If you’re a small business owner launching your first Google AdWords program, one of the most difficult questions is probably around budget. If you’ve never run a PPC program before, it can be a difficult question to address. In this post, I provide 3 topics all small businesses should consider in answering this question. If you have other questions about setting your budget, please let me know in the comments below and I’ll answer it there (or maybe even write another blog post about it!).

The Simple Answer: $1,000 per Month*

I expect to receive a lot of argument here, so allow me to explain. In reality, the budget you need depends on a lot of different factors (that’s why the asterisk is there), including the number of keywords you’re pursuing, the average cost-per-click (CPC) of your keywords and how your campaign is structured (among many others). If you’re in a low CPC industry (like e-commerce or online dating), you can probably start smaller. If you’re in a higher-cost industry like a law firm, you’ll probably want to start with a larger budget. Likewise, if your program is divided into only 2-3 campaigns, a smaller budget could work while a PPC program with many campaigns will likely require more. Working with small business clients, I’ve found that $1,000 per month is usually a good starting place that will provide enough data to help you analyze performance and potential without breaking the bank. You can usually get 100 to 1000 clicks over your first month (depending on the factors above) and that should get you at least a few conversions, whether you’re looking at sales or leads. Even in the relatively expensive area of law firms (where CPCs can exceed $10/click), you should get at least 5-10 leads with this budget.

Your Targeting Makes a Difference

If your small business is targeting a few counties in your area (especially if you’re not near a huge metropolitan area), then you may actually find it a challenge to spend $1,000/month (you might consider starting with half that amount). On the other hand, if your audience is nationwide, you’ll probably spend that budget with no problem with a lot of room to grow. A couple tips around targeting. First, make sure you’re targeting relevant areas (I’ve seen a lot of advertisers miss the mark here). Second, you’re able to focus your programs to desktops vs. mobile devices by leveraging mobile bid adjustments. I recommend taking advantage of this once you have enough data and you see one device type outperforming the other.

Your Budget Isn’t Set in Stone

It’s important to remember that your AdWords budget will change. If your program is performing well and most of your campaigns are “Limited by Budget”, it’s a pretty easy call to increase your budget in campaigns that are performing well (as long as your business can handle the load). There’s an AdWords metric called Impression Share that helps you understand how much more you could spend. Lost IS (Budget) indicates what percentage of your impressions you lost due to your daily budget cap for a campaign while Lost IS (Rank) informs you about impressions you lost due to your bids being to low.

If your program is lackluster, you’ll definitely want to understand why it’s underperforming before you find yourself throwing money away. Review underperforming areas of your program and try to determine why they’re not driving conversions.  If you feel that those areas of your program are simply incorrect for your market or goals, pause those ad groups or campaigns. Even in programs that aren’t stellar, there’s a good chance that you’ll find a few diamonds in the rough to build on.

The Last Word: Just Get Started

Don’t let yourself suffer from analysis paralysis. What’s important is to get started with your AdWords program and learn as much as you can about your market and your online marketing efforts. If you need help launching your first AdWords program, we offer a Floodlight Academy course specifically designed for small businesses and entrepreneurs. If you prefer to have someone launch and/or manage your program for you, please don’t hesitate to reach out.