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How Much Should A Small Business Spend On Google Ads

How Much Should A Small Business Spend On Google Ads
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How much should my business spend on Google Ads? Okay, How long is a piece of string? So, the simple answer to this is, as I said earlier on, you need to test. I don't know your situation whether you're starting a new campaign or you have been running campaigns before and you want to either go up or go down.

If you are new, spend the amount of budget which you are comfortable to lose. Don't expect anything in return. And you say okay I've got this much money. I'm going to try to test it and see what happens. If I don't get anything I can live with it. But don't spend an amount which is going to really affect your business or your lifestyle.

What I mean by that is that you are unable to pay your mortgage or your rent or your expenses or and all that. Never do that. Only play safe. Spend the money, test it. If you start to get returns, you want to reach the breakeven point as quickly as possible because then it is self-funding. It's self-fulfilling. You don't need your cash flow will not get affected because it is paying for itself, right?

You run ads, you get leads, you get customers, customers pay you, you get a profitable return on investment, you put more money in Google and you rinse and repeat. That's what I would do. The question should be how quickly can I reach the breakeven point so that it doesn't affect me and once you get a profitable and a positive ROI budget should not come into question because as long as you can keep on servicing those leads or you've got enough stock to deliver to the customers you keep on scaling it because it's not affecting your cash flow at all so you what you want to do is to reach the break-even as quickly as possible and then keep on scaling.

This depends on a lot of factors. I’ll share some advertising facts I’ve learned over the years. They may help you make your decision.

Your Advertising Budget Should Be Varied

You don’t want all your eggs in one basket. But you also need to spend money on advertising channels that generate revenue for you. When you get started, you should try out many different options to see what works best for your business.

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But It Shouldn’t Be Too Diverse

Because in general, you will find that 20% of the ads you show make 80% of the revenue. To know about ads, you need to track and measure your Google Ads campaigns. So drop the non-working ad campaigns.

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Sales Are Essential To Success

You can hide a lot of problems in business if you can get sales. So your marketing budget should reflect this fact. If you can spend a dollar to make a profit, spend it. If your ad campaigns are run efficiently, then more investment will lead to more growth. If they are swollen, you will only bleed money.

Don’t get me wrong. Google Ads is a great platform and you should budget to test it out. But it’s not for every business. You may see better results on Facebook Ads. Even Bing Ads is competitive in some sectors. But don’t assume anything. Test different ad channels and see what turns out.

With all that said, a good advertising budget is about 10-20% of the revenue. Invest more if you want to grow faster and you know what you’re doing. But be careful. Growing too quickly can cause problems. And throwing money at ads without understanding metrics is a good way to lose money.

Uzair Kharawala

Written by Uzair Kharawala

Partner at SF Digital Studios, a Google Premier Partner agency. Uzair has been helping businesses grow with Google Ads since 2002 and teaches it every week on YouTube.

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