conversion rate for the event you want to optimize for. Consider a slightly more conservative number than the one from your web analytics platform, as this rate includes “warm traffic”, users who are more likely to buy than those who just discovered you via Google Ads.
   2. The expected cost-per-click for your keywords: Find this in the keyword planner during your keyword research, and take an average of all keywords.

Your Google Ads should generate at least 30 conversions per month for automatic optimization to work well. The absolute minimum is 15, which can also be successful, but the optimization algorithms may take longer to work effectively.

First, calculate how many clicks you need per month to get 30 conversions:

30 / Conversion Rate = Number of clicks needed to reach 30 conversions

Next, calculate the cost of these clicks:

Number of clicks needed to reach 30 conversions x Cost-per-Click = Monthly budget

Although this is a simplified calculation, it’s a better starting point than guessing.

Stay tuned for part 2, where you’ll learn how to calculate the maximum budget you can spend on Google Search Ads – and get access to a useful resource for these calculations.