How to choose the budget to devote to Google Ads?

budget to be devoted to Google Ads

By embarking on a campaign of - via Google Ads, the e-merchant hopes, of course, to generate more traffic to his site and convert more customers. But how much budget should be spent on Google Ads to ensure that these business objectives are met? Before embarking on the definition of an ATS budget (Search Engine Advertising or "search engine advertising"), there are a few parameters for the functioning of Google Ads that need to be mastered.

The Californian giant's paid search engine optimization platform operates primarily on a cost-per-click basis. It also requires choosing a maximum daily budget, which in reality has to be considered on a monthly basis. How to estimate this investment? What are the Google Ads tools, but also the tricks, to identify a budget that allows to attract and convert prospects?

The Google Ads platform works mainly on a "cost-per-click" or CPC basis.. In short, the advertiser chooses the price it is willing to pay for a web user to click on one of its advertisements. It is said that in this case he opts for an "auction". The advertiser never pays the cost per click more than the bid he has chosen.

The amount of this bid largely determines the positioning of the ad in Google search results. A bid too low can cause him to lose positioning. There are also other types of auctions and therefore costs, which are detailed in article How much does Paid Listing Service (PARS) cost?

At the same time, the advertiser also sets a maximum budget for its Google Ads campaigns. This budget is defined on the basis of a daily average. It happens nevertheless, some days, that Google Ads uses more than this budget, because the ads work well. That's why, more than thinking on a daily basis, it is advisable to set a monthly budget limit. The advertiser then earns Divide this figure by the average number of days in a month, i.e. 30.4..

A tool to identify the budget to devote to Google Ads

Benchmarking performance planner is a Google Ads tool born in 2019. This is a feature that allows users to cross-reference their monthly budget with their business objectives to identify new conversion leads. This process involves mastering a few concepts, such as "target cost per acquisition", or target CPA.

Determine the cost per target acquisition

Benchmarking cost per target acquisition, or target CPAis what an advertiser is willing to pay to acquire a new customer. It depends on several parameters, including the margin made on each product and the average shopping cart made on the e-commerce site.

Estimate the budget to be devoted to Google Ads via the performance planner
Benchmarking Google Ads performance planner allows to cross the cost per target acquisition and the expected conversions to estimate the budget to be devoted to Google Ads. Screenshot ©Google

To determine a target CPA, it is necessary to control all the costs generated by the acquisition or manufacture of your products. These costs, or the average of these costs, must then be subtracted from your average basket. The resulting figure corresponds to your average margin. The target CPA is therefore equivalent to the portion of the margin you wish to use to get a new client via Google Ads.

Example: a company selling cosmetics online estimates its average basket at 45€, for an average charge on this basket of 22€. Its margin is therefore an average of 23€ on this basket. This company wants to devote 10% of this margin to its Google Ads strategy, i.e. 2.3€. This means that this advertiser has a cost per target acquisition of 2.3€. This indicator is central in the use of the Google Ads performance planner..

Read also : How much do we pay when a user clicks on our Google Ads ad?

Data to be cross-referenced to identify a relevant budget

The Google Ads performance planner is a budgeting tool. So it does not really change the Google Ads. Note, however, that it is possible to apply the changes suggested by the scheduler in Google Ads through Google Ads Editor.

Budget forecast on Google Ads performance planner
Example of Google Ads performance planner forecast by changing some data such as budget, target CPA or conversion rate. Screenshot ©Google

With this strategic tool, the advertiser can cross-reference different data, including the target CPA and the costs generated by a paid search engine optimization campaign. It thus makes it possible to run simulationsby varying the values of these two components with a third: the conversion rate. In particular, you can submit to the planner the conversion rate you observe on your e-commerce site.

The planner will allow toidentify the costs that match your target CPA and at your average conversion rate. It also shows the costs of a lower or higher target CPA.

Whatever simulations you run on the Performance Planner, it always shows that the conversion rate increases in proportion to the budget devoted to Google Ads. Your target CPA must therefore remain a benchmark that allows you to limit the budget outbursts that are unsuitable for your business.

Frequently Asked Questions

Is it possible to determine an overall budget rather than a daily budget?

Yes, but this feature currently only applies to video campaigns with start and end dates. In all other cases, the Google Ads budget remains set on a daily basis.

What is cost per target acquisition?

Originally, the cost per target acquisition is one of the Google Ads auction strategies. However, it is also a benchmark value, which corresponds to the budget that an advertiser is willing to spend to acquire a new customer on Google Ads. This number helps to choose a strategic budget, adapted to the reality of the company.

What is the Google Ads Performance Planner for?

It is a tool for forecasting and planning your Google Ads spending. It allows you to see the impact of the changes you want to make on your Google Ads campaigns.

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