How Much Should I Spend On Google Ads? Cost Breakdown + Expert Tips

Google Ads spending should range between $1,500 and $30,000+ each month, depending on your business goals. We break down how much businesses spend based on their industry and type. Plus, we share expert tips for making the most of your budget.

Here, you’ll find:

• How much should you spend on Google Ads?
• What determines your Google Ads spend?
• How to set your Google Ads budget
• How to set a Google Ad budget based on your business type
• How should local businesses approach Google Ad spend?
• How should ecommerce retailers approach Google Ad spend?
• How to budget for lead generation campaigns with Google Ads
• How to evaluate if your Google Ads campaigns are worth it
• When to re-evaluate your Google Ads strategy

Google Ads can drive targeted leads for your business. But you must find the right level of spend.

Spend too little, and your ads get buried. Overspend, and you’ll eat into profit margins.

Every cent counts.

So the question now is: How much should I spend on Google Ads? Based on our research, businesses should allocate between $1,500 and $30,000+ monthly on Google Ad campaigns.

Let’s look at key considerations for Google Ads budgeting.

How much should you spend on Google Ads?

Your advertising budget range will depend on your business goals. While this varies, generally, these are the amounts you can expect:

• Small businesses may spend $1,500 to $8,000 per month
• Mid-size companies may spend $7,000 to $30,000
• Large enterprises may spend $50,000 to $250,000+

“If you’re a small business that wants to drive more sales, you could run a campaign optimized for phone calls and start with spending $500 per week,” says Ty Wilson, Co-Founder and COO at CustomMade. “You can track the sales and profits from those phone calls and compare them to how much you spent on the ads. If you make more profit than you spent on ads, keep ramping up the spend and growing your profits.”

If you’re new to this form of marketing, it’s important to understand what PPC is worth. Brands generate an average of $2 for every $1 spent on the Google advertising platform. This means every dollar you spend can boost your bottom line. Plus, if you continue to monitor and adjust your campaigns, that budget can go even further.

What determines your Google Ads spend?

There are four other factors (besides business size) that determines how much you’ll spend on your Google Ad campaigns:

1. Competitive landscape
2. Your goals
3. Market trends
4. Expertise

1. The Competitive landscape

The average cost-per-click (CPC) on Google averages about $4.22. Some industries, like auto and real estate, have lots of competition and land in the higher range of average CPC.

The campaigns your competitors run, keywords they place for, and amount they bid make a difference. If you’re going after a keyword with lower search volume, you’ll pay less. A high-volume search term will likely result in a higher CPC.

For example, a coffee shop could find that the terms “best coffee shop” or “coffee near me” have a high CPC. If they dial into more unique keywords like “artisanal coffee downtown” or “organic espresso bar” they may have a lower CPC while still getting qualified traffic.

2. Your goals

Your digital marketing strategy should always relate to the goals of your brand. What you choose to focus on may also have an impact. Take a closer look at the way goals influence your PPC budget:

• Brand awareness: Getting the word out about your brand will require reaching a broad audience. This could involve more spending on generic search terms with a higher volume.
• Lead generation: Capturing leads requires you to dial in your keyword strategy. Bid on specific keywords that show a potential interest in your products or services.
• Sales: Boosting your bottom line with PPC requires you to bid high-intent keywords and use retargeting campaigns. Focus your campaigns on terms your customers use when they’re ready to purchase.

Not sure where to start when selecting your keywords? Use PPC keyword research tools to start your process. This will pinpoint relevant search terms that reflect what you offer. They’ll also give you a sense of how much bidding will cost.

3. Market trends

Google Ads aren’t something you can set and forget. A campaign that works in the first quarter of the year may not get the same results toward the end of the year. These shifts and the way you handle them also impact budgeting.

Keep up with trends in your industry that could impact costs or competition. Seasonal trends may spike the CPC on some keywords. For example, if there’s an event or conference in your industry, you may find that PPC management is more expensive during that time.

4. Expertise

Knowing how to manage campaigns makes dollars stretch further. You have a few options for finding expertise for your Google Ads campaigns. https://hawksem.com/wp-admin/media-upload.php?post_id=26412&type=image&TB_iframe=1

• Existing staff: Do you have someone on your team who has PPC knowledge? Having them work on your campaigns is a budget-friendly option. But also consider the cost of moving them away from their current work to focus on PPC.
• Bringing a new team member: If you don’t have anyone on staff who you can work with for PPC campaigns, consider hiring for the position or bringing in a contractor. If you go this route, calculate training, pay, and benefits costs.
• Working with an agency: Agencies usually have a team of experts with a wide range of skills and experience in PPC. They may understand more nuanced topics, like how to improve an ad’s quality score.

Along with the cost, factor in the time it takes to evaluate and find a trusted marketing agency. It’s important to work with a partner that truly understands how budget and strategy work together.

“There are multiple factors to consider for PPC budget, such as the industry, competition, and average CPC,” explains Rambod Yadegar, President of HawkSEM. “What we consider highly important is the lifetime value (LTV) of a customer. Once you know the LTV of a customer, you can work on the marketing budget and CPA goals accordingly.”

How to set your Google Ads budget

Once you understand what goes into your ad spend, it’s time to set your budget. Here’s a breakdown between daily and monthly ad spend.

Daily budgets

Many businesses set an average daily budget ranging between $10 and $500. This allows flexibility to adapt day-by-day while providing greater control over spending. This is particularly important to focus on when looking closely at what’s working and what’s not.

Monthly budget

Looking at monthly spending, typically in the four- to five-figure range, provides a better view of your overall advertising costs. It allows strategic long-term planning, so you can better understand how campaigns contribute to sales targets or marketing goals.

Both approaches, or a combination of them can work. No matter which you choose, make sure you actively manage the campaigns. Set aside time every week or month to analyze the data, see what’s working, and cut low-performing ads or look for optimization opportunities. This will allow you to get the highest return possible from your budget.

(Image: Adobe Stock)

How to set a Google Ad budget based on your business type

Every business is different, and the best Google Ad spend strategies vary. Here’s what you should keep in mind based on the stage of your business.

Google Ad spend for small businesses

For small companies, making every Google Ads dollar count is crucial when working with limited budgets. The key is optimizing campaigns to drive real business growth. This requires strategies to make your budget go as far as possible.

Small businesses may focus on these budget optimization techniques at their spending level:

• Concentrate on targeted demographic and geographic segments to boost ad impact.
• Prioritize high-intent keywords where Google search users are ready to buy or engage.
• Set a small budget and invest more money as you analyze results.

Google Ad spend for startups

As a startup, your advertising dollars must act as fuel to get the business off the ground. To maximize your campaigns, you need a strategic approach to stretch your budget while making an impact.

Here are key areas for startups to focus on when optimizing Google Ad spend:

• Target core buyer personas using demographic and interest-based segments.
• Bid on commercial keywords where searchers show an intent to buy or engage.
• Scale up slowly as you analyze performance data.

Google Ad spending for mid-size businesses

As a mid-sized business using Google Ads, you’ll have more room in its budget and heightened competition. You need to leverage those dollars strategically to maximize impact and ROI.

Here are key optimization tips for your level of spend:

• Diversify with campaigns for different offers and segments of your target audience.
• Bid on more competitive keywords to place for popular terms.
• Design more complex campaigns to scale based on performance and market trends.

Google Ads spending for enterprise-level companies

Enterprises have many ways to maximize their massive PPC budgets. But always monitor your spend carefully to avoid waste and missed opportunities.

• Work across departments like sales and customer service to drive alignment.
• Connect PPC campaigns with your larger content marketing strategy.
• Make extensive use of analytics and big data to inform decisions.

How should local businesses approach Google Ad spend?

Running a local business? Your digital ads budget requires specific tactics to connect with new customers in your area. The key is tailoring your strategy to match your community’s unique interests and needs.

Here’s how to achieve that.

Keywords and messaging

Do some digging on the kind of messaging and offers that get attention locally across different seasons or events. A bakery may feature seasonal pie specials during the holidays and bid on related keywords. A home services company may need to run a few ads to see what service people are most interested in.

Targeting

Set up campaigns dialed into your region, city, or even neighborhood. Ensure your text, calls-to-action, and landing page experience are relevant too. For example, a Miami realtor may say “South Beach waterfront properties” instead of “home listings.”

Testing

Finding the right route requires some testing and optimizing. Once you determine your starting point, leave room in your budget to run different experiments. For example, you can target different neighborhood and cities in yoru area to see which attract the most traffic and conversions.

How should ecommerce retailers approach Google Ad spend?

Running and advertising an online store comes with its challenges. Unlike brick-and-mortar shops, you’re in a digital marketplace competing for clicks. You need an approach that’ll stand out in search engine results.

Here are a few suggestions.

Keywords and messaging

Take a different approach to keywords and topics because your store is competing against every other competitor with an online presence. Research other campaigns in your space. This will give you an idea of what keywords are working, and you may identify low-hanging fruit (easy-to-rank-for keywords) or missed messaging opportunities.

For example, an online fashion brand may sell sustainable clothing, but see a lot of competition around those keywords. So they promote specific offerings instead and choose a long-tail keyword like “sustainable dresses for summer” or “sustainable capsule wardrobe.”

Targeting

Zero in on highly targeted segments to reach people where they’re browsing and shopping online. According to Google, these are some ways to use targeting in your ads:

• Topics: With topic targeting, you can show your ad across multiple pages, Google Ads analyzes factors like text, language, links, and structure to determine the main themes of each page. It then matches those topics with the ones you selected to target.
• Managed placements: You can target specific websites your audience visits on the Display Network. Unlike contextual targeting, which is automatic, placements don’t require keywords. You can target whole sites or subsets.
• Content keywords: Use Keyword Planner and tailor your keywords to reach certain groups or meet goals. For instance, adjust them based on trends or for sales. This allows more control and a better ability to reach your demographic.

Testing

Evaluate what is and isn’t working for driving traffic and sales. Otherwise, you’ll miss out on opportunities to improve your Google Ads and get better results from your efforts.

Split test multiple ad versions, changing elements like images, ad copy, and calls-to-action. You’ll find that seemingly small shifts can add up over time, and help you gain an edge over your competitors.

ConversionIQ, HawkSEM’s proprietary software, reveals who’s clicking your ads (and converting), so we can personalize your ad marketing campaign and messaging for better results.

How to budget for lead generation campaigns with Google Ads

When you budget for lead gen campaigns, prioritize quality over quantity. Some potential customers cost more upfront but can pay you back long-term through repeat business. Keep that in mind when determining your spend.

Instead of casting a wide net, target people who match your best buyer profile. Pinpoint the keywords that attract qualified leads and bid high for them. While you’ll get fewer leads, these are the ones more likely to become customers with strong lifetime value.

Tie your budget and bidding strategies to your goals. Driving more traffic or leads does nothing if those people never convert or only make small one-off purchases. Focusing on attracting more of the right leads will stretch your ad spend further.

How to evaluate if your Google Ads campaigns are worth it

To know if your campaigns are worth the money, define what success means upfront. Refer back to what strategies make the most sense for the size and stage of your business. That’ll inform what your key performance metrics are.

They could be:

• Target cost-per-click (CPC)
• Average click-through rate (CTR)
• Conversion rate
• Return on ad spend (ROAS)

Then, keep a close eye on your Google Ads account and check on these benchmarks over time. If your goal is ROAS, for example, use analytics to see what partition of sales you can contribute to your Google Ads cost. Look for trends as your campaign continues. Are you trending toward a higher ROAS as the months pass, or are you not seeing much movement?

By implementing a custom and strategic PPC campaign for AppDymanics, HawkSEM increased its conversion rate by 20% while doubling targeted traffic. Read the full case study here.

When to re-evaluate your Google Ads strategy

The best marketers test, optimize, and evolve their Google Ads over time. But when do you know it’s time for a bigger strategy refresh? The main triggers for re-evaluation are:

• Missing key benchmarks: If your ads are failing to hit targets for return on investment, conversions, or other KPIs month-over-month, something needs to change.
• New product or offering: When your business introduces a major new product line, service, or experience, realign your ads.
• Business change: Fast-growing startups have different needs compared to mature enterprises. As your company evolves, so should your ad strategy.
• Market shifts: Seasonal changes and market trends will impact your pay-per-click success. Adjust campaigns accordingly.

In all cases, analyze performance data and customer insights. Identify what’s broken or missing before applying fixes. Significant strategy shifts require planning to execute well.

The takeaway

Dialing in the right budget for Google Ads is a complex process with many factors to think through. When done right, the marketing dollars you spend on paid search can support your business goals and other efforts like SEO and social media.

Use this post as a guide to find a budget for search ads that gets business results.

Want to put together an online advertising campaign that converts? We’d love to help. Get in touch with our experts today.