In today’s post, we will be addressing one of the top questions asked from most of our clients when considering advertising with Google.  And that question is:  “How much money do I need?”

Up to this point, we’ve explained why Google Ads is the most powerful form of advertising on the planet as well as how, out of all the mainstream forms of advertising out there, Google Ads will get you the best bang for your buck.  And if you missed those articles, you can check them out by clicking any one of the hyperlinks above.  But to get started on today’s topic, you might be saying to yourself “Well, it’s great to know that Google Ads is the most powerful form of advertising and that I could save a lot of advertising dollars by taking that route.”  However, then you might be asking yourself “But how much money will I need for my business or my particular product or service?”  And, we don’t wanna boost your ego too much here but, that’s a good question…

With so many different industries out there, and so many different advertising options with Google, you could end up needing an advertising budget of anywhere from $200 to $2000 a month…or more.  But before we go any further, you should know that Google gives their advertisers multiple bidding strategies to choose from, which can be fully customized…even right down to the point of you telling Google how much you’re actually willing to pay for a lead, which means that you are ultimately in control of how much you spend.

Now, just to be clear on this:  If you bid too low on your ads, Google will show them less which means that you will get less traffic to your website and ultimately, less leads or sales.  But if you bid too much, you may find yourself overspending while getting a lesser return on your investment.  So there is a balance that needs to be found here…which is why you need a company like us to build and manage your Google Ad campaigns (shameless plug here).

But just to keep things moving, we need to introduce you to a nice little 3-letter acronym:  CPC…which stands for “Cost Per Click.”  Because this is one of the most utilized forms of bidding on most of Google’s ad platforms, we’ll just start breaking things down from there.  When starting up your Google Ad campaign, you need to first decide how much you’re going to be willing to pay for someone to click on your ad.  Ad clicks can range anywhere from a few cents to several dollars per click.  Keep in mind, you need to account for the fact that not everyone who clicks on your ad will become a customer.  In fact, 90% of people who visit your website may just browse your products or services and then move on to the next vendor.  This means it could take 100 clicks for you to get 10 customers.  So essentially, before you figure out how much you should be paying per click, you need to know how much a customer is worth.

We’ve put together a little example here for you.  Let’s say you own a car detailing service.  To keep the math simple, you charge roughly $100 for a full service detail.  The national average of cost-per-click for this type of industry is going to be right around $3.  This means that you’re going to pay $300 for 100 people to click on your ad.  If 10 of those people become customers, you will have made roughly $1000, which is a $700 return on your advertising investment.

Now, this is where it could get a little confusing but bear with us.  We originally said that “you need to know how much a customer is worth.”  Based on the example just given, does this mean that each customer is worth only a hundred bucks?  No, and here’s why:  There is a percentage of these people who are very likely to become repeat customers or even regulars.  Let’s just say that 50% of the car owners you work for end up using your services again.  This means that 5 out of the 10 new customers you garner each month from your Google Ad campaign will become consistent, paying clients.  This means that after 10 months of advertising with Google, you could have gained 50 steady paying clients for your detailing service.  And let’s just say you’re only detailing their cars once a month.  That means that, at a rate of $100 per customer, you’re making a steady $5000 a month after only paying $300 a month consistently with Google Ads.  Even if your ads perform half as good as what we’ve talked about here, you’re still getting an amazing return on your investment.

When budgeting for a Google Ad campaign, this type of approach works the same for nearly every business out there.  Just to give one more quick example:  If you’re a home remodeler, you may have to pay $10 per click when advertising your kitchen remodeling service.  This means you’ll spend $1000 for 100 clicks.  But if just one of those people hire you to do a $12,000 kitchen remodel, then you should consider your campaign a success.  

Now, obviously we don’t have the time to run through every single industry out there.  But hopefully we were able to give you a better understanding of how you’ll need to budget for a successful Google Ad campaign.  We highly recommend you finding someone certified in Google Ads and who can research your particular trade or industry and deliver you a realistic estimate of what it would cost for you to advertise your business on Google.  In the meantime, there’s a great resource from Wordstream that we’d like to reference:  The Google Ads Benchmarks for Your Industry.  This article will take you through many of the Google Ad metrics that should be taken into consideration when setting up a campaign for your particular industry.  If you want to simplify things and just take a look at the average CPC for your industry, here’s a direct link to that information:  Average Cost Per Click in Google Ads by Industry.

For now, if you enjoyed this blog post, don’t forget to share with others (we like when people post links to our articles).  If you have any further questions, please feel free to reach out to us on our contact page.  We would love to hear from you!  And if there’s only one thing you take away from this post, let it be this:  Before you spend any of your hard earned dollars with Google, find out exactly how much your customers are worth.