How To Find Your Google Adwords Budget

Likely the most popular question I get from marketers and clients is – how much do google ads cost? With so much saturation in the market place most people fall into one of the two buckets below:

They think they can spend a minimal amount to drive a massive amount of conversions (or)
They think Google advertising is way out of their budget and can’t quite see the value.

Both buckets have generally crafted thoughts based on what they’ve been told by prior marketers, or what they’ve self-read or taught. Whilst we know our main job is going to be education to turn ideals necessary to understand and mentally be able to work through the costs when launching a new client or chatting through potential strategies.

Read below how I am mentally walking through a new client, what things I consider for my strategy and how many benjamins the client will need for their desired outcomes.

ALWAYS start with the advertising goal!

What is the desired outcome of Google Advertising? What is the client expecting to get in return for running search advertising? It may also be a good time to understand the client’s expectations around a Google ads budget.

Consider this process:

Perhaps the client is expecting to receive 500 new leads from the advertising during quarter 4.
Determine what exactly a lead is – generally, these will be a combination of phone calls, and form fills. Understand exactly what the goal is.
Be sure tags are set up to accurately measure these leads in Google Analytics & be sure all tags are imported and firing properly in Google Adwords.
Understand that whilst our job as marketers is to drive leads to site and get the customer to take a desired action – we will have little control over what happens to these leads. Necessary to chat the client through the actual sales conversion rates as well. How many form fills or phone calls become paying clients. If there is not a solid sales funnel or sales team there may be a real struggle to drive desired business outcomes.

Prepare Your Google Ads Funnel

Now that we have our key performance indicator (500 leads during Q4) we can begin to build out our marketing funnel to determine the suggested google advertising cost.

Resort to this Wordstream article to help with average metrics by industry.

Find the average benchmarks by industry. We’re looking specifically for the following. Let’s imagine our industry is sports and fitness – so perhaps we’re advertising for Gym X.

Health and fitness google ads benchmarks include:

Conversion Rate: 3.83%

Reverse Conversion Rate Formula

Insert your average conversion rate (3.83%) and the total expected conversions from the client (500) into the formula below.

(Total Conversions/Total Visits) = Conversion rate

(500 / (unknown x) ) = 3.83%

Change 3.83% into a fraction = 383/10000

(500 / X ) = 383/10000

Cross multiply to remove the fraction.

500 * 10000 = x * 383

5000000 = x * 383 (divide both sides by 383)

x = 5000000 / 383

x = 13,055

If you’re thinking woah maths are not my thing feel free to use this easy scientific calculator to quickly find the solution.

Fill In Your Strategy With The Numbers

Now that you’ve solved for total visits (x above) you now know how many clicks you need to fill the top of your marketing funnel in order to drive your desired 500 conversions during Q4.

Now you can go to work with your strategic mind and brainstorm how you are going to be driving 13,055 new users to site during the 3 months of Q4.

Using this wordstream article we can see that the average cost per click on Google ads across the fitness and health industry is $1.98 (of course this will greatly depend on competition in the market).

Further we can do a quick formula below to gain an understanding of what the recommended google adwords budget would be to drive our desired outcomes.

13,055 * $1.98 = $25,848.90

Recommended google ads budget is $25,848.90

This breaks out to $8,616.30 per month

and roughly $287.21 per day.

Bringing it all together

In conclusion, it’s crucial to both understand conversion rates and be able to mentally play through the equation when considering a google ads budget. I keep this formula close when entering any client meeting or brief. The costs around google AdWords is highly misunderstood so it’s crucial to back yourself with this data (especially if we’re considering a million dollar plus budget).

Love what you’ve just read? Let me know your thoughts below in the comments.

If you’re keen for my help understanding your potential google adwords budget please click to drop me a line here.