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how do i set up an adwords budget

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# 1
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i never used ad words before and wanted to know how to set up a budget for it.

How do i pay for it?

how much do i pay and what is that based on

Do i pay the same amount monthly?

 

1 Expert replyverified_user

Re: how do i set up an adwords budget

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# 2
Top Contributor

Hi leslie and welcome to the Community.  Those are big questions - bigger than you think probably - fortunately, budgeting for AdWords is one of my favourite topics...

 

How do I pay for it?  There are two main models of payment; pre-payment (Manual), where you deposit an amount of money with AdWords then this money is used for Ads until it runs out and post-payment (Automatic), where your Ads run continuously and you're billed on a cycle or when the amount owed reaches a certain threshold.  I'd expect most businesses selling products online to use the post-payment, Automatic method.

 

More on Payment Methods

 

How much do I pay?  Well, now this really is the big question.  If you're advertising a product or service that has a real value - a physical product like a TV, a watch, clothing, sports goods, etc. - then your advertising spend should be directly related to your income from that advertising.  In short, you must measure how much money your advertising makes you then apply that to your advertising spend.  In theory, if your advertising makes you a net profit, the only limit to your budget is how many potential customers are actually out there.

 

If you're advertising something that converts (sells) offline, e.g. a physical store, a service like plumbing or building or a restaurant, it can be harder to measure advertising success.  You must try though and AdWords can help with things like Offer extensions and call metrics.  However, the only way you may be able to tell is by observation.

 

The really tricky bit in the first case is determining how much to spend in the beginning, before you know if AdWords will make you money or not.  You have to spend enough to give it a fair chance, is the only answer I can give.  If you spend too little, you probably won't be effective (it's like only putting flyers on a dozen cars in a 2000 car lot) and this can give the impression AdWords won't work when actually spending more could cause it to return a net profit (it'll cost you more to put flyers on all the cars, but you'll probably get more sales to cover that cost).  I would always recommend that if cash is tight, rather than spending a little per day, "save it up" to spend a lot more in just a few days - it'll give you a better idea of how AdWords might work in the long run.

 

My "progress chart" on determining budget

 

Do I Pay The Same Amount Monthly?  If you end up with a long running Account you'll probably spend roughly the same amount once everything settles down.  However, as I've said above, since your spend should reflect your income, I'd expect a new Account to start small then increase over time until it reaches a natural limit.  This increase could be quite rapid.  For example if you spend £1000 in the first month and you get a net profit of £10,000, I'd imagine you'd want to spend quite a lot more the next month, but it could be much slower.  

 

You may also see seasonal variations that change what you spend.  

 

Bear in mind that when an Account is "settled" there may be months where you don't spend all your budget.  For example, if you set a monthly budget of $5000 and this is fully used during the summer months (you sell garden furniture), in the winter months your budget can still be set to $5000, but it may only spend $2000.

 

Does this help?

 

Jon

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