What is the Recommended Google Ads Budget for 2020?
The question of “what is the recommended Google ads budget?”, is as old as the platform itself. It’s perhaps the number one question asked of every marketer by small business owners. While the answer may seem simple, the logic isn’t. Some marketers have even dared to provide a simplistic response to leading questions like “how much can you afford?” However, it’s much more complicated than that. There are a few factors to consider when making a decision for your Google Ads monthly budget in 2020 and beyond. You want to consider your goal(s) in a particular period or season, the value of your customer’s search term, what your competitors in your industry are currently spending, and finally what key performance indicators (KPI) you want to measure. In many cases, this will vary from company-to-company and person-to-person.
Occasionally, I would run into someone who would ask me if Google Ads are worth it? My response in almost all cases is—“are you truly serious about growing your business?” Google Ads are very much worth every penny you put into it, if you know what you’re doing. The platform is designed to help you build your brand. From the moment a potential customer sees your ad, makes the decision to click on it, and then visit your landing page, a connection has taken place. It is a rare opportunity that’s often lost simply because the action required for them to take when they visit your landing page isn’t clearly stated. It is important to understand that most customers aren’t going to convert simply by landing on your fancy landing page or website. Not all landing pages will convert and therein lies another problem. You may simply have to engage them through email marketing or engaging Facebook content before finally driving that conversion.
So, let’s consider each one of these factors much closely as we try to answer this complex question. It is important to point out that Google Ads/marketing isn’t Facebook marketing—which is mostly a disruptive marketing platform geared towards content marketing and storytelling. Google Ads are built as an auction marketplace where the commodity is “keywords and search terms”, and the currency is your “bid.” That being said you can spend as little as $50 per month or upwards of $10,000 or more.
What are your goals for the period?
A great way to determine your budget for Google Ads is to define your goal but more importantly, you want to consider your industry’s peak season. In many instances, this will affect your keywords cost. Google’s keywords search volume will often vary from month to month. Each month, Google collects aggregated data relating to variant keywords—which it then calculates based on user’s intent and interest across popular browsers. These search results are then auctioned to determine keyword relevancy (KR) and keyword competitiveness (KC) within Google Keyword Planner and across all industries. A search term like “salon suites for rent” from February through June might average 2,900 search volume, while from August through October the same search term may yield 2,400 searches.
A well defined and clearly thought out goal ensures that you are adequately competing on relevant keywords, and cost-per-click (CPC).
What value do you place on your customer’s search query?
One of the main factors that is often overlooked is Customer Value. What is your customer worth to you? In my opinion, this is the most important factor to consider when deciding your minimum Google Ads budget. Many small business owners place too much emphasis on keyword costs and too little on their customer value. And while cost is a very important factor to consider, it can easily skew your decision.
The Google Ads that tend to do very well on SERP (search engine results pages) are the ones who value the intent behind every search query. For example, a search query for “salons near me” most likely indicates that the customer is ready to take action. These types of highly sought after search terms have a high conversion rate.
Companies who value customer’s search queries will usually create a marketing funnel because they understand that not every click will result in sales but every click should result in a potential lead. And so, for those high-performing ads, they will often set lead funnels to understand the buyer’s journey and conversion goals to measure clicks. They are also not afraid to bid anywhere from $3 – $6 per click because they are not price-sensitive but much more focused on converting leads.
The average consumer today is highly influenced by the internet of things (IoT)—which makes the average consumer savvy and well-informed. They have a platter of options to choose from and are less forgiving if you miss the mark with them the first time around. They want absolute control and tend to be more loyal to brands that take the time to understand them. The great benefit of Google’s search platform is that the intent behind every search query shows that people are ready to take action. While this is great news for both marketers and business owners, it can also cause great pain if customer value isn’t appreciated.
What are your competitors spending on keywords?
This next point is very important, but before I get further into it, I would like to point out that the Google Ads platform wasn’t designed for everyone to play on, but just for a few who are truly serious about scaling their brand or services. A great way to stay ahead of the game is to consider what your competitors are actually spending on their ads. Tools like SEMRush and SpyFu are designed to help you conduct some real 007 espionage on your competitors.
Knowing what your competitors are bidding on a keyword can be helpful when deciding your Google Ads budget for your campaign. According to SpyFu data reporting for 2019, competitors like Sola Salon and My Salon Suite are spending up to $4.23 and $7.71 per click, respectively, for their top keywords. I’m not saying that you should always match your competitors on every keyword spend, but consider coming close to their keyword bid. You certainly don’t want to spend $5 – $10 per day when your competitors are averaging $50 – $100 per day on Google Ads. Spending adequately will ensure that you are well-positioned to compete on those competitive keywords, especially during peak seasons for your industry.
What KPI do you want to measure?
The final point to consider is how to measure the return on ad spend (ROAS). Understanding this process will enable you to avoid the rat race and wasteful ad spending habits. The best way to accomplish this is to set up conversion tracking or creates a conversion goal for every ad campaign. Ideally, you want to define what your goal for each campaign is going to be before the campaign even starts. For example, if your goal is to drive traffic to your site, then you want to measure clicks. On the other hand, if your goal is to capture leads from the ad campaigns, then you want to measure lead conversions which would be based on form completions.
There are times when you may want to conduct some split testing between two ads to determine which messaging or phrase in your ad copy performs the best. Such invaluable data will inevitably impact your budget as you will have to allocate a separate budget to each test campaign. However, the results of your A/B or A/B/C test will be invaluable to your future ad spend. You may even find that you are now spending less and getting better results from your ads due to your discovery.
When considering what budget to spend on Google ads, it’s very important to keep these things in mind as it may make the difference between success and failure. Setting aside an adequate budget of $500 – $1,000 per campaign, per month on Google Ads, and $250 – $350 per campaign, per month for Facebook lead ads is adequate enough to be competitive towards gaining a strong market share and scaling your franchise.
Blog post written by:
Digital Advertising Manager
The Salons by JC marketing team lives and breathes all things marketing and are experts in digital advertising. Reach out to us at email@example.com and schedule a phone call or video chat to learn more about marketing for your specific location.
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