How much should I spend on Google AdWords? is a question that we get asked very often. Earlier this blog provided a strategy answer.
[ Note: This post was originally published on October 28 , 2014. Due to the great interest of our dear readers and many changes in the digital landscape the post is updated on March 2, 2021]
Since we are happily at the vaccination stage of COVID-19 we can expect that life will return to normal in the not too distant future. However, we all realize that buyer behavior for both consumers(B2C) and businesses (B2B) has changed forever. With the huge adoption of online research and buying with COVID lockdowns and stores closed the public has become far more comfortable with online commerce.
As the new image with this post indicates, if you think of a physical store on main street – they always did offline advertising. These would include welcoming signage, ads in the local newspaper, sponsoring community events, working with the local chamber of commerce on opportunities, leaflets with special offers, a yellow pages listing etc.
All this offline advertising did help in getting customers aware of the store and consider it if they were walking down main street. Some would walk in and look at what was offered, talk to the owner and might come back even if they did not buy something on their first visit. However, the dilemma of Half the Money I spend on Advertising is Wasted continued with businesses large and small with offline advertising. You never knew exactly how many people came to your store directly after seeing your newspaper ad or mainstreet billboard.
Fast forward to life after Covid (hopefully 2021 and certainly 2022). All customers have become used to online environments and every store that could – have indeed strengthened their online presence.Meanwhile, Google has also been working in 2020 on the performance planner that allows advertisers who have had 100 conversions in the last seven days to use Google’s machine learning to estimate what spending will result in what level of conversion. Conversions could mean an e-commerce transaction or a sign up that is valuable to your business. Your past results are combined with global search behavior to predict future results at different levels of ad spend.
What if you have not been advertising through the pandemic ? And are just thinking of starting or restarting.
Here are some tips for new advertisers and those advertisers who are reviewing their spend on Google AdWords:
- The daily budget is all upto you: The daily budget can be set in Google AdWords very easily so there is no risk of over spending. You can decide to start at say $10/day that works out to $ 300 a month.
- What do I get for $10/day ? : Let us say you had a budget of $10 per day, you pay for keywords that people use to search for your business. The price of keywords is decided in an auction and depends a lot on the competition. If you are selling holiday gift items online, you can expect that the word “holiday” will become more expensive as Thanksgiving gets nearer. However, the more specific your holiday gift item, the easier it is to bid on keywords as there is less competition.
- A good idea is to start with smart bidding to take advantage of machine learning: Our earlier advise (in the 2014 post) was to do manual bidding and start at $2 per keyword. Now Google offers smart bidding that is based on machine learning. Once you fix your daily budget, it’s therefore a good idea in 2021 to go with smart bidding. If your ad account is well structured you can expect 5 visitors to your website. Getting 5 visitors to visit your brick store is very difficult spending only $10 a day.
- Are there exceptions to five new visitors a day with $10/day budget ? Yes, and that occurs for highly competitive words. According to Elisa Gabbert at Wordstream many words cost more than $10 each. There is a way out of this budget crunch if you think marketing in totality as suggested in several of our adwords posts.
- You can measure which words result in conversions: It is fairly easy to measure which words lead to conversions, be it orders or sign ups or time on page. This is a big plus compared to traditional advertising. Once you know, you can change what you are doing.
The reason we like Google AdWords is because getting a visitor to your website builds your brand awareness at the very least. You do not pay for “views” of your ad and pay only for clicks on the ad based on the keyword that triggered the ad.