What is a campaign budget?

Google Ads lets you set an average daily budget for your campaigns, with the flexibility to change it at any time. Your daily budget is the average amount you’d like to spend each day over the course of the month.

While your spend may vary each day, you won’t pay more than your monthly charging limit, which is the daily budget you set, multiplied by the average number of days in a month. On days when your ads are likely to get you more traffic, you may spend up to 2 times your average daily budget. Those days are balanced by days when your spending is below your daily budget.

Why set a campaign budget?

Google Ads is built as an auction marketplace, and the commodity that Google sells are website visitors. How much you spend on Google Ads depends a lot less on the channel itself and more on your industry.

Within Google Ads there are many ‘mini-markets’. Each keyword group will come with its set of prices and factors to consider, ie. mini-trading markets.

When you bid for clicks (website visitors) in Google, you’re not bidding for the same clicks as everybody in the world. You’re only bidding for the clicks that are relevant to you based on your settings for your campaign, such as location and keywords versus your competitors bidding with similar settings.

When it comes to how much you should spend on Google Ads it comes down to how much you and your competitors believe a potential customer is worth, and those customers will have wildly different values depending on the industry, product, price point etc.

There are four key questions you need to ask yourself when determining your initial Google Ads budget:

  1. How does Google Ads fit into my current marketing strategy? Generically speaking, you should always have a budget for branded campaigns 
  2. What (and where) are my competitors spending? Google your company’s name. What do you see as the top results? Now Google your competitor’s name. 
  3. How much are the CPCs (costs per click) for the keywords I’m bidding on? Pull up the keyword research you completed on the SEO toolkit. Check for keywords that indicate urgency or familiarity. Those are more likely to convert than ones that don’t. A branded keyword conveys more intent than a competitor keyword. ‘Limo from Sydney city to northern beaches midnight’ is more urgent (and therefore valuable) than “limo service,” even if the search volume is significantly lower. In general, you’ll want to focus on keywords with high traffic, low competition and high commercial intent (keywords that match your business intent).
  4. Which KPI (key performance indicator) matters most to me?