How much should I spend on Google AdWords?

Excerpt from:  Don't Waste Money on Google Adwords

The amount you should spend on Google AdWords depends on your own budget, your own business model, and your own advertising objectives. Yet it is essential that you do not set out to spend a lot of money on Google AdWords until you’ve completely understood what it takes to create a successful Google AdWords campaign.

The simple answer is that you should spend as much on Google AdWords as you need in order to achieve your sales target. But of course, your sales target is going to depend in part on how much money you have to spend on Google advertising. When you’re starting out, it’s a good idea to scale up. Start with a modest sales target and build your first campaign around that.

In order to calculate how much you’ll need to spend on Google AdWords to achieve your sales target, start with the total number of sales you’d like to achieve. Let’s make it simple and start with one sale per day.

Next, estimate how many visitors will click on your Google ads in order to convert one sale. Conversion rates vary by product and website, but 1% is good starting point. This means you’ll need 100 clicks to convert one sale.

Third, estimate how much you’ll pay per click. This is a bit tricky, because it depends on the competition for the keywords you’ve chosen in your campaign and your own keyword quality scores. You may want to do some research and find out how much clicks cost for your types of products and services, yet it commonly costs 50 cents or more for clicks on well placed ads.

With this information, you can calculate that it will cost you around $50 for a single sale: 50 cents times 100 clicks. If that’s too much to pay, then you’ll need to improve your quality score, increase your conversion rate with better ads and a better website, or reconsider whether Google AdWords is even right for your product or service.

To learn more about setting the right budget for Google AdWords to meet your specific revenue target, read Don't Waste Money on Google AdWords.

See: What makes people instantly click Google Ads now?