understanding google ads budgets and how our team recommends them

11 minutes ago

4 min read

Every piece of your Google Ads strategy plays a role in the performance and outcome of your campaigns, and budget is one piece of the puzzle we get a lot of questions about. How does it affect your campaigns? What is the right budget? Can a budget be adjusted? Can a smaller budget still see results? We’ll dive into these questions and more below to help you understand how budgets influence campaigns and help support your business goals.

What Does Your Google Ads Budget Affect?

First, it is important to understand that Google Ads is a pay-per-click model, meaning that your budget is utilized only when a user clicks on your ad. There are a few main components that a Google Ads budget directly affects:

Campaign Reach: How many users or potential customers see your ads.
Auction Competitiveness: How budget and ad quality influence your ability to compete against other businesses for placements.
Click Volume: How spend and average cost per click affect website traffic.
Data Collection: How sufficient traffic helps you or your team evaluate performance and optimize campaigns.

How Our Team Determines the Right Budget

When working with Google Ads clients, our team takes a look at all aspects of your business and your goals to determine the best budget. While a higher spend does mean more results, there is a balance to the budget. Too low, and you risk not seeing results. Too high and your entire budget might not be utilized. Here’s what we pay attention to when looking for that balance:

Business Goals: Is your goal brand awareness, driving traffic to your website, generating leads, or sales? This will define the type of campaigns built and the metrics that are tracked.
Industry Competition and Estimated Keyword Costs: Having a pulse on the industry and understanding what people are looking for and what they might be searching for can inform the structure of your ads and the keywords to target to get the best bang for your buck.
Target Audience and Geographic Reach: Who are you trying to show your ads to? Are there certain areas you want to target? Refining targeting can ensure the right people are seeing your ads.
Campaign Strategy: Past strategy and historical data can provide a lot of insight. If you’ve never run a campaign, you’ve come to the right place! Close monitoring in the first weeks to months can showcase where strategy can be tweaked.

What Can Your Budget Deliver?

Ad budgets can affect several parts of your campaign, and are customized to your goals and business. If you looked at budget only, here is an example for how that can vary, keeping in mind that there are many other factors that can affect campaign performance.

Metric	Example 1	Example 2
Ad spend	$1,000	$2,000
Estimated impressions	12,500	20,000
Clicks	200	400
Click-through rate (CTR)	1.6%	2.0%
Average cost per click (CPC)	$5	$5

These figures are illustrative assumptions, not industry benchmarks or guaranteed results. Actual performance varies by campaign, competition, targeting, and website experience.

Clicks are important, but there is more to the bigger picture. Targeting will help to narrow who sees your ads (persona, location, interests, etc.). Keyword and negative keyword selection will communicate to Google when the right time to show your ad is – it’s important for people to find you (or not find you) by what they are searching for. A positive website experience is important so when a user clicks on your ad and lands on your website, they can immediately find what they are looking for and learn more about your product or service. There’s more than meets the eye!

Monitoring and Adjusting Your Budget

So, how do we evaluate performance and key metrics? Blue Seven uses tools that gather the data so we can review and analyze what is working, what is not working, how seasonal shifts affect performance, necessary shifts in campaign focus, and what people are responding to.

To spend or not to spend (more)? When we evaluate campaigns, optimization is the primary goal, but sometimes comes a recommendation for increased ad spend. How do we decide when it’s time to increase budget?

Increase spend: When a campaign is consistently generating quality leads or conversions at an acceptable cost, and there is an opportunity to reach more potential customers or scale results. Other factors may also lead to an increased spend recommendation, such as: seasonality, special promotions, events, competition, and more.

Optimize first: When clicks are expensive, engagement is low, or campaigns aren't generating the expected conversions. Refining keywords, targeting, ad copy, and landing pages can help improve performance before investing more.

Frequently Asked Questions

How much should a small business spend on Google Ads?

There’s no one-size-fits-all budget for Google Ads. The right investment depends on your business goals, industry competition, target audience, and average cost per click. Our team considers these factors to recommend a budget that aligns with your objectives and creates opportunities for meaningful results. Reach out to us and we can help you get started!

How long should a campaign run before adjusting its budget?

Campaigns need time to collect enough data to evaluate performance. Rather than making frequent changes based on short-term fluctuations, we monitor key metrics like clicks, conversions, and cost per lead to identify trends and determine when adjustments are needed. The timeline depends on your budget, traffic volume, and campaign goals.

Can a smaller budget still generate results?

Yes! A smaller budget can be effective when campaigns focus on specific audiences, geographic areas, or high-priority keywords. However, a limited budget may restrict reach and slow data collection. A focused strategy helps make the most of your investment while setting realistic expectations for performance.

Does ad spend include agency management fees?

No. Ad spend is the amount paid directly to Google to run your ads, while agency management fees cover the strategy, setup, monitoring, reporting, and ongoing optimization of your campaigns.

Your ad spend might just be one part of your campaign, but it can affect all the other parts of your strategy, which it’s important to understand what and how it can affect. There is no “right” budget, and it all comes down to your goals, industry, and targeting. If you want to start advertising on Google or your campaigns just aren’t working, we can help! Connect with our team to learn more about our Google Ads management service.