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What’s A Good Google AdWords Budget For A Small Business?

What’s A Good Google AdWords Budget for A Small Business?

A good Google AdWords Budget for a small business is one that’s sufficient enough to reach the advertiser’s targets. And that varies from business to business.

So there isn’t a specific budget figure. And you should consider how many sales or leads you require for it to be a success.

However, as a small business you’re likely to have a small starter budget. That could range from a few hundreds to a few thousands each month.

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Here are some factors to help you determine a good Google AdWords Budget for your small business:

Level of competition

Your competitors’ budget should be a factor when you’re looking to assign a budget for your campaigns. It’s not always easy to know what their budgets are. However there are tools like SE Ranking and Spyfu that can help with competitor research.

The competitor research will identify the keywords and ads in their campaigns. It will also show what positions they have for these ads and keywords and whether they’re ranked at the top or bottom.

So you can use some of these keywords as part of your keyword research. And you can create differentiated ads that are more relevant and can lead to high Click Through Rates (CTRs).

And knowing what they are spending on average per month helps you to decide what budget to assign to your campaign.

Average CPC

Your keyword research will inform you whether competition is low, medium or high for the keywords. It will also advise what bids to assign these keywords.

Your bid is the maximum amount you want to pay for each click. However the actual CPC at auction time will be significantly less. You’ll pay a penny more than the next ranked Ad. So if your bid is £3 and the next ranked competitor has a £2.50 bid, you’ll pay £2.51 per click.

Knowing what the average CPC is for your keywords helps you to determine how many clicks you’ll get for your budget. If you find the click volume too low to make it viable, then you should consider increasing the budget.

For example, if the average CPC for your keywords is £1 and you have a £500 budget per month, then you’ll get at least 500 clicks on average. If this is too low then you should either increase your budget or lower the CPC bid.

Impressions and Click Volumes

Keyword Research is one of the first things you’ll do to setup your AdWords campaigns. This will inform you of the potential impressions and clicks and how many visitors you’re likely to get.

This will help to assign a budget. The Keyword Planner tool in AdWords can help with this. It includes a keyword research tool and a forecasting tool to give you an idea of what you’re likely to spend for the keywords you’ve shortlisted.

However, bear in mind that this is for ‘exact match’ searches of your keywords. So this doesn’t include the wide range of long tail searches that your ads can appear for. In fact, according to Google’s on stats, about 15% of searches on their search engine are totally new to them and have never appeared before. So they won’t come up in your keyword research.

Desired Ad positions

Your Ad Rank is a big factor to what your budget spend will be. If you plan on achieving high Ad positions you should be aware that you’ll pay higher CPCs and therefore spend more.

Ads that are in the top 4 positions spend considerably more than lower positioned ads. They have more exposure and therefore higher click through rates.

If these are the positions you want to secure then you should budget for them. A few things you can do to achieve these positions is bidding higher, adding all applicable ad extensions and creating relevant ads.

Conversion targets

If you know how many conversions you need daily, weekly or monthly, it will be easier to set an AdWords budget. As a small business you should know how many sales or enquiries you need per month. This helps you set the right budget.

It will also help you choose the right bid strategy. And you’re able to use one of the smart bidding strategies such as Target CPA (Cost Per Acquisition) and Maximise Conversions. These help you focus on conversions and how much you’re willing to spend per conversion and so you can then work on the budget.

Conclusion 

As a small business, the AdWords budget you set is one of the most important decisions you’ll make. So it’s crucial that you take time to research your keywords and look at what competitors are doing. Then move quickly to assign the right budget and promote your products or services.

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Mike Ncube

I'm a Certified Google Ads Expert and Marketing Author and in this blog I share my latest tips and secrets on how to promote your business successfully on the web and increase customer loyalty, retention and advocacy on Google Ads.

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