Setting realistic best google ads monthly budget

Have you noticed your campaign saying “Limited by budget” or realised that your monthly cost keeps increasing but your return is similar or lower?

Have you taken drastic action and gone into further loss?

It’s a common scenario: many advertisers struggle with setting a realistic Google Ads budget that delivers a solid return on investment.

If you want to rank higher in Google Ads, you must know how to allocate the budget correctly.

Now, before we talk in detail about setting a realistic monthly Google Ads budget correctly, you need to have a general understanding of cost per click (CPC), cost per conversion and other key metrics.

Table of contents:

  1. Assess your needs and freedom to spend on ads
  2. Knowing your CPC cost
  3. Know your cost per conversion
  4. Assess your competition’s Google Ads budget
  5. Asses – Limited by Budget
  6. Assess for budget wastage
  7. Set a realistic Google Ads budget

Assess your needs and freedom to spend on ads

Setting the right Google Ads monthly budget starts with a clear understanding of your needs and objectives. Consider these factors:

  • How many leads or sales do you need each day, week, or month?
  • Get a handle on the CPC for your keywords, whether they’re in the low, mid-range, or high-end.
  • Know your current and desired cost per conversion.
  • Competition analysis can provide valuable insights into what you’re up against.

Once you’ve mapped out your goals and collected all the necessary data, you should have a clear picture of the maximum you’re willing to spend.

Knowing your CPC cost

Yes, Google Ads has become more expensive than before, but it can still be worth every penny if managed correctly. Tools like Google Keywords Planner help in estimating the CPC for your chosen keywords.

The CPC cost varies for different keywords and you should know the low, mid-range and top end CPC of your keywords to get an idea or an average CPC cost you will be paying to get clicks.

According to Wordstream, the average CPC in Google Ads across industries is about $2.69 for search and $0.63 for display. So use this price as an anchor point to determine your CPC.

What is CPC?

CPC, or Cost Per Click, is a metric in digital advertising where advertisers pay each time a user clicks on one of their online ads. It’s one of the most common methods used for pricing web ads, particularly in platforms like Google Ads and Facebook Ads.

Here’s a simple way to understand CPC: Imagine you’re a café owner using Google Ads to attract more customers. Each time someone searches for “best coffee near me” and clicks on your ad, you pay a predetermined fee. This fee is your cost per click.

Know your cost per conversion

When you intend to set the correct daily Google Ads budget for your campaigns, you should have clear data about your cost per conversion and if you are starting a new Google Ads account then it’s worth knowing the industry standard cost per conversion.

The cost per conversion associated with your target goal is the foundation for setting the correct Google Ads budget.

Assess your competition’s Google Ads budget

If you want to allocate the ideal monthly Google Ads budget, you need to know your figures and an idea about your competitors’ Google Ads budget and the kind of return they may be getting. Your competition Google Ads data and estimates will help you competitively set your budget and win against them.

You can use third-party tools like SEMRush, and Ahrefs to learn more about your competition.

Asses – Limited by Budget

Don’t ignore the “Limited by budget” signal; it’s like leaving money on the table. This flag means that at certain times of the day, your ads aren’t showing up because your budget’s tapped out for the day.

A well-optimized campaign can often benefit from a slight increase in the daily budget.

Consider gently increasing your daily budget if your ads are already performing well and giving a good return on investment. This subtle increase allows your ads to appear more frequently throughout the day, potentially reaching more people during peak search times that you might have been missing.

Moreover, this tweak can provide you with richer data on ad performance, offering valuable insights that can fine-tune your strategy and sharpen your future campaigns.

The Limited By Budget signal & opportunities

The “Limited by Budget” signal in Google Ads is a notification that tells advertisers their campaigns could be performing better if they increased their daily budget.

This warning appears when the budget set for a campaign isn’t sufficient to fully capitalise on all potential ad impressions and clicks available based on the campaign settings and bidding strategy.

When your campaign is “Limited by Budget,” it means that your ads are not showing as often as they could be throughout the day. You are missing out on potential traffic because your budget runs out before the day ends.

This can limit your campaign’s effectiveness, reducing both the visibility of your ads and the potential conversions from users who search for relevant keywords associated with your ads.

Assess for budget wastage

Assessing for budget wastage should be carried out regularly even with the most efficient campaigns.

It is important especially while allocating the right budget for already running Google Ads campaigns and those flagged as limited by budget.

This is also one of the key steps to reduce Google Ads budget.

How to assess budget wastage in Google Ads?

1. Review keyword performance

This is the best place to assess for budget wastage, just follow the following promotes:

  • Set the date range to last 30 days or 3 months
  • List all keywords of a particular Ad Group or Campaign
  • Sort by Cost in descending order
  • Check top spending keywords and their return in terms of the number of conversions and cost per conversion.
  • Take necessary action like pausing or bidding less (if manual bidding).

2. Irrelevant keywords & clicks

  • Make sure your ads are not being triggered for irrelevant searches.
  • Make sure you have the necessary keywords in place to avoid getting clicks for unnecessary searches
  • While setting the right Google Ads budget, don’t forget to take this action to ensure you get the best return from your ad spend.

3. Campaigns with minimum or no return

  • When you are aiming to apply the best Google Ads budget, make sure to check your existing campaigns and find those with minimum or no return.
  • Either pause them or do a deep analysis to optimise and assess again in a week.

Set a realistic Google Ads budget

If you understand the above points, you should be in a better situation to allocate the best Google Ads budget for your business.

Steps to allocating the right Google Ads budget:

  1. Know your average CPC.
  2. Know your current average daily number of leads or sales vs the desired number.
  3. Use the Google Ads cost calculator tool to get your monthly ad spend.
  4. Make sure you allocate your budget within your maximum spending capacity to avoid a financial burden.
  5. Assess optimisation signals like limited by budget, and budget wastage.


What is a good monthly budget for Google Ads?

There are a variety of factors that play into a good monthly budget. Start with a budget you’re comfortable with, assess the impact and if you are happy with the performance then increase to get more conversions and do not exceed your freedom to spend your max amount.

Need professional help with setting your budget?

We’re a Melbourne-based Google Ads agency, ready to help you make the most of your ad spend.

Why not book a time with our Google Ads consultant to fine-tune your budget requirements?

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