What should my Google Ads budget be?

This is the million-dollar question every business asks when launching their Google Ads campaigns. Years of experience have shown us that this isn't a question that can be answered without understanding the client's goals for using Google Ads.

When we talk to companies about their goals, some tell us they're trying to generate a specific number of leads or prospects over a specific period of time, others want to generate a specific amount of revenue, and still others are trying to generate a specific amount of revenue and make their investment profitable.

Let's take an example to illustrate this point:

Guillermo is the marketing director at a private school. His main goal is to get parents to enroll their children in his school. Guillermo is going to create a Google Ads campaign, since today's parents search for schools and information about them online.

With Google Ads, Guillermo hopes to get 15 parent visits to his school each month.

This is the user experience with a private school:

1. Parents search the Internet

2. Visit the school's website

3. They fill out an online form

4. They visit the school

5. Enroll your child in school

6. The son starts the course at school

In this case, the goal of the Google Ads campaign will be to reach the admissions team with as many qualified parents (prospects) as possible through the online form they fill out. The admissions team's goal will be to get the parent to visit the school and convert that visit into enrollment.

Guillermo will need the following metrics, in collaboration with his agency, to determine his budget:

• Conversion rate of leads to visits: school visits / prospectuses.

Ideally, Guillermo will find this data in collaboration with the admissions team and will gather data from the last 6 to 12 months.

With this information, the agency will provide Guillermo with the following metrics:

• CPC: Based on the agency's experience and information provided by Google Ads.

• Conversion rate of website visits to leads (leads = qualified prospects or parents):

This data will be analyzed based on the average monthly website visits provided by Google Analytics and the leads generated by the website per month (information that will be provided by Guillermo if the website tracking system has not been configured).

Read our article about conversion ratios if you want to know more about this topic.

Suppose we obtain the following observations:

• Conversion rate of prospects to school visits = 25%

• CPC: € 0.85

• Conversion rate of website visits to leads = 1.75%

With this data, we can begin to calculate the budget we need.

• Prospects = number of school visits / conversion ratio of prospects to school visits

  Prospects = 15 / 25% = 60 prospects. Google Ads will need to generate 60 leads each month to get 15 visits.

• Website visits = number of prospects / conversion rate of website visits to prospects

  Website visits = 60 / 1,75% = 3,829 website visits.

• Cost = website visits x CPC

  Cost = 3,429 x €0.85 = €3,428

Guillermo will need to invest €3,428 in Google Ads to obtain 60 leads and 15 visits to the school.

Let's take another example using a different assumption:

Guillermo has an annual budget of €25,000 to invest in Google Ads. Based on the findings above, these are the calculations:

• Website visits = Google Ads spending / CPC

  Website visits = €25,000 / €0.85 = 29,412 website visits.

• Leads = website visits x conversion rate of website visits to leads

  Prospects (leads) = 29,412 x 1,75% = 515 prospects.

• School visits = Leads x conversion ratio of leads to school visits

  School visits = 515 x 25% = 129 school visits.

Guillermo will generate 129 visits in a year with a budget of €25,000Of course, Guillermo will need to take seasonal fluctuations into account when managing his Google Ads budget each month.