SEM Budgeting: How much should we spend on Google Ads?

how much do I need to spend in Google Ads
SEMDEEPDIVE
As the founder of SEMDEEPDIVE, Joshua Cohen frequently encounters a recurring question: "What's the right Google Ads budget for my business?" Get ready for a thorough deep dive into this subject.

This article delves into Google Ads and SEM budgeting considerations at-large, offering guidance and practical advice to approaching SEM budgets of all sizes.

With more than 15 years in SEM account management, I’ve managed campaigns ranging from modest monthly amounts of less than $500 to overseeing expenditures well north of $250,000 per month.

One lesson I’ve learned: High-Spend SEM accounts can achieve incredible successes at rapid paces but even the most well-resourced businesses do not have to start with large monthly budgets to develop successful and scalable SEM campaigns.

IN THIS ARTICLE

how much do we need to spend in google ads

1. High-Spend SEM: Do I need to go large in Google Ads?

In scenarios such as campaign launches for major brands, national events, or lead generation for top hospitals & law firms, aggressive SEM budgets may be necessary from the onset. Budgets in these cases can range from $30,000 to several million dollars per month. New business ventures may also launch SEM campaigns at these high levels to have maximum impact right out of the gate.

High-spend accounts have a range of monikers, the most common are: 

  • Enterprise SEM
  • Corporate SEM
  • Large budget SEM
  • High-spend SEM

For the purpose of this article, all of these monikers are simply referring to campaigns with an average monthly spend of $30,000 and up. 

Question: Are there advantages to utilizing High-Spend SEM campaigns?

Short Answer: Yes.

Here Are Some of My Favorite High-Spend SEM Advantages:
  • Rapid data collection. 
  • Accelerated SEM Optimization processes.
  • Impression-share dominance that can lead to optimal CPAs & ROIs.

When done right, high-spend SEM campaigns can propel businesses through exhilarating journeys of financial and business growth. I’ve had the pleasure of leading many such charges over the last fifteen years across multiple industries.

Enterprise SEM campaigns can see significant improvements in Cost-Per-Acquisition and overall ROI after achieving market dominance of specific keyword targets. 

Of course, I’m merely touching on the tip of a much larger iceberg. High-spend SEM account management requires high-levels of expertise and intense campaign oversight that encompasses a myriad of professional skillsets.

and.. What about data? 

You may have noticed that I haven’t mentioned the importance of data & conversion tracking yet, but we’ll get there.

2. Finding Success with Small-Budget SEM

Let us hone in on small-business SEM budgets.

Question: Can small-budget SEM campaigns have meaningful impact on my business?

Short Answer: Yes.

First, let’s define small-budget SEM

I consider small-budget SEM as SEM accounts with total budgets of roughly $1,000 to $3,000 per month.

What to Expect with Small-Budget SEM:
  • Expect success in proportion to budget and on a longer timeline.
  • Data insights often take longer to develop due to limited paid traffic, but will emerge in time.
  • Targeting specific locations at launch can prove beneficial and provide a baseline for future expansions.
  • Small budgets can benefit both large and small businesses looking to:
    • Initiate long-term growth strategies for leads and sales.
    • Test the waters with new marketing ideas.
    • Test new product lines.
    • Test new websites and conversion funnels.
    • Establish proof-of-concept.
 
While typically slower in data accumulation, lower budget accounts can effectively meet marketing objectives over time. Success here often hinges on patience, strategic planning, and data-driven adjustments.
 
Location-targeting can be a make it or break it factor for small budget SEM accounts.
 

For example, a new boutique clothing store based out of Philadelphia may find greater success targeting a local zip code rather than spreading a SEM budget across the entire US.

A $2,000 monthly budget may not be enough to effectively saturate and engage customers in all 50 states, but it may be more than enough to effectively target several keywords and zip codes.

How about SEM budgets under $1,000 per month?

I generally won’t accept clients or businesses looking for micro-budgets totaling under $1,000 per month, as a matter of practicality.

Most reputable SEM companies have a minimum monthly retainer, SEMdeepdive is no different in this regard. Our minimum monthly retainer is $500 for SEM services. Therefore, it wouldn’t make sense for me to onboard a business with a total monthly budget of $600 and leave only $100 for monthly Google Ads distribution.

Most of my SEM clients start at or above a $2,000 monthly budget allocation. 

What about SEM accounts between $3,000 & $30,000 per month?

Indeed, let’s briefly discuss those ‘middle children’ of SEM budgets. Although this article primarily covers budget extremes, mid-level SEM budgets, usually between $3,000 and $30,000 per month, are key levels for many businesses.

These campaigns combine strategies from both smaller and larger campaigns, emphasizing a more aggressive data collection and strategy adjustments.

This budget range often marks a significant growth phase for many businesses in SEM.

3. Large or Small: Opt for a Data-Driven Budget Escalation

For high-spend SEM and small business budgets alike, my preferred path to SEM success often includes similar approaches and strategies:

Launch Phase
  • Expert Manual CPC campaigns often serve as my SEM account foundations.
    • With cost-per-click models, we only pay for clicks, not impressions.
  • Businesses without historic sales or lead data can initially leverage soft conversion metrics.
  • Focus will rapidly shift to hard conversions (purchases, leads, etc.) as paid search data becomes more robust.
  • Conservative initial launches are complimented by incremental budget increases (hourly, daily, and weekly)
  • An aggressive & meticulous blacklisting process for negative keywords is initiated and maintained to mitigate wasted ad spend. 
Planning SEM Budgets: A Structured Approach with Adaptability

I typically plan SEM budgets in 3 to 4-month increments. Successful SEM, like many marketing strategies, requires time to unfold and yield results.

Budget Timeline Examples:

  • High-Spend SEM (Example A):

    • Monthly Budget: $100,000
    • Period: 3 months
    • Total Spend: $300,000
  • Small-Budget SEM (Example B):

    • Monthly Budget: $1,500
    • Period: 3 months
    • Total Spend: $4,500

Flexibility with Monthly Rollovers:

During the initial launch phase, I recommend rolling over any unused budget to the next month. This approach maintains the overall budget while allowing for adjustments based on campaign performance.

  • Example Rollovers:
    • If Example A spends $80,000 in the first month, the remaining $20,000 is moved to the second month.
    • For Example B, if only $1,000 is spent in the first month, the unused $500 is added to the next month’s budget.

These examples illustrate how budgets are managed with flexibility within their 3-month allocation, ensuring both adaptability and fiscal discipline.

The Benefits of Monthly Budget Rollovers:
  • Increased SEM Optimization Flexibility: Allows for real-time adjustments based on early performance indicators.
  • Enhanced Campaign Adaptation: Facilitates strategic shifts to capitalize on emerging opportunities or address challenges.
  • Improved Overall Account Performance: The ability to reallocate funds can lead to more efficient spending and better campaign outcomes over the budget period.

4. Look at Your Competitors' SEM Budgets Before You Spend a Dime.

Before launching a new Google Ads campaign, I always assess what competitors are spending.

Here’s a quick rundown incorporating the use of third-party aggregates for an informed start:

  • Industry Averages: Understand the general SEM budget within your field. Don’t be deterred by high numbers; tailor your spend to target specific market segments or locations, not necessarily match top spenders.
  • Competitor Spectrum: Identify both direct and broader competitors. Analyze their SEM spending to gauge investment levels and effectiveness.
  • Keyword Discovery: Find out what keywords competitors are targeting. This can lead to new opportunities or reveal oversaturated areas to avoid. It’s about smart choices, not just following the crowd.

This approach helps in crafting a budget and keyword strategy that’s grounded yet flexible. As the campaign grows, I shift focus to detailed data from our own Google Ads account and closer competitor insights for ongoing optimization.

5. Conversion & Data Tracking in SEM is Required

Conversion data is absolutely essential in SEM. It’s often what makes or breaks a campaign. Here’s my approach:

Pre-Launch Priority:

  • The setup or optimization of data & tracking systems. (such as Google Analytics)
  • Sidestep typical traps of new Google Ads accounts:
    • Establish Key Performance Indicators (KPIs)

Data Integration: Non-Negotiable:

  • No campaign launch without solid conversion tracking and data unification.
  • SEM’s a science, not guesswork – every seasoned pro knows this.

Why It Matters:

  • Informed decisions, not hunches, drive success.
  • Data guides everything from targeting tweaks to ad creative refinements, ensuring our strategies hit the mark.

6. Set the Course for Sustained Growth & Lasting Partnerships

The ultimate goal of an SEM campaign is not just short-term success but sustained growth and the development of lasting partnerships. This requires a consistent, long-term strategy focused on continuous improvement and adaptation.

Regularly revisiting and refining SEM tactics ensures campaigns stay relevant and effective.

Building strong relationships with my clients or stakeholders based on transparency, results, and ongoing support fosters trust and sets the foundation for long-term success in the dynamic world of digital marketing.

7. Quick Takeaways on SEM Budgeting

As we wrap up our discussion on SEM budgeting, let’s revisit the crucial elements for determining the ideal Google Ads investment for your business:

  • Tailor Budgets to Business Needs: Effectively align your SEM spending with your business goals, ensuring the budget fits whether it’s high-spend or small-scale.
  • High-Spend SEM for Broad Reach: Ideal for extensive projects or established brands, high-spend campaigns (usually over $30,000/month) facilitate rapid data collection and strong market presence.
  • Maximizing Small-Budget SEM: With budgets typically between $1,000 and $3,000, these campaigns are perfect for targeted marketing and steady growth.
  • Adaptable Strategy Development: Begin with manual CPC bidding, evolving strategies based on data insights, suitable for all budget sizes.
  • Structured Budget Planning: Opt for 3 to 4-month budget cycles, incorporating rollovers to enhance adaptability and performance.
  • Competitive Analysis: Before starting, thoroughly assess competitors’ spend and strategies for better-informed budgeting and keyword choices.
  • Importance of Data and KPIs: Emphasize accurate conversion tracking and data integration, establishing clear KPIs to measure and guide campaign success.
  • Long-Term Growth and Partnerships: Aim for sustained growth and enduring partnerships, continuously refining SEM strategies for lasting effectiveness.

Incorporating these strategies and focusing on clear KPIs will help you tailor your Google Ads spending to meet your specific business goals, ensuring effective and sustainable SEM campaign performance.

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