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Three ideas how to decide your AdWords budget

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Google Employee
# 1
Google Employee
One of the first things you must fill out when you set up your AdWords account is your Daily Budget. If you have never used AdWords before, you may find yourself at a loss when it comes to choosing an amount. Your Daily Budget can impact your campaign performance, your costs and your return so we recommend that you think about it carefully before choosing a figure. Below, we've outlined the most important factors we think you should consider when choosing your Daily Budget. 
 
1. How your budget works - Your Daily Budget is the maximum amount you are willing to spend per day on your campaign. Make sure you choose an amount that you are comfortable spending in a day! If you have a monthly budget for AdWords, we recommend dividing that amount by 30.4 (the average number of days in a month) and you have your daily budget figure! 
 
One thing to note is that you can exceed your daily budget by 20% per day. However, in a given billing period, you're never charged more than the average number of days in a month times your daily budget. And finally, your budget is not set in stone - you can edit this figure at any time Smiley Happy
 
2. How your budget affects your costs - AdWords is essentially a series of auctions so the main impact that your Daily Budget will have on your costs is that it caps the amount you will spend in your billing period. As it is an auction, you can expect your costs to vary per day.
 
3. How your budget and your bids work together - Your daily budget is completely separate from your bids. However, as it caps the amount you spend in a day, it can impact your bidding strategy. Your CPC (Cost per click) is the maximum amount you want to pay when someone clicks your ad. If you have a low daily budget, this may impact the amount your CPC figure which can impact your campaign's performance.
 
Does anyone else have any tips on how to decide your first daily budget?
 
Hopefully, you found this information helpful! For more information on deciding a daily budget, please read this article.

 

2 Expert replyverified_user

Re: How to decide your budget

Top Contributor
# 2
Top Contributor

Thanks llyons26, I might add one or two points...

 

When you set up a new campaign it can often be difficult to know what's going to happen.  Even those of us long in the tooth can still be surprised when a campaign performs above expectations (or below them).  Adwords accounts also need "tuning" over time as you see data and can analyse results and performance: It would be a very rare campaign indeed that worked perfectly from the first day it launched, never needing any changes.

 

For these two reasons I always recommend that people start with a fairly low budget - even if they intend over time to reach quite high.  Set a budget that is high enough to gather data but not so high that you spend a lot on poor quality clicks before the account is tuned.  This low budget period need not last very long - perhaps only a week or so - but it'll save you money in the long run when you ramp up the budget with the campaign in a better situation.

 

Jon

AdWords Top Contributor Google+ Profile | Partner Profile | AdWords Audits

Re: How to decide your budget

Explorer ✭ ☆ ☆
# 3
Explorer ✭ ☆ ☆

When starting out, I had a VERY low budget and chose the setting to show my ads evenly over time. I found that the combination of my max CPC bids and the low daily budget resulted in my ad periodically not showing as Google attempted to space out my impressions over the course of the day, even though I am not in a terribly competitive industry.

 

So in my experience, the size of my daily budget did have a relationship with my bids. I gradually increased my daily budget and adjusted my max CPC bids until I found a happy medium where my ad shows up much more often, but my costs have not increaesed dramatically. It definitely took a few months to get to this point.

Re: How to decide your budget

Google Employee
# 4
Google Employee

Thanks for the great advice. I agree that starting with a low budget is a good strategy. However, I would be careful not to set a figure which is too low as it will influence your campaign's performance and it may not give you an accurate picture of how your ad would perform if you invested more.

 

I recommend choosing somewhere between $5-$50 as a starting budget (depending on your industry and advertising budget of course) and allowing your campaign to run for one/two weeks before adjusting! As AdWords is an auction and every industry differs, there is an elemenet of trial and error to begin with.

Re: How to decide your budget

Top Contributor
# 5
Top Contributor

Hi llyons26, is that $5 - $50 budget per day or month?

 

I usually recommend a minimum of UK£100 per month to my clients, which works out roughly just over $5 a day I guess.

 

Jon

AdWords Top Contributor Google+ Profile | Partner Profile | AdWords Audits
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Re: How to decide your budget

Google Employee
# 6
Google Employee

Hi Jon,

 

Exactly, $5-$50 a day so your recommendation is absolutely perfect. Obviously, it does depend on the size of each business and their marketing budget. 

 

Thanks, 

 

Laura

Re: Three ideas how to decide your AdWords budget

Visitor ✭ ✭ ✭
# 7
Visitor ✭ ✭ ✭

Re: Three ideas how to decide your AdWords budget

Visitor ✭ ✭ ✭
# 8
Visitor ✭ ✭ ✭

It totally depends, target market, competition, product demand. 5 USD is a nice daily budget if used wisely!