Some business owners can’t comprehend spending a $200 a day budget for Google Ads. As a matter of fact, most businesses don’t even appear in Internet searches for their products and services.
If you’re going to run and build a successful business it’s imperative to expand your mindset and consider the big picture.
If you’re a local business chances are you have search equity. Search equity means each day a certain number of people search for your products and services on the Internet.
The available amount of search equity depends on the following questions:
How large is the area you service?
How large is the population?
How much competition is in your area?
Do the Research First
If you’re going to do Google Ads the first step is to determine how much search equity is available.
The next step is to determine the cost per click (CPC) which is driven by competition and the inventory that is available.
For example, if there are 200 searches available (potential inventory) and there are multiple businesses competing for those searches, it raises the cost (value) of the inventory.
There is a tool inside the Google Adwords dashboard called the Keyword Planner which you can use to get an idea of how much inventory is available for your campaign.
Let’s look at some sample variations using the same keywords for a few different demographics.
For this experiment we are going to use the niche window installations and we will break it down in 3 different markets to compare the data.
Los Angeles California
The graphics above were all taken straight from Google Adword’s Keyword Planner. The information we are evaluating over the 3 markets is how many potential monthly searches are performed, the competition level, and the cost range to be at the top of the search.
First off let me say these numbers are not be taken literally this is mainly to give you some sort of a perimeter, they can be higher or lower. Not to mention the numbers change considering how many companies are advertising during any timeframe.
As you are in the first experimental steps of a Google Adword campaign the real numbers will reveal themselves.
Let’s consider the 3 markets and what these numbers tell us.
The most important consideration is most clicks happen in the top position, so any business there is getting the lion share of the action.
Take a look at the keyword window replacements near me in Nashville TN. On average there are 210 searches in 30 day’s time, the competition is medium which is good. This tells me that not a lot of companies in this niche are using Google Adwords or at least not properly because they are not impacting the inventory very much.
The cost to be at the top of the page for this keyword is $4.10 on the low end and $21.46 on the high end.
Looking at Atlanta for the same keyword there are potentially 140 searches and competition is higher which says to me more companies are advertising and are doing a good job of taking the inventory that is available to them. You can also see that the cost per click is much higher with the low end being $10.65 and the high end being $30.35. So, it obviously cost a little more in Atlanta than it does in Nashville to convert a lead to a customer using Google Adwords.
However, consider what is an average customer worth? In my experience for a company in this niche it could be $3500 on the low end and up to $35,000 on the high end (or even more) so is a click worth paying $30.35? You answer that question for yourself.
Los Angeles, CA
This data is interesting, Los Angeles falls somewhere in the middle of the other two markets and I wouldn’t have thought that until I saw this data. I personally think there are other factors at play here that impact these numbers because the LA market is a very different animal. But that research would be for another story at another time.
So, looking here at LA there is on average 170 searches, the competition is high and the low-end click is $9.95 and the high end is $21.46.
Once again, the number the Keyword Tool provides are not hard, and they change a lot considering so many factors from time of year to how many advertisers are present at any given timeframe and just a long list of other factors.
A $200 a Day Ad Spend
When I start a client on Google Adwords for the first time, we do the necessary research to get an idea of what a potential click is going to cost and then we set a conservative budget of usually $20 to $30 a day sometimes more depending on the market.
The first 30 days or so of a Google Adword campaign are mainly exploratory and for research. We are getting an idea of what the hard data is, what the real costs are, and what keywords we want to try to compete for. Once the data starts to reveal it’s then we can put a strategy into place.
Now just so you know you can’t start up a Google Adword account with a giant budget it doesn’t make sense. There is an algorithm and a process involved and that has to be taken into consideration. So basically, it’s something we build up to.
The thing is if you are paying up to $7 for one click you can’t get enough tread to work yourself up to a profitable campaign if your budget is only $10 or $15 a day.
Once the campaign is performing well and you start to create leads then it’s just a matter of making some decisions.
- What is your average customer worth and what do they cost?
- What is your closing ratio?
- What are your sales goals?
- From an operational standpoint how many sales can you close per month and still deliver a great service? (Click here for a great read on scaling your business.)
Basically, if you want to close more sales you need more leads in your pipeline.
The client I am referring to it took 6 months to move to $200 a day in ad spend. Sometimes we spend the entire amount budgeted and sometimes we don’t.
(Also, I want to mention in this campaign we are also advertising door installation as well as window.)
The point is the budget is high enough that we do not miss any click opportunities. Although the budget is at $200 a day if that brings in ten leads and they only close one (which their closing ratio is much higher than that) on the very low end they make $3500. So, would you pay $200 to make $3500?
This particular client did over $150K in sales for March 2020 which was during the coronavirus pandemic so that wasn’t too bad. Also, 90% of that revenue was generated by our Google Adword Campaign of which the spend was $4,400.
Is Your Business in the Search?
Are you marketing your business properly? Can the operational side of your business stand more business?
If you have the operational power to service more customers and you’re not marketing your business, you’re holding back growth and revenue.
Your ad spend doesn’t have to be $200 a day, it only needs to be enough to provide the amount of leads you need to close as much business as you can handle.
Reach out to me if you would like professional help with your Google Adword campaign. I am very highly trained and will bring results to your business. Click here to contact me.