How To Determine The Right Google Ads Budget and Maximum CPC
One of the common question I get when talking with a potential client is “how much budget should I allocate monthly to Google Ads” and “how much should I pay per click”
Based on many years of experience, allotting the right budget and CPC is very important if you need your campaign to be a success.
If your ads budget is too small, you will end up being limited by budget and if your budget is too high, your budget will be under-utilized.
The same is true with your CPC.
If your CPC is too small, you’ll end up not ranking on the top three positions on Google which is the best place to rank if you’re looking for people who will immediately buy your services/products.
Sadly, when it comes to choosing a budget and maximum CPC, a lot of people do it the wrong way.
They choose the path of guess work rather than using data to make insightful decision.
The best way to determine Google Ads budget and maximum CPC using data is to use Google Ads keyword planner’s own “search volume and forecast”
Search volume and forecast will help you see search volume and other historical metrics for your keywords, as well as forecasts for how they might perform in the future.
Search volume and forecast will help you remove guess work when determining an ad budget and maximum CPC.
It lets you make an insightful decision by utilizing data that has been collected on your target keywords.
Why search volume and forecast is ideal with determining your campaign Budget and CPC
- It takes into consideration, your target keywords search volume, target location, CTR and CPC history.
- It lets you add a maximum CPC bid that you can afford.
- It uses your preferred maximum CPC bid, keywords monthly search volume along with historical click through rate and CPC data to stimulate real life scenario.
- Using your preferred maximum CPC, it will help you calculate daily, average ad position and monthly ads budget.
- It will help you determine how much to bid for the top three spots on top of search engine result pages
Below is how to use search volume and forecast report to figure out your campaign monthly ads budget and maximum CPC.
Go to Google Ads keyword planner
Head over to Google Ads keyword planner here
Click on “Get search volume and forecast”
Add your keywords
Add your target keywords separated by commas and click get started.
Add your preferred location
Once you have added your keywords and hit “Get Started” the next step is to edit location and add your preferred target location.
Click on location at the top of your screen, enter your preferred location and click save.
Add Maximum CPC
To add your preferred maximum CPC bid, click on the maximum CPC bid to edit and enter your preferred CPC bid.
In the case of the image below, click on the A$1 to edit and enter your preferred maximum CPC bid.
After that, Google algorithm will do the rest.
Note: This test is to give you a clue on how many clicks you’d get at a given maximum CPC using historical data.
In real life, you may not get the same results as there are many factors that may prevent you from getting the same result like your ads copy, quality score and how much your competitors are bidding on your keywords.
So, let’s assume you added A$1 as maximum CPC bid for all your target keywords.
Your ads will get a total of 150 clicks at a cost of A$99 from 5.9k impression, 2.5% CTR, average CPC of A$0.67 and average position of 1.8.
All this could be achieved from a daily budget of A$4.81 and a monthly budget of A$99
If you are satisfied with the total number of clicks, daily and monthly ad budget based on historical data then you are good to go.
But if you’re not satisfied and would like to increase or reduce CPC, then you will repeat the process all over again until you are satisfied with the results.
Note: If you reduce your maximum CPC, the number of potential clicks (or CTR) will reduce.
And if you increase your CPC, the number of potential clicks (or CTR) will increase.
