What Google Ads Budget Does a Small Business Actually Need?

The most common mistake with Google Ads is not spending too much. It is spending too little for too long, learning nothing, and concluding that ads do not work.

Work backwards from one customer

Take what a customer is worth to you over a year. Decide what you would happily pay to acquire one. If one in four enquiries becomes a customer, you can afford a quarter of that number per enquiry. That figure, multiplied by the number of enquiries you want a month, is your budget. Everything else is guesswork.

A realistic floor

For a local service business in a district like ours, Rs 15,000 to Rs 25,000 a month of ad spend produces enough clicks to gather statistically useful data within four weeks. Below about Rs 8,000 the campaign will take so long to learn that you will lose patience before it does.

What the first month is for

Not profit. The first month buys you a list of the search terms that convert and the ones that waste money. Month two is when you cut the waste, and month three is usually when the cost per enquiry settles.

Numbers worth watching

• Cost per qualified enquiry, not cost per click.
• Search terms report – what people actually typed.
• Conversion rate of the landing page, separately from the ad.
• Call duration, if you track calls. A twelve-second call is not a lead.

And never send paid traffic to your homepage. A campaign deserves a page written for that one search.