Google Ads for Beginners: Defining Your budget

If you’re unsure how much you should spend on Google Ads, it is best to get things going with a Test Budget.

When you go all-in right away, you can experience unnecessary money loss because you have no idea about the ins and outs just yet. Testing things out is the safer route of action. You could get lucky running your initial campaign and raking in big profits, but this is not everyone’s case. If anything, it is the exception to the rule. Some business experience break-even. It is not as bad as losing money, which is yet another possibility. 

I have produced many projects that have been profitable from day one, but as I have said, this is not always the case for me or everyone. Think of your initial investment as a form of market research. At this stage, your aim should be to gain insights on which ad formats appeal more to your target audience. What’s more, is that you also figure out which keywords have high conversion rates and discover the most substantial areas on your landing pages through this initial screening. Both of which are good for your business.

Defining Your Test Budget

How will you know the right money allocation for your test budget? Start by increasing the number of keywords you want to monitor by the cost per click (CPC), with a minimum of 100 clicks. As a rule of thumb, you should have at least 100 to 200 clicks per keyword to realize whether it’s working for you. 

Allow me to provide you with an example. 

Suppose you are to evaluate ten keywords that cost $1 per click, a test budget of $1,000 to $2,000 is ideal. You will see an assortment of positive and negative keywords, landing pages, and ads after performing the initial test. This will give you a chance to narrow down your campaign strategy. Stick to the winners and bid farewell to the losers, resulting in a more profitable campaign.

After that, forget about the budget.

Once you’re earning from your campaign, your budget is considered old news, so ditch it.

Professional advertisers know that it is not ideal to cap your budget because advertising is to grow your business. Therefore, it is one of the most significant financial investments you can get into.

Put yourself in this situation. You are investing a dollar into Google Ads. In return, you are getting$1.25, $2, and $5. It sounds unnatural to limit your own earnings, doesn’t it? So, why skimp out on your advertising efforts?

Everyone wants their business to open more doors. For this reason, making investments regularly is one of the keys that can make it happen.

Ignore Expenses, Zero in on ROI 

If you want to be in control, stop drawing your attention to managing expenses. Instead, highlight your return on investment or ROI. It is where you should channel all your energy.

Some customers put in about $100,000 every month for Google Ads. It seems like a huge chunk of the budget, but they are totally fine with it. The majority of innovative financial investments always bring in a healthy profit. As a matter of fact, business owners who see results from investing in advertising want to invest more and more every time.

How do you figure out whether you’re expanding your advertising efforts or growing your market share?

Prioritize EPC, not CPC

When it comes to advertising, CPC is not the only metric to follow. Many advertisers work on their CPC to lower its value. Creating better ads to improve Google Ads scores is a good first step to get cheaper clicks, but you need to take one more step to land on both feet. 

It goes without saying that you shouldn’t stop discovering ways to increase advertising efficiency. But lowering CPC is not the end-all-be-all option.

You can’t only concentrate on cost per click (CPC). Lots of advertisers focus on getting their CPC down. They try to compose much better ads to enhance their Google Ads quality scores to get cheaper clicks. But that’s only half the formula. Your actual leverage when it comes to Google Ads lies in your earnings per click (EPC). Highest EPC means you can always outbid competitors, get more and more click, and eventually more leads and customers. It can serve as your finishing move to beat your competitors.

Calculating EPC

It’s fairly straightforward. You start by multiplying the conversation rate by your client value.

** Conversion rate refers to the percentage of people who click and make a purchase.

** Client value refers to the money you get from one customer less than the fulfillment expenses. 

Here you can see the formula: 

Conversion Rate X Customer Worth = EPC

If a customer spends $100 and your conversion rate is about $1, your EPC’s total number is 10.

This is good news. It means you could easily promote keywords using a CPC below a dollar.

If you increase your EPC to $1.5o to $2.00? You get more chances of boosting your quotes and gaining more market share. Your business will reap about 50% to $100 after increasing quotes by 50% to 100% based on my experience.

Those who really want to get in there and win in Google Ads should not neglect your EPC.

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