Google Ads Budget Optimization: 7 Tried-and-True Expert Tips

Google Ads budget optimization is the process of managing your ads budget in a way that gives you the best possible ROI. Learn the top ways to optimize your budget for maximum results.

Ads budget optimization can get you the best results while minimizing wasted ad spend.

Below, we share our firsthand experience on 7 ways to optimize your ad budget with expert insights from HawkSEM lead strategist Ian Dawson.

What is Google Ads budget optimization?

Google Ads budget optimization is the process of allocating and managing your pay-per-click (PPC) advertising budget optimally. The goal is to get the highest possible return on investment (ROI).

This process involves strategically using your search ad budget across different ad campaigns, ad groups, and keywords to maximize results. It also requires monitoring and tweaking ad campaigns to minimize wasted ad spend.

7 ways to optimize your Google Ads budget

Learning how to get the most out of your Google Ads budget is the key to maximizing ad performance while keeping wasted ad spending to a minimum. Let’s jump into 7 ways to optimize your Google Ads budget:

1. Calculate your conversion value
2. Use historical data to predict future ad spend
3. Run test ad campaigns
4. Review keyword search terms regularly
5. Experiment with ad and landing page copy
6. Improve Quality Score to enhance performance

1. Calculate your conversion value

Before you start your budget optimization journey, you need to understand what each click is worth. Believe it or not, it’s surprisingly common for businesses not to know their company’s lead value or lead cost.

“For any campaign, whether it is high or low spend, optimizing budgets should start with understanding the value that comes from your click,” says Dawson.

“Budgeting should reflect a positive return on your ad spend, so reviewing your conversion value will help make sure your budget is appropriate to allow for a positive return.”

The value per conversion tells you how much, on average, each of your conversions is worth. You can calculate this by dividing your total conversion value by the number of conversions.

“Knowing your conversion values can help you plan for realistic budgets,” Dawson says. It makes budget allocation and budget management easier when you have a better understanding of conversion values.

2. Use historical data to predict future ad spend

Knowing how much money you’ve spent on Google Ads in the past can help you better understand a realistic budget for your next campaign.

To get started, gather your historical data.Go into your Google Ads account to export data like your daily and monthly ad spend, clicks, conversions, and any other metrics that might be relevant to your budget.

Then, analyze this historical data to identify trends and patterns in your ad spending that can inform future campaigns.

For example, looking back at past campaigns, you might notice that certain keywords are more expensive than others. That means if you intend to target these keywords again, you’ll need to set aside a larger budget.

You might also look for trends, such as times of the year when you tend to spend more on ads, or find certain campaigns or keywords consistently provide a return on ad spend (ROAS).

Once you have an idea of future ad spend, you can then adjust your budget accordingly.

3. Run test ad campaigns

Whether you’re brand new to Google Ads or you’re just running a new type of campaign, running tests can help you better understand what is likely to be the best use of your ad budget.

Choose keywords

Start by selecting keywords for your test campaign. These keywords should reflect the campaign’s overall goal.

Don’t forget to include long-tail keywords. These are more specific than broad keywords, making them more likely to be used by someone who is ready to make a purchase.

Google Keyword Planner is a great place to get started with keyword research. Make a list of initial keyword ideas, and then use Google Keyword Planner to find search volume, competition level, and bid range.

Google will also suggest ad group ideas when you set up your Google Ads campaign. Just paste the landing page URL and get several groups of keywords you can target.

While you don’t want to rely just on this feature to identify keywords, it often helps you find keywords you might have missed during your initial search.

If you are newer to Google Ads, you should start your test on a small number of keywords at first. While the exact number of keywords to test will depend on how your test campaign budget, 10 keywords is a great place to start.

Determine your bids

Once you’ve selected the keywords you want to test, it’s time to determine how much you are willing to pay for each site click. The right bid will depend on the campaign type, cost of keywords, and keyword success.

To set a starting bid, think about how much an ad click is worth to you. For example, you don’t want to bid $10 on a keyword for a product that only costs $20.

Set a test budget

When it comes to testing ads, you want to get at least 100 clicks on each ad before you determine if it performs well.

So, let’s say you want to test ads for 10 keywords with an average CPC of $3. That would mean you should plan to spend at least $3,000 on your test ads.

To avoid wasting ad spend, keep a close eye on your ad results when they launch. If you find that one of your ads isn’t set up right or isn’t converting any visitors, you should pause the ad campaign ASAP to avoid spending too much on an ad that isn’t performing at all.

Analyze the results

These test ad campaigns will provide you with information you can use to make data-driven decisions about future campaigns.

One of the most important metrics to examine is the click-through rate (CTR). CTR is calculated by dividing the number of clicks each ad receives by the total number of impressions.

CTR shows you which keywords had high enough bids to display to users and which ones were clicked, giving you a better idea of which keywords and bids you should continue to use in future campaigns.

You’ll also want to look at the conversion rate, which tells you the percentage of people who converted after clicking on the ad. However, you need to look at the conversion rate in relation to the cost per conversion.

For example, you might have an ad campaign with a high conversion rate. But if you look at the cost per conversion in relation to the average sales value and find that you are not getting a return on ad spend (ROAS), then this is not an ad you would want to run again.

4. Review keyword search terms regularly

Review your keyword search terms regularly to track the keywords driving the most traffic and conversions. Once you identify the most clicked-on keywords and search terms, you can adjust your campaign to maximize those conversions.

Dawson suggests identifying underperforming keywords as well. “For Search Network campaigns, reviewing the search terms associated with keyword clicks can help to reduce unnecessary or wasted spend,” he says.

Remember to include negative keywords for non-converting traffic. Adding negative keywords to your campaigns helps prevent your ads from appearing in search results for keywords that are not bringing you qualified leads.

“Taking the time to add negative keywords to your ad groups and campaigns will allow your budget to flow to better-performing keywords and related search terms,” says Dawson.

For example, if you offer home renovation services, you might include negative keywords like “do it yourself,” “DIY,” or “cheap” to avoid attracting people who are unlikely to buy.

5. Experiment with ad and landing page copy

Another way to make sure you’re getting the most out of your Google Ads budget is to experiment with and test both your ad and landing page copy.

When A/B testing copy, make sure you’re only testing one element at a time to ensure you’re able to determine what is impacting conversions.

“Experimenting with ad copy and landing page variants can positively impact your ad budgets,” says Dawson. “By testing ad copy changes that help educate users before they click, you can potentially stretch your budget further by reducing irrelevant clicks.”

He gives the following example:

An example that often comes up relates to B2B marketing to enterprise users, where a B2C non-enterprise user could potentially search for your B2B keyword. Adjusting ad copy to speak specifically to a B2B user can help to reduce B2C clicks and further optimize your ad budgets.

This is a great example of why it’s so important to test ad and landing page copy. Adjusting your messaging can help ensure you’re bringing in potential customers who are ready to buy.

6. Improve Quality Score to enhance performance

Google Ads Quality Score impacts your ad performance and determines your ad rank. Not to mention, it can lower your cost per click (CPC), the price you pay when someone clicks on your ad.

That means improving your score can help you reduce ad costs and maximize your budget.

What is Quality Score?

Quality Score is a score of 1-10 that Google calculates based on 3 elements:

• Expected clickthrough rate (CTR)- The likelihood that your ad will be clicked on
• Ad relevance- How relevant your ad is to the user’s search intent
• Landing page experience – The relevance of your landing page and user experience for those who click your ad

Basically, Google compares you to other advertisers who have targeted the same keywords in the last 90 days to determine whether each of your elements is above average, average, or below average.

How to check your Quality Score

To check your Quality Score, log into your Google Ads account, and click on “Campaigns.”

Click the Audiences, keywords, and content drop-down. Then, click “Search Keywords.”

In the upper right corner of the table, click the columns icon.

Then, under “Modify columns for keywords,” open the Quality Score section.

This is where you’ll find the current Quality Score and the status of each component. You can add any of the options to your statistics table — Quality Score, Landing Page Exp., Exp. CTR, and/or Ad Relevance.

Then, click “Apply.”

How to improve your Quality Score

Quality Score impacts ad performance and determines ad rank. It can also lower cost per click (CPC), the price you pay when someone clicks on your ad.

Here are a few ways you can improve your Quality Score to maximize your ad budget:

• Make sure your keywords are relevant. When choosing target keywords, select specific, relevant search terms that will attract your target audience — users who are interested in your offer.
• Align ad copy with keyword search intent. When revising and testing your ad copy, keep the user’s search intent in mind. Your copy should directly address the user’s need.
• Optimize your landing page. The landing page copy should align with the ad copy to provide a seamless experience. You should also optimize the page so it’s mobile-friendly and easy to navigate with a design that loads quickly and a clear call-to-action (CTA).

How Google Ads campaign budgets work

Before we dive into how to optimize your Google Ads budget, it’s vital to understand how campaign budgets work on Google Ads.

Average daily and monthly budget

Google allows you to set an average daily or monthly budget for your campaign. The average daily budget is the average amount you’re willing to spend each day for that campaign. The actual daily spend may be more or less than your daily budget, depending on factors like competition.

To find your monthly budget, multiply the daily budget by 30.4. This is the monthly spending limit or the maximum amount you can be billed for a campaign within a month.

Shared budget

You also have the option to set a shared budget. This is the maximum amount you’re willing to spend across multiple campaigns.

For example, let’s say you have a $100/day budget shared between two campaigns, each at $50/day. There is a day that Campaign #1 gets fewer impressions and clicks than usual, which results in only a $30 spend.

With the shared budget, Google Ads can then take the remaining $20 from Campaign #1’s budget and reallocate it to Campaign #2. This helps you maximize your campaign results without manually adjusting budgets daily.

How much do Google ads cost?

Google ad costs typically range between $2-$5 per click. However, actual costs depend on a number of factors, including your industry, keywords, bid, and budget.

Market trends can also impact Google Ads costs. As consumer trends shift over time, the average cost-per-click (CPC) can also fluctuate.

When estimating Google Ads costs, consider PPC management costs as well. Working with a PPC agency to manage your Google ads can help you get better results faster while reducing wasted ad spend. PPC management costs depend on the agency’s fee structure and your PPC budget.

How much should I spend on Google ads?

The amount you should spend on Google ads depends on a number of factors as well, such as industry, keywords, and objectives.

While there is no minimum spend, setting too low of a budget — like a few dollars a day — is not going to get you practical results.

We recommend starting with an ad budget between$1,500-$3,000per month. If you are new or inexperienced when it comes to running Google Ads, you should start with a lower budget to avoid wasted ad spend.

The takeaway

Like every part of your marketing strategy, Google Ads budget optimization requires monitoring, testing, and tweaking for the best results. Unfortunately, it’s far too easy to make a simple mistake that results in wasted ad spend.

An experienced PPC management agency like HawkSEM can help you get the most out of your Google Ads budget while saving you time and effort.

Looking for a PPC partner? Book a free consultation to see if we’re a good fit.