Zeffective manages Google AdWords campaigns for many of our clients. Of all the questions that we’ve been asked over the years, the #1 most asked question from our clients is, “How much should I spend?” If a client has asked you this, or if you’ve had to ask this of yourself when considering how much to spend for your company, you probably dread this question. Why? Because the answer is different for every business, which makes it difficult to 1) evaluate and establish a set budget, and 2) communicate that to a client. But with time and experience, I learned an effective method for answering this question. Today, I’m sharing it with you.
“How much should I spend on AdWords?”
Imagine you’re creating an AdWords account for a new small business and they ask you this question, “How much should I spend on AdWords?” Here’s how to respond.
Step 1: Clarify the goal
The first thing you want to do is clarify based on the client’s goal or objective. What the client’s really asking here is, “How much do I need to spend to accomplish my goal?” So, make sure you include this in your response. For example:
Client: “How much should I spend?”
You: “Good question. It all depends on your goal/primary objective. Your goal is <lead generation, sales, brand awareness, etc.>.”
Step 2: Set an initial budget
After you clarify the goal, it’s critical to remind your client (or yourself) that you should always think of your initial budget. Don’t try to determine an end-all-be-all budget–your budget will change based on results. For example, imagine you set a budget of $1,000 for an AdWords campaign. Four weeks later, you’ve spent all $1,000, and you have a positive ROI. Would you stop this campaign because of some arbitrary number you threw out four weeks ago? I hope not. If you have a positive ROI, you should keep investing money in the campaign. So here’s how you present this to a client:
You: “Okay, so our goal is <goal>. Let’s talk about the best strategy to set an initial budget?” Then, talk through the three options below.
Option 1: Start with $1 a day until you see results, then increase the budget.
Answer: We’re all about starting small, but this might be too conservative for you to see results with your campaign.
Option 2: Start big and after a couple of weeks, lower your budget in areas where your account isn’t performing.
Answer: This might be a bit aggressive. We suggest starting with a small budget so you can test with lower stakes before increasing your budget too significantly.
Option 3: Start small and after a couple of weeks, invest more in the areas that drive your business.
Answer: Yes! You should recommend starting small at first so you can see what’s working!
Tips to determine your daily budget
Tip #1: Calculate based on your monthly budget.
If you’re used to working with a monthly advertising budget, you can calculate the amount you might budget per day by dividing your monthly budget by 30.4 – the average number of days per month.For example, let’s say you typically spend $1,450 per month on advertising. To figure out your daily budget, you’d divide $1,450 by 30.4 and would get a daily budget of $48.Note: Due to changes in traffic, AdWords allows up to 20% more clicks in a day than the budget specifies. However, in any given month, AdWords never charges more than the average daily budget amount multiplied by 30.4.
Tip #2: Calculate based on your average cost-per-click.
You can choose a daily budget for each campaign based on your advertising goals.For example, let’s say your cost-per-click is $0.10 on average, and you’d like around 500 clicks per day. You might budget $50 per day.Using this example, here’s how you’d figure out your daily budget:
$0.10 x 500 = $50 per day (cost-per-click x clicks per day = Daily budget)
Tip #3: Find your campaign’s recommended budget
AdWords shows recommended budgets for campaigns that repeatedly meet their daily budget but have the potential to earn more clicks and impressions. You can use these recommendations to estimate how a new budget may improve the visibility of your campaign’s ads. The recommendations are based on the following factors:
* Recent campaign performance
* Current campaign budget
* Keyword list
* Campaign targeting settings
Note: AdWords won’t display a recommended daily budget if you rarely meet your daily budget, or if your campaign has limited data. If you don’t see a recommended budget, and you know your ads aren’t being shown as often as they could because your budget is limited, you might want to consider raising your budget to an amount that you’re comfortable with.
Tip #4: Check your ad delivery method
When your average daily budget is reached, your ads will typically stop showing for that day. You’ll want to consider your campaign’s ad delivery method, which determines how quickly your ads are shown and how long your budget lasts during a given day when setting your daily budget.The “Standard” delivery method is like a slow-burning candle – it spreads your budget throughout the day.The “Accelerated” delivery method is more like jet fuel – it uses your budget more quickly. Accelerated delivery is ideal for advertisers who want to show results more quickly.