The question of how to calculate the advertising budget in Google Ads is a common one among entrepreneurs and marketers. They want to know how much they should invest to get significant and profitable results from their advertising campaigns. In order to make an accurate estimate of the right budget for a given niche, there are a few key indicators to consider.
In this article, we will provide you with valuable information and tips on calculating your Google Ads advertising budget, so that you can make informed decisions and maximize the effectiveness of your investment. We will explore various aspects of budgeting, from identifying the amount needed to dividing the budget between different types of campaigns and managing a limited budget.
So, let’s explore together how to calculate your advertising budget in Google Ads and how you can get the best results for your business. Whether you already have a set budget or are looking for an estimate, this article will give you guidance and solutions to make the best decisions.
1. Volume of searches per month: The first step in calculating the promotion budget is to look at the volume of relevant searches for keywords in our niche. This number shows us how many people are actively searching for information related to the products or services we offer in a month. The higher the volume of searches, the more potential there is to drive traffic to our website through Google Ads.
2. Average cost per click over the last 12 months: After identifying the volume of searches, we need to look at the average cost per click (CPC) for relevant keywords over the last 12 months. This indicator shows us how much other advertisers pay, on average, for a click on their ads. The cost per click can vary considerably depending on the competition and demand for those keywords.
3. Click-Through Rate (CTR): Click-Through Rate is the percentage of users who click on our ads in relation to the total number of ad impressions. Click-Through Rate can vary depending on the industry, the relevance of the ads and the quality of our campaigns. A good click-through rate indicates that our ads are attractive and relevant to our target audience.
To estimate the budget needed for Google Ads, we use the following formula:
Estimated Budget = Search Volume per Month x Average Cost per Click x Click Rate
Let’s take a concrete example to better understand how this formula works:
Volume of searches per month: Suppose there is a search volume of 10,000 searches per month for keywords relevant to our business.
Average cost per click over the last 12 months: After a market analysis, we have determined an average cost per click of 1 euro for relevant keywords.
Click-through rate: We estimate a click-through rate of 5% for relevant keywords.
Now we can calculate the estimated budget:
Estimated budget = 10,000 searches x 1 euro/click x 5% = 500 euro
This is the cost required to cover all relevant searches in one month for a search campaign.
How we split the budget on different Google Ads campaigns
In terms of dividing the budget between different campaigns, we need to consider the budget for display campaigns in addition to search. It is usually recommended to allocate between 25% and 30% of the total budget to display campaigns, but this percentage can vary depending on the specific goals and needs of your business.
It is essential to understand that your Google Ads promotion budget is not a fixed amount, but can be adjusted depending on your results and goals. Starting with an estimated budget, you can then adjust it as you gain experience and improve your promotion strategy. Flexibility in adjusting your budget is an important aspect of getting the best results from your campaigns.
How do you work with a limited Google Ads budget?
It’s important to find effective solutions to maximise results even when the budget available for promotion is limited. If you only have half of your estimated budget for a campaign, this is not a problem. You can start with this amount and expect to get, most likely, only a fraction of the available clicks.
Successfully managing a limited budget in Google Ads requires you to approach smart strategies and prioritize what really matters to your business. Here are some tips to maximize the effectiveness of your investment, even on a tight budget:
– Focus on relevant, high-quality keywords: Invest your limited budget in relevant, well-segmented keywords to attract the right audience to your website. Avoid generic and expensive keywords that can quickly consume your budget without bringing significant results.
– Constantly test and adjust: Because your budget is limited, it is crucial to test different versions of your ads and adjust your strategy based on the results. Track campaign performance in real time and reallocate your budget to the most effective and efficient campaigns.
– Analyze the competition: Be aware of the strategies used by competitors and learn from their experience. It can be useful to identify gaps and find ways to differentiate your campaigns, even with a smaller budget.
What do you do when you can’t manage your promotion budget yourself?
If you feel overwhelmed by the issues of managing your promotion budget or simply don’t have the time to make detailed calculations and estimates, there’s no need to worry. There are solutions at your fingertips to ensure effective promotion on Google Ads and get the results you want.
One solution is to turn to our agency. At re7 consulting we offer the expertise and knowledge needed to create and manage effective Google Ads campaigns so that you get the results you want.