Spend More to Make More


Account spend can be a funny thing. Often I’ll get asked how much we need to spend to get a result. The answer I give is usually a convoluted variation on "how long is a piece of string?" Google looks at a number of things when it comes to your budget and I want to shine some light on how you can best get results out of a campaign and how you can best work out how much to spend.

When it comes down to it, how quickly do you need/want to see results? When Google is presented with a daily budget, they will take your money and spread it evenly over your entire ad schedule. The reason that they do this is to ensure that you don't get clicked out early on in the day and with that, people searching for you at the end of the day have an equal opportunity to find you as someone searching at the beginning of the day. What this means for anyone using Google as an advertising tool is that your budget only allows you to be shown for a finite number of searches every day.

In all cases, it will take your bidding strategy into account and based on your cost per click work out how many searches you need to appear for in order to spread your clicks evenly throughout the day.

Now for the numbers. I’ll try not to make it too boring so please stay with me…

Let’s say you have a $5/day budget and a cost per click of around $0.50cents. It means that over a 15-hour schedule, you can expect to receive roughly 10 clicks per day. Now let’s say you have a 3% click through rate, which means you can expect to get roughly 300 impressions per day. The 300 impressions you can receive needs to be spread evenly over your 15-hr schedule which means you can expect around 20 impressions per hour and one click every 1.5 hours.

All of a sudden you can see how that $5/day budget could limit your exposure and the potential to be seen by the right people at the right time.

Increasing an AdWords budget has a number of benefits to the results of your campaign and results, two of which are:

  1. Increasing your budget increases exposure and the capacity to be shown to the right people. Increasing your budget allows you to be shown more often and as such improves the chances that a campaign will gain traction.
  2. Increasing the budget increases the amount of data you are able to gather, meaning you get much more information in a much shorter period of time. In doing this, we can expect results much faster.

So now I’ve explained how Google looks at your budget, but how does it impact results? I mean really, won’t it just make Google richer?

Well yes, but it will also make you richer.

As it stands, after three months worth of data at a $5/day budget you will have enough data to begin to see trends and make improvements within a campaign. Let’s say your total monthly spend is $150.00 and your cost per acquisition is $50, it means that for every $50 you spend you can expect one conversion… at that rate, it means you will convert roughly once every ten days.

So if you say that roughly for every $50 spent you can expect a call, to get one/week you need to be spending roughly $7/day. To get 2 calls per week you need to be spending roughly $14/day... Using this theory we can begin to say, ‘what results do we expect… how much do we need to spend to achieve that?’

This all assumes that you have conversion data to work with, and admittedly, doesn’t take into account external changes which we have no control of. However, if you find that you have an account which has hit a wall and you can’t seem to get that little bit more out of it, try investing more for a period of four weeks. Providing you continue to optimise based on the data you’re receiving, you should be able to see a positive impact when it comes to the data needed to get the results you require.

Comments (1)
Jeff Gordon

Jeff Gordon, Principal at Prestige SME Business Solutions

The biggest risk is to take no risk! I use financial modelling tools (what if scenarios) that enables businesses to plan for growth and making sure they have the plans, staff, funding, cash flow projections etc.