How Much Should I Budget for Google AdWords?

Google Adwords budget
Designing a campaign to make the most of Google Adwords can feel daunting. We’ll help you determine what paid media budget makes the most sense for you.

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Paid media is an important function of the marketing toolkit. Primarily used for brand awareness and lead generation, there are many types of paid media available to the modern day marketer. One of the most popular advertising channels is via intent-based marketing, or advertising based on what people are searching, commonly called Search Engine Marketing (SEM) and the largest advertising platform out there is Google. 

Advertising on Google works differently than traditional advertising channels. Instead of paying a set cost for a billboard or a radio ad, digital ads are usually purchased in CPM (cost per thousand). But Google is different. Google AdWords operates as an auction marketplace. You are essentially bidding on search terms relevant to your business, paying Google to get in front of customers who are searching for products or services relevant to your business. You are bidding for placement, or the position that your ad appears on the page, and are charged for every customer who clicks on your ad after using a search term you have bid on: or cost per click. 

Top search terms in competitive industries often cost more than $50 per click! Although this isn’t the case for everyone, the specific approach you take to your Google Adwords campaign will always depend largely on the budget you have for paid media. Depending on how much you have to spend, you will have to refine your AdWords strategy. Here is what you can do to get the most out of your paid media budget, whatever its size.


Understanding Google AdWords Strategies

The quality of your ads comes down to striking the appropriate balance between cost per click, keyword volume, and relevance to your business and your potential customers. The most common way to turn the dials on these variables is by focusing on either:

  • Intent Based Advertising: These are ads based on targeting people researching specific topics, products, and solutions.
  • Transactional Ads: For customers looking for something to buy. This could be Google products/shopping for direct sales, or ads for software or a specific service.
  • Navigational Ads: Highlight a specific page, contact information, or an address.
  • Branded Ads: Businesses can advertise against their brand keywords, a great strategy for rebrands of defending keywords against competitors.
  • Competitor Ads: Running ads against competitors to get the name out or to try and take some of their search traffic. These ads rarely perform well from a lead generation perspective and are more for branding.
  • Remarketing Ads: These are shown specifically to people who have visited your website, but did not convert. The purpose of these ads is to pull them back into the sales funnel.

Google Adwords Budget

There is no catch-all budget or strategy that can be applied to any given Google AdWords campaign. These key factors affect your budget:

  • Competition: The more people are bidding, the higher the costs.
  • Monthly search volume: Utilizing keywords that are frequently searched means getting your ads in front of more eyeballs, which drives up costs.
  • Geographic reach: Where you show your ads changes who you’re competing with.
  • Campaigns: Each campaign should have its own set of keywords, budget, targets, ad copy, and landing page. More campaigns require more effort and bigger budgets. 
  • Quality: If your ad copy or landing page doesn’t match what you are bidding on it lowers your quality score and increases your spend, making your ad efficiency decline.

Limited Budget Campaign

Many marketing departments are likely working with a tight advertising budget, but a little creativity in your AdWords campaign can take that budget a long way.

With a limited budget, focus on the “lower quality” keywords: these may be slightly less relevant for your business, but still offer high traffic volume with lower competition and a lower CPC. By striking the right balance between quality and volume, you can minimize your CPC while still generating solid traffic and conversion numbers. If you can, target $1,000 – $5,000 per month for a limited budget campaign, you should expect to generate performance if you have a focused target area, keywords and only a few ad groups. 


Lead Generation Campaign

With a larger budget, spending more on high-quality, highly relevant search terms begins to make more sense. You can target two or three of the top search terms relative to your Designated Marketing Area (or DMA, the geographic location of the customers you are targeting). These can come with a significantly higher CPC, but those clicks are more likely to become leads and conversions.

Complement your highest quality search terms with some mid-tier search terms to take your media spend as far as possible. You can also consider utilizing dynamic remarketing to deliver targeted ads to users who have already visited your site. A paid media spend of $6,000 – $14,000 per month is a good starting point for a successful, multi-tiered Lead Generation Campaign. At this budget level you’ll be able to target multiple DMAs and have a handful of campaigns and ad groups. This is where you can start adding remarketing to your campaigns. 


High-Performance Campaign

Is paid media a top priority for your marketing team and you’ve been given a big budget to deliver results? Great! You will have the resources needed to run a high-performance AdWords campaign.

With this kind of paid media budget, you can prioritize bidding on 3-5 high-quality terms, complemented with lower quality but high-volume search terms, dynamic remarketing, and multimedia ads.

At this level, running ads against company and competitor branded searches also starts to make sense. You can gain visibility by having your services appear when a competitor is searched for, getting in front of intent-based searches. This spending level is also needed for account based marketing ads where you’re targeting specific companies with specific creative to drive higher conversion rates on your key accounts.

High-performance campaigns typically require a paid media spend of at least $15,000. It’s not cheap, but a well-run campaign can return that investment to you many times over.



Measuring paid media results

But did it work? That is the only question that really matters when it comes to paid media campaigns, and there are multiple ways to measure results and ROI. These vary by campaign type, but here are some common measurements of the campaign:

  • Click through rate (CTR): How many people clicked on your ad?
  • Conversion rate: How many people bought your product or service after clicking on your ad?
  • Impressions: A great metric for branding campaigns, impressions measure how many people saw your ad.
  • Lead value: Your lead value is the value of sales revenue divided by your total number of leads. Did your leads brought in through digital ads justify the cost of your campaign?

Still not sure what Google AdWords strategy makes the most sense for you? You’re not alone! Our expert paid media team at GreenLit Marketing can help you set up a digital advertising campaign that optimizes your ROI, getting the most out of budgets of any size.

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