What’s the Best Way to Set the Budget for My Ad Campaigns?

The best way to set the budget for your ad campaigns is by using keyword research to inform your decisions. By analyzing the top bids for relevant keywords in your specific location, you can determine a daily budget that aligns with your conversion goals and campaign structure.

Full Explanation

Setting the budget for ad campaigns starts with thorough keyword research. Using a keyword planner tool, you identify the highest bids for keywords that are important to your business, such as “plumbers near me” for a local plumbing service. These bids provide valuable insight into the competitive landscape and help you understand how much investment is needed to appear effectively in search results.

Once you know the top bids for your target keywords in your city or area, you can estimate how much to allocate daily. This budgeting should also consider your campaign’s expected conversion rate, which reflects how many actions or sales you might achieve each day.

Step-by-Step Breakdown

1. Conduct Keyword Research: Use a keyword planner to identify the highest-cost keywords relevant to your business and location.
2. Analyze Top Bids: Examine the top bids, such as a $63 bid for “plumbers near me,” to understand the competition and cost per click.
3. Estimate Conversions: Determine how many conversions your campaign is likely to generate in a day based on your current performance.
4. Set Your Daily Budget: Multiply the top bid by the number of expected conversions to arrive at an initial daily budget (e.g., $63 x 1 conversion = $63; scale accordingly to your needs, such as $600 if planning more conversions).
5. Structure Your Campaign: Instead of spreading your budget thin across multiple campaigns, consolidate your resources into one campaign with multiple ad groups to provide sufficient budget room for optimization and performance.

Real Examples

Imagine the top bid for “plumbers near me” in your city is approximately $63, and your campaign typically achieves about one conversion per day. To ensure your ads have enough budget to compete and convert, you might set a daily budget of around $600. This larger budget allows the campaign to gather enough data and performance insights.

Instead of dividing this $600 budget across four separate campaigns, you start a single campaign with multiple ad groups underneath. This approach enables better budget utilization and offers room for the campaign to adapt and improve.

Common Mistakes

• Allocating Budget Without Research: Setting budgets without looking at keyword bids can lead to underfunding or overspending.
• Splitting Budget Across Too Many Campaigns: Dividing your budget among several campaigns can limit the data gained and impact overall performance.
• Ignoring Location-Specific Costs: Not considering local keyword bid costs can misalign your budget with market realities.

FAQs

Q: Why is keyword research important for setting budgets?
Keyword research reveals the competitive costs for keywords, helping you set realistic budget expectations aligned with market demand.

Q: Can I start with smaller budgets?
While smaller budgets are possible, having an adequately sized budget helps campaigns gather data more quickly and perform better.

Q: Should I run multiple campaigns or one?
Starting with one campaign that includes multiple ad groups under a solid budget allows for better budget management and flexibility.

Key Takeaways

• Use keyword research tools to identify top bids for relevant keywords in your target location.
• Set your daily budget based on keyword bids and expected campaign conversions.
• Consolidate your budget into a single campaign with multiple ad groups for improved performance.
• A well-researched budget provides your campaign the room to gather data and optimize effectively.