Tips For Calculating Your Google AdWords Budget

Written By SEO Team

Google AdWords is a hugely important advertising tool for both small and medium-sized businesses. Google, through its numerous products and tools, handles a massive amount of internet traffic and it gathers a lot of data about its users, every day. And all this information can be highly beneficial for your business. It also shows that Google knows its business, and it’s amazingly good at it: it can send a lot of traffic towards your website if you know how to use it.
One thing is for certain: with all this data, Google AdWords really knows how to truly boost your online advertising strategy. The question is – how much will it cost you? How big should your budget be to really see those awesome results? Here are some tips to help you out:
1. Your Test Budget
This is the first thing you’ll need to think about before planning your strategy. The test budget is where you determine what you want to get, how and when. It’s the perfect time to test out any idea, strategy or technique. It’s where you get the time to experiment – what works and what doesn’t work.

It’s where you can assess how your audience resonates with your ad: do they love it or hate it? How can it be improved? Should you abandon it?
So, how much money should you spend on your test budget?

Most experts will advise you to use a simple formula to determine your budget: multiply the number of keywords you want to test by your cost per click and by a minimum of 100 clicks. Usually, you should aim for a minimum of 100 to 200 clicks to really determine what works and what doesn’t work in your campaign.

For instance, if your cost per click is $2, and you want to test 15 keywords, you should have a test budget of roughly $3,000. You will definitely get some good and bad keywords, but this is actually a good thing – as now is the time to “prune” your strategy.
2. After the Testing Phase
As soon as your testing phase is over – and you notice good results for some of your keywords, DITCH the budget entirely. Keep in mind that the most successful advertisers simply don’t cap their advertising budgets, at all.

Simply put, if you invest $1,000 in your AdWords campaign, and you turn a profit of $2,000, why should you stop? Why would you cap your advertising budget? As long as you invest, you are making a profit. Assuming you want to grow your business, you should try to make that investment as many times as possible.
3. Focusing on ROI, not on the Costs
Really successful entrepreneurs don’t focus on costs – they focus on the profits. They focus on the ROI – the return on investment – that’s ALL they think about. They only want to maximize the return on their investment.

It’s not uncommon to hear clients asking for ways to invest even MORE in their Google AdWords campaigns. If they spend $10,000 every month, they want to spend $20,000, and get more clients, more sales and expand their business even further.
4. EPC, not CPC
EPC is the metric you should really pay attention to in your future campaigns. EPC stands for “earnings per click” and it’s a way more important metric than CPC (cost per click). If your EPC is high, you can outbid and outsale your competition.

Simply put, your business will get more clicks, more leads, more paying customers and will get a whole lot more visibility. This is how you truly win the Google AdWords game.
How to calculate your EPC?

– you just have to multiply the customer value (the amount of money you make from one customer, minus costs) with the conversion rate (the number of people who click an offer and become paying customers)

– the equation should look like this: Customer value X Conversion value

– for instance, if an average customer generates $150 and you have a conversion rate of 2%, your EPC is $3 – in this case you could advertise profitably on keywords with a CPC under $3, which is very good.

Obviously, if you manage to increase your EPC even further, you could expand your campaign and use even more keywords, further growing your business. This means more traffic to your website, products and offers, more leads, more customers and more sales. Maximizing your EPC should be the end game in Google Adwords and this is the place to really invest your money in.

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