We get asked at the start of every Google Ads project – How much should be our Google Ads Investment?
These are the questions that we need to ask to get to the answer of this question:
- Which keywords will you be targeting and how much do they cost per click (CPC)?
- What is the time frame for your test? Do you need to see results in weeks, months, or a year?
- What is your sales process and typical sales cycle? Do customers buy the same day they search or does it take months before a purchase is made?
- What are your typical sales conversion rates? How many of your leads become customers?
Find Your Target Keyword CPCs
In a Google Ads search campaign, you pay per click. That means you only pay Google when a prospect clicks on your ad. If your ad shows up in Google’s results 1,000 times, but no one clicks on it, then you don’t pay a penny. That’s why AdWords is sometimes called PPC, or pay per click advertising.
The exact amount you’ll pay depends on the keyword you’re advertising on. For example, if you advertise on the keyword, “coffee shop”, then you’ll pay a different amount than if you advertise on “mortgage broker” The keyword “coffee shop” is 4 times more expensive than the keyword “mortgage broker”.
Google provides you with the answer using the Keyword Planner Tool. Search for your target keywords and the Keyword Planner tool will give you an estimate for how much each keyword will cost per click. Note that these are estimates so you may pay more or less.
Your Sales Cycle
What is your typical sales cycle? If it’s over 1 month, then obviously you’ll need to test for multiple months to get decent data from a test campaign. If your customers buy within 1 day, then you know you’ll get almost instant feedback from the campaign once it starts.
How Long To Run The First Test Campaign?
It’s important to realize that you need to go into an ad campaign with a realistic time frame in mind.
There may not be enough search volume for your target keywords to get leads and sales data in 1 month. If your keywords were searched for 1000 times a month and you get a click through rate of 5% (which is good), then you will have 50 website visitors. Is it realistic that you would get a sale from only 50 website visitors? Probably not. Of course, you’ll be targeting more than one keyword.
The goal here is to make sure there is enough search volume for your target keywords to achieve your goals within your time frame. Plus, if you have a longer time frame, then you can spread out your monthly budget across multiple months.
Your Sales Conversion Rates
The final step before we can calculate your budget is to use your sales conversion rates. In my example above, we estimated that we can drive about 50 prospects to our website- How many visitors do you need tp make a sale on average?
Estimate Your Google Ads Investment
As you can see, there are a lot of variables that go into estimating your AdWords test budget. Play around with the Google Keyword Planner to find your target keywords’ CPCs and search volume. Then run the numbers based on your sales cycle and conversion rates.
If you need any help with your Google Ads in south Wales then contact us for a friendly chat.