If you’re thinking about running Google Ads, one of the first questions you’ll probably have is: how much do I actually need to spend?
Unfortunately, there isn’t a neat answer like “every small business should spend £500 a month.”
A sensible Google Ads budget depends on what you sell, where you want your ads to appear, how competitive your market is and, most importantly, what a new customer is actually worth to your business.
You don’t necessarily need a huge budget to make Google Ads work. But you do need enough budget to generate meaningful data and give your campaigns a realistic chance of producing results.
What is a realistic Google Ads budget for a small business?
For many local businesses, I’d rather see a smaller, well-targeted campaign than a large budget spread too thinly across lots of services and locations.
For example, if you’re a Shropshire business with £500 a month to spend, trying to advertise every service you offer across the whole of the West Midlands probably isn’t the best use of it.
It may make much more sense to concentrate that £500 on one or two profitable services in the areas you most want to work in.
Before deciding on a budget, I’d look at:
- How much people are actually searching for your service
- The likely cost per click
- How many clicks your budget could realistically buy
- How many of those visitors are likely to become enquiries
- What an enquiry or new customer is worth to your business
- How much competition there is in the locations you want to target
That gives you a much better starting point than choosing a figure because it happens to sound affordable.
Start with what a customer is worth
This is one of the most important parts of setting a Google Ads budget.
Imagine you’re spending £600 a month and generating six genuine enquiries from it.
If one of those enquiries turns into a £5,000 job with a healthy margin, the campaign could make commercial sense.
If your average customer only spends £50, the same numbers tell a very different story.
That’s why I don’t judge Google Ads simply by how many clicks an advert receives or whether the cost per click looks expensive. The important question is whether the advertising is contributing to profitable business.
How much does a click on Google Ads cost?
This varies enormously.
Some searches might cost a couple of pounds per click. Others can cost £10, £20 or considerably more, particularly in competitive industries.
Location matters too. The cost of advertising a service in Shropshire may be very different from targeting the same search across Birmingham, Manchester or the whole UK.
Before recommending a budget, I look at the actual search market around the business rather than applying a standard figure to every account.
Don’t spread a small budget too thinly
This is probably one of the biggest mistakes I see with smaller Google Ads budgets.
Say you have £500 a month.
That’s roughly £16 a day.
If that £16 is being divided between five services, multiple campaigns and a huge geographical area, Google doesn’t have much budget to work with for any one of them.
I’d usually rather identify where the strongest commercial opportunity is and focus the budget there first.
Once you know what’s generating enquiries and sales, you can make a more informed decision about whether increasing the budget makes sense.
How long should you test Google Ads for?
I’d be cautious about judging a campaign after a week or two.
Google Ads needs enough activity to tell you which searches, adverts and targeting are actually producing useful results.
That doesn’t mean you should keep spending indefinitely on something that clearly isn’t working. It means your initial budget should allow you to collect enough information to make sensible decisions.
During that period, I’d be looking beyond clicks and impressions at what happens afterwards.
Are people calling? Are they completing forms? Are those enquiries relevant? Are they becoming customers? And ultimately, is the value being generated enough to justify what you’re spending?
Should you increase your Google Ads budget?
Not automatically.
If a campaign is spending £500 a month profitably and regularly running out of budget while there is still good-quality demand available, increasing the budget could make sense.
If the campaign isn’t generating worthwhile enquiries, simply putting another £500 into it probably isn’t the answer.
I’d want to understand why it isn’t performing first.
The problem could be the keywords, targeting, landing page, conversion tracking, offer or even the underlying level of demand.
More budget doesn’t fix those things.
Work out a sensible starting budget
If you’re not sure where to start, I’ve created a free Google Ads Budget Calculator to help you get an initial idea of what your budget could deliver.
It won’t tell you exactly how many customers Google Ads will generate. No calculator can realistically promise that.
What it can do is help you understand the relationship between your budget, likely click costs and the number of enquiries you may need to make the numbers work.
Want me to look at the numbers with you?
If you’d rather have someone look at your market, likely search demand and advertising costs before you commit to a budget, I can help with that too.
My Google Ads management service is built around whether paid search makes commercial sense for your business, rather than simply encouraging you to spend more with Google.
I can look at what people are searching for, likely costs, your geographical targeting and what you need the advertising to achieve.
And if I don’t think Google Ads is the right place to put your marketing budget, I’ll tell you that too.
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