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How to Set a Google Ads Budget for Optimal Results

Learn how to calculate an approximate Google Ads Budget in order to achieve optimal results.

Edona Shala

Content Writer

How to Set a Google Ads Budget for Optimal Results

Google Ads is one of the most effective tools in your business’s marketing strategy. Google Ads has one of the quickest and highest ROIs of any marketing strategy available. Paid searches on Google receive more clicks than other search engines. Google has a 63% click-through rate, which is the highest CTR among search engines.  


Google Ads does not have a set maximum or minimum ad budget. How much you spend is entirely up to you. Prices may then vary according to your industry, location, competitors, goals, and target audience.


Learn how to calculate an approximate Google Ads Budget in order to achieve optimal results.

What Is a Google Ads Budget?

A budget in Google Ads is the amount of money your business wants to spend each day on an ad campaign over the course of a month. While your daily budget may vary, it will never exceed your overall budget. 


Think of the Google Ads platform as a huge market where you could buy visitors for your website. So you come in with a specific monthly budget in mind. To get that traffic, you need to bid on keywords relevant to what you do.


The level of competition is high, just like in any other market. To get the best results while staying within your budget, you need to carefully think about the keywords you bid on.

How Much Money Should You Invest in Google Ads?

Always have realistic expectations to get a clear picture of how much money you need to invest in Google Ads and how much traffic you will receive.


Assume you already have a budget and want to know how many clicks you’ll get within that budget. Here’s the formula you can use to estimate your traffic:


Number of Clicks = Budget/Average CPC

Now, let’s say you have an idea of how much traffic you’d like to get but are unsure of how much money you should spend on Google Ads. To  calculate your approximate budget, use this formula:


Budget = Desired Clicks x Average CPC

Your company’s overall marketing budget as well as the average price of each of your sales determine your Google Ads budget. It is difficult to provide a solution that applies to all businesses. 


According to data, the average cost-per-click for Google Ads is between $1 and $2.


However, keep in mind that this cost can vary depending on the industry, as some are more competitive than others.


Google recommends setting a daily ad spend of $10-$50. This is an excellent starting point for beginners. Once you know your ad is converting, you can increase your daily budget.


Small to midsize businesses spend, on average, between $9000 and $10,000 on ads.  Because Google does not have a minimum budget for advertisers who want to advertise on Google Ads, you can set whatever you believe your company can afford.  


Take a look at the table to get a better idea of how much Google Ads cost in different industries.



Average CPC (Search Network)

Advocacy – $1.43

Auto – $2.46

B2B – $3.33

Consumer Services – $6.40

Dating and Personals – $2.78

E-commerce – $1.16

Education – $2.40

Employment Services – $2.04

Finance and Insurance – $3.44

Health and Medical – $2.62

Home Goods – $2.94

Industrial Services – $2.56

Legal – $6.75

Real Estate – $2.37

Technology – $3.80

Travel and Hospitality – $1.53

How to Set a Google Ads Budget

It’s important to do some research on your company, objectives, and audience before deciding how much to spend on Google Ads. You should also research how to set a Google Ads budget that is appropriate for your business.

Use Google’s Keyword Planner

Because Google Ads is a bidding platform, the ad price depends on the demand for the keywords you would like to show up for.


When you run Google Ads campaigns, you first decide which keywords to target and how much you’re willing to pay per click.


Use Google’s Keyword Planner to research the keywords you’re interested in and find new ones to target. It suggests similar keywords, the number of people who search for each one each month, the number of other advertisers who compete to advertise for those keywords, and a proposed Google Ads bid.


You can do searches like this for each of the services you want to promote to find the best keywords for your business. In the “service or product” field, enter a broad search term related to the service or product you want to advertise. 


Google Keyword Planner will return a list of keywords associated with the broad search term or terms you entered. While your actual CPC may change during the course of the campaign, you can use the estimated CPC to set a budget.


When you have your keywords, it is time to figure out your budget. 


Go to Keyword Planner and, under “Tools,” select “Get search volume and forecasts,” then enter the keywords you chose. 


On the right-hand side bottom corner, Google Keyword Planner will display the daily CPC estimate. Hovering over the graph should reveal the highest suggested CPC. After you enter your bid, you should see the estimated traffic and daily costs for your keywords.


To get the monthly budget, multiply your total estimated CPC by 30.4, which is your monthly budget. For example, if your estimated daily budget for a set of keywords is 2, your monthly budget will be:

30.4 x 2 = 60.8

Optimize Your Ad Campaign

You should keep a close eye on the data that you can gather while your campaign is running. This way, you can optimize your ads in order to get the best results out of them. Before launching more ads, you should examine your campaigns and focus on three elements:


  • Click-through rate
  • Cost per convention
  • Negative keywords


You can see a ton of information about each of your ads on Google Ads. 


One of the most important is the click-through rate, or CTR, which is calculated by dividing the total number of views by the total number of clicks. Your CTR is crucial as it affects your Quality Score.


Improving your ad’s quality score is one of the best bidding strategies. You will not only rank higher, but you will also save a lot of money. If your quality score is higher, you will rank higher and receive more clicks without spending more money.


Then, look at the number of people who converted after clicking each ad.  This implies that you should keep ads with a lower cost per conversion than the sales they generate and remove ads with a higher cost per conversion.


If you come across any keywords with a high click-through rate but a low conversion rate, you should look into the possible cause of the low conversion rate. In many cases, this happens as a result of targeting a very broad keyword. Another possibility is that visitors are having difficulty converting via your landing page.


You can add negative keywords based on the non-converting traffic you received to prevent your ads from showing up in search results for your unqualified keywords.If any searches show intent other than conversion, you should consider adding them to your negative keywords list.

Set the Budget According to Your Goals

When you first start out in Google Ads, you should have a clear goal or KPI in mind. Do you want to generate a lot of leads at a low cost? Do you want to maximize your reach? Do you want to increase traffic to your website?


You should also consider the rest of your marketing strategy. If your business is like most, you reach out to customers through many different channels.This means you should check your overall marketing budget before you decide how much to spend on Google Ads. 


You can accomplish this by calculating the ROI of each of your strategies and allocating larger portions of your budget to the channels with the highest returns. If you have extra money in your budget, increasing your Google Ads spending can be a great way to boost your online marketing results. 


The average conversion rate for Google Ads across all ad channels is 75%, while the purchase rate through ads is 50%. 

What Affects the Cost of Google Ads?

Location, industry, competition, keywords, and time are all factors that influence the cost of Google Ads.


The price of online ads differs from place to place and is affected by the popularity of that location. To put it another way, you’ll pay more for ads in California and New York than in Vietnam or Siberia.


Besides that, what you advertise in a particular location also matters a lot. In the United States, you will pay an average of $17.71 per click to advertise your insurance company, whereas, in Mexico, you will pay only $0.48 per click.


Your competitors’ budgets play a huge part in online advertising. The larger your budget, the better your Google Ads efforts will be. However, unlike SEO, Google Ads allows you to appear in the first results of a Google search even if you are a small business. 


You should also keep in mind that keywords with intent tend to be more expensive than keywords with information. It’s because people search with a specific purpose or urgency.


The days and hours you make Google Ads visible to your target audience affect the price you’ll pay. You don’t want your ads to appear when people are sleeping or not using the internet. As a result, you should pay to make sure that your ads reach your target audience.


Another factor that can affect the cost of Google Ads is holidays and big events, because that’s when most people are online, and the prices for Google Ads usually skyrocket.

Final Thoughts

Setting a Google Ads budget is an important part of any digital marketing strategy. This allows businesses to reach their goals while also staying within a reasonable budget.


It’s important to remember that even though there are suggested parameters when it comes to creating an ad budget, the number you set should depend on how much you can afford and the results you hope to achieve. While setting a Google Ads budget requires time, energy, and research, it’s essential for helping you reach your business goals in today’s digital world.


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