Digital Marketing
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How Much Should You Invest in Google Ads?

Are you finding it challenging to determine how much you should invest in Google Ads? Are you trying to balance the scales between cost-effectiveness and high return on investment? If you've pondered these, you are in the right place. Also, this article is for you, regardless of whether you're a startup, a burgeoning small business, or a well-established company.

This article aims to provide an exhaustive comparison of investment amounts in Google Ads. This will ensure you make the most informed decision on where to place your digital marketing budget. So, let's dive in.

"An investment in knowledge pays the best interest." - Benjamin Franklin

We will be covering the following key areas:

  • The fundamentals of Google Ads
  • Assessing your business needs and goals
  • Deciding how much to invest in Google Ads
  • Optimizing your Google Ads investment for higher ROI

Are you ready to unlock the mystery behind those Google Ad numbers? Let's get you started on your journey of mastering the art of Google Ad investment.

Understanding the Cost of Google Ads

The world of digital marketing is vast, and there's no denying that Google Ads holds substantial dominance within this arena. But what does it cost to stake your claim on this platform? Figuring out the economics of Google Ads can feel like diving into a sea with varying depths; it can be deep or shallow, depending on various factors.

Unlike traditional advertising mediums – think billboards and TV ads – Google Ads does not have a fixed price. Instead, it operates on an auction-based system, where advertisers bid on keywords relevant to their products or services.

Three principal components predominantly determine the cost of your Google Ads:

  1. Bid Amount: This is the maximum amount you'll pay for a click on your ad. The higher your bid, the better your placement.
  2. Quality Score: This Google-generated metric is based on the quality and relevance of your ad to the user, factoring in elements such as your click-through rate (CTR), ad relevance, and landing page experience. A higher quality score can lead to lower costs and better ad positions.
  3. Competitiveness of the Keyword: Some keywords are more competitive (and therefore pricier) than others, depending on the market niche.

Google Ads operates on a pay-per-click (PPC) model, meaning you spend money each time a user clicks on your ad. The average cost-per-click (CPC) across all industries on Google Ads is between $1 and $2 on the search network. However, highly competitive industries, like insurance or legal services, could see a CPC of over $30.

Moreover, while these factors give us a ballpark, budgets can be as diverse as businesses. There's no one-size-fits-all; your costs could completely differ from your competitor's – even if you're in the same industry.

Setting up a budget for your Google Ads requires a deep understanding of these factors, your business goals, and your financial capabilities. Let's dive into that discussion next.

Determining Your Budget for Google Ads

Determining your budget for Google Ads is imperative to ensure optimum results. It begins with a robust understanding of your organization's financial capabilities and marketing objectives. Always remember that investment in Google Ads doesn't have to be a fortune to be effective; what matters more is where and how you allocate the budget.

Understand Your Financial Capabilities

Start with understanding your business's financial health. Evaluate how much you can comfortably invest in Google Ads while maintaining healthy cash flow for other critical aspects of your business. Do not forget that, like any additional investment, there's always a level of risk involved.

Establish a Test Budget

If you're new to Google Ads, starting with a smaller budget may be prudent. This initial phase would essentially be a test run which allows you to identify which keywords, advertising formats, and strategies work best for you. Once you've collected sufficient data, you can adjust your budget accordingly.

Align Budget with Marketing Objectives

Your Google Ads budget should be in tune with your marketing goals. For instance, if you aim to increase brand awareness within a specific demographic, you might need a larger budget, especially if your targeted audience is an expensive one to reach. On the other hand, if your goal is more conversions-oriented, focusing your budget on highly targeted, lower-volume keywords could provide a more substantial return.

Know the Industry Benchmark

Knowing the average spend in your industry can also guide you in setting a realistic budget. You can research industry benchmarks or use Google's Keyword Planner to get an idea of your niche's expected costs per click (CPC).

Optimize and Revise

Finally, remember that your budget is not set in stone. As your business and marketing goals evolve, you must regularly review, optimize, and change your Google Ads budget. Remember, achieving the highest return on your investment (ROI) is the ultimate goal.

Setting Realistic Goals for Your Google Ads Investment

Before you dive headfirst into Google Ads, it's critical to establish a set of realistic goals for your investment. Remember, Google Ads isn't a get-rich-quick scheme; it's a tool to help your business reach its broader marketing objectives. Here are a few pointers to guide you in setting attainable targets.

Evaluate Your Business Objectives

First, ask yourself: "What exactly do I want to achieve with Google Ads?" Your answers could range from increasing website traffic, boosting brand awareness, and generating leads to sky-rocketing sales. The objectives should align with your overall business plan. Defining clear and concrete key performance indicators (KPIs) will help you track progress and measure success.

Be Smart About Your Goals

Every goal you set for your Google Ads should be SMART- Specific, Measurable, Achievable, Relevant, and Time-bound. This rarely-proven strategy ensures you have clearly defined targets, making it easier to measure progress and adjust your approach as needed.

Understand Your Industry

What works for one industry may not necessarily work for another. Researching and understanding industry standards, including typical click-through rates (CTR), average cost-per-click (CPC), and conversion rates (CVRs), can provide valuable are

Reality check: High ambitions won't equate to great results if you're not prepared to back them up with appropriate resources — monetary or otherwise. Realistic goals reflect what your budget, time, and team can genuinely achieve. If resources are tight, focus on highly targeted campaigns that make the most of what you have.

Continuous Learning and Adjustments

Investing in Google Ads isn't a "set it and forget it" type of deal. It requires constant monitoring, learning, and adjustments to your strategy. It's like a living ecosystem that needs care, attention, and occasional pruning. Staying static in this dynamic environment may lead to dwindling investment returns.

That's where continuous learning comes into play. Sipping from the fountain of knowledge that is Google's vast advertising platform can seem intimidating, but it's crucial for your campaign's success. Get familiar with response analysis, keyword trends, demographic targeting, and ad auction dynamics. Stay updated on new AdWords features, algorithm changes, and industry best practices. There's always something new to learn, and often, it can significantly improve your ad campaigns' performance.

Next, it's about making adjustments based on your learning. These adjustments might include your ad copy, keyword selection, targeting parameters, or bidding strategy. For instance, if your ads perform well among a particular demographic, you might target that demographic more aggressively. Or if a specific set of keywords costs too much but brings little return, you might want to reassess your use of those keywords.

Remember, the ultimate goal is to make your Google Ads investment as profitable as possible. To achieve this, keep an open, learning mindset and be ready and willing to make adjustments whenever necessary. That's the key to successfully navigating the ever-changing landscape of Google Ads.

Optimizing Your Google Ads Budget for Maximum ROI

Optimizing your Google Ads budget for the best possible return on investment (ROI) can seem daunting, but don't worry; with the right approach, you can maximize the effectiveness of every dollar spent. Before we get into the nitty-gritty, remember this golden rule: The optimization level largely depends on the performance indicators central to your business. These KPIs guide your budget adjustment behaviours and should always be kept in perspective.

Refine Ad Targeting

Efficient budget use starts by reaching audiences that are more likely to convert. Consider refining your ad targeting parameters with strategies such as geographic targeting, demographic targeting, or device-specific targeting. By tailoring your ads to reach your ideal prospects, not only do you enhance your ad performance, but you also ensure that you are investing your budget in initiatives that yield returns.

Focusing on High-Performing Keywords

Adjusting your investment based on keyword performance is a smart move. Put your money where it matters by identifying high-performing keywords and allocating more budget. On the opposite end, low-performing keywords could be a drain on your resources. Hence, it may be best to discard them or reduce their budget.

Implement Conversion Tracking

Without tracking conversions, how do you measure success and ROI? Implementing conversion tracking helps you identify what works and what doesn't, thus providing insight into areas that require more budget and those that you could potentially cut back on. Tracking assists in quantifying results, and that lays a foundation for more efficient budget spending.

Regularly Review Campaign Performance

Regularly reviewing your ad campaign performance allows you to make real-time changes that can save money or pivot resources to better-performing campaigns. By staying on top of your campaigns and frequently reviewing performance, it is possible to make ongoing optimizations that further leverage your budget.

Consider Dayparting

Dayparting, or focusing your ads during specific times of day, can be a strategic move for your budget. You can get more from your investment by concentrating on ad delivery during peak performance periods. This method requires a careful analysis of click and conversion rates at various times.

Remember that the world of Google Ads optimization is dynamic and ever-evolving. Continuously aiming for improvement and adaptation to emerging trends is vital. It's all about making informed, data-driven decisions to steer your budget toward high-yield investments.

Exploring Different Google Ads Bidding Strategies

Bidding strategies are at the heart of your Google Ads campaign. It determines how you'll pay for users to interact with your ads. What works for one business might not necessarily work for another. So, let's consider some popular Google Ads bidding strategies.

Cost-Per-Click (CPC) Bidding

Also known as Pay-Per-Click (PPC), this strategy involves paying for each click your ad receives. Cost-Per-Click bidding is an excellent approach for businesses interested in driving website traffic. Remember that the cost of each click can vary depending on your market and keyword competition.

Cost-Per-Acquisition (CPA) Bidding

With CPA bidding, you only pay when someone clicks your ad and then completes a conversion on your site. This could be filling out a form, purchasing a product, or any other desired action. The advantage? You're only paying for profitable interactions. However, a crucial prerequisite for this strategy is robust conversion tracking.

Cost-Per-Thousand Impressions (CPM) Bidding

This type of bidding is ideal for businesses aiming to increase brand awareness. With CPM bidding, you pay for every 1000 times your ad is shown. While this may not directly drive website traffic or conversions, it can effectively increase your brand's visibility.

Maximize Clicks Bidding

As the name suggests, this automatic strategy aims to get as many clicks as possible within your budget. It is well suited for businesses eager to increase website traffic but may lead to rapid budget depletion if not carefully monitored.

Enhanced Cost-Per-Click (ECPC) Bidding

ECPC is a semi-automated strategy where Google tweaks your selected bids to help achieve more conversions. It's another form of CPC bidding that works well for businesses focused on building conversion-related metrics.

Ultimately, your selection of bidding strategy will heavily depend on your specific campaign objectives and budget considerations. Once you have figured out what you aim to achieve with your Google Ads campaign, you can align it with the most suitable bidding method. Be sure to monitor the outcomes closely and implement necessary adjustments as required.

Understanding the Lifetime Value of a Customer in Google Ads

Understanding the lifetime value of a customer is a pivotal aspect of your Google Ads investment strategy. Why, you may ask? This value reflects the projected revenue a customer can generate throughout their relationship with your business. It's more than just a one-time purchase or conversion—it's about capturing enduring value.

Customer Lifetime Value (CLV for short) is centred around a core business tenet: it's often easier and more cost-efficient to retain existing customers than acquire new ones. Investing in Google Ads to reach new customers is essential, but understanding the value they bring in the long run can dramatically change how much you should invest.

  • Understand the Profitability of Your Customers: Are your customers just one-time purchasers, or do they use your service and products persistently? Make sure you assess the profitability of your customers over their lifecycle. This will help you determine how much to invest in converting potential clients through Google Ads.
  • Customer Retention: The longer a customer stays, the higher their lifetime value. Remember, a high customer retention rate boosts CLV, which justifies a higher Google Ads spend. Are you cultivating customer loyalty?
  • Track Customer Lifespan: Customer lifespan refers to the time a customer is continuously associated with your business. Monitoring this will help anticipate revenue flow and decide your Google Ads budget.

In conclusion, understanding the lifetime value of your customers can dramatically influence how much you need to invest in Google Ads. By comprehending how much value a single customer can bring over their lifespan, you can allocate your resources more effectively and maximize your Google Ads ROI.

Analyzing the Competition: How Much Are They Investing?

Examining your competitors' advertising activities can offer a wealth of insights. Regarding Google Ads, understanding how much your rivals are investing can help shape your budget and strategy. Doing so gives you a sense of the overall demand and competition for valuable keywords.

Conduct a Competitive Analysis

To start, conduct a competitive analysis. Several online tools can help you analyze the estimated spending of your competitors on Google Ads. Understandably, these figures will be estimates, but they will give you a ballpark figure and guide you through setting your budget.

Gauge Keyword Competition

Next, try to gauge the competition level of your industry-relevant keywords. If you notice that your competitors are bidding high for specific keywords, it might be a signal that those keywords are generating valuable traffic and leading to conversions. However, it's also worth considering that it could potentially inflate your ad spend.

Learn from Your Competitors' Strategies

Lastly, scrutinize your competitors' ad strategies. Study their ad copy, offers, and landing pages. Successful competitors likely have refined their Google Ads strategies over time. Learning from their tactics can give you a shortcut to a successful strategy, saving you time and money.

However, it's crucial to understand that what works for your competitors might not work for you. Tailoring these strategies to fit your business is vital. Use this knowledge not as a blueprint but as a guiding tool to inform your unique strategy.

So, while knowing your competitors' spending is a good starting point, let it not dictate your budget. Align it with your business goals, profitability, and the value you want to drive from your campaigns.

Avoiding Common Budgeting Mistakes in Google Ads

As you begin allocating funds to your Google Ads, managing your budget can be daunting. However, understanding common pitfalls can pave the way for a more effective advertising investment. By avoiding these common budgeting mistakes, you ensure that your hard-earned money is working to bring worthwhile returns.

Overlooking the Quality Score

The Quality Score is a critical parameter in the Google Ads platform. It significantly impacts your ad placement and cost-per-click (CPC). Ignoring this could result in paying more for lower ad placements. Improve your Quality Score by optimizing your ad relevance, landing page experience, and expected click-through rate (CTR).

Setting and Forgetting Your Ads

Many businesses presume that their work is done once they've set up their ads. However, this practice often comes at a high cost. Google Ads require consistent monitoring and adjustments to enhance performance and prevent budget waste. Make necessary tweaks based on your campaign's performance metrics to maximize your budget utility.

Confusing Budget with Bids

There's a common misconception among newcomers in the Google Ads space in which budget and bids are often confused. You must understand that your budget is the maximum amount you're willing to spend on a campaign per day, while your bid is the most you're ready to pay for a single click on your ad. This understanding is crucial for effective budget allocation and bid management.

Ignoring Negative Keywords

Another common slip-up is not utilizing negative keywords. You do not want your advertisements to appear for these search terms. Strategically implementing negative keywords ensures that your ads are not served to irrelevant or unqualified audiences, thereby maximizing the valuable potential of each ad spend.

Not Setting a Proper Geographic Target

Lastly, do not make the mistake of overlooking geotargeting features. Be sure to correctly set your geographic targets to reach audiences most likely to convert. If you fail to select a proper location, you might waste a substantial amount of your budget on areas outside your service zone.

By being mindful of these common budgeting mistakes, you're well on your way to making the most out of your Google Ads investment. Remember, the goal is to spend and invest wisely for a return that supports your business growth and objectives.


In conclusion, understanding how much to invest in Google Ads is crucial in determining one's campaign success. While Google Ads can be highly effective, the key is to find the sweet spot in terms of investment that delivers a return without breaking the budget.

WebSuitable can play a pivotal role in determining your optimum ad spend. Our specialty is managing Google Ads campaigns profitably so you can focus on what you do best - running your business.

Our digital marketing specialists have in-depth knowledge of the Google Ads ecosystem, and they use the latest strategies to ensure your campaigns generate high-quality leads and sales. They continuously monitor your campaign performance and optimize it to achieve better results.

Remember, your level of investment in Google Ads should align with your business goals, the competitive landscape, and your overall digital marketing budget. But without professional guidance, it might be a tricky equation to solve.

What's the next step? We invite you to book a free, no-obligation strategy call with one of our digital marketing specialists. We'll review your current ad spend, benchmark it against your industry, and help create a tailored strategy to ensure your Google Ads investment delivers maximum value.

Head over to our Get Started page and book a call today. Whether a small-scale campaign or a broad, aggressive approach, WebSuitable can deliver results that suit your budget and business objectives.

Your ideal Google Ads strategy is just a click away!

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