How To Set Google Ads Budgets Correctly

A common big mistake in Google Ads campaigns is that people don't set their Google Ads budgets correctly. And even worse, if you are running multiple Google Ads campaigns, some people will have their campaigns all out of whack where they have their focused spending. So they're spending the highest amount of money in their worst performing campaigns, so their campaigns with a higher cost per conversion and they're spending lower amounts of money in their top performing campaigns, so. So those campaigns with a higher conversion rate and a lower cost per conversion. Now, when it comes to setting up your budgets in your Google Ads campaigns, there's three core questions that you need to ask. And the first one is what is your current impression share? And then the second one is what is your current impression share versus your cost per conversion? And then the third and final one that you need to ask is what is your current search impression share versus your daily budget? And that's what we're gonna be going through in today's video. But just in case we haven't met yet, my name is Aaron young and I'm 15,000 hour Google Ads master. And I've been optimizing and creating profitable Google Ads campaigns since all the way back in 2010 when I started my very first Google Ads campaign to launch my own business. And then since then, because I now understand exactly how Google Ads works and how you can use it to grow your own business. I've been managing profitable Google Ads campaigns for other people since 2016 and every single year from then earning a multiple six figure income in just from doing that alone. And if you would like to learn more about how Google Ads really works and how you can use it to scale not only your own business, but also the business for some of your clients or even some new clients that you want to get and take on so that you can manage their Google Ads campaigns as well. I want you to join up my 10x Google Ads community. And this is a community where I share advanced Google Ads teachings which I don't share here on my YouTube channel. It also includes some group coaching and live Q and A calls. And then finally you also then become part of an active community where people from all over the world can ask questions and give advice on problems or issues that you're facing right now with your Google Ads campaigns. And if you would like to know more about my Google Ads 10X community and even pre register or even sign up, all you need to do is to go through and follow the link in the description below. With all of that said, let's get into today's teaching and we're going to start with that first question we're going to which is what is your current search impression share? Now, if you don't know, your search impression share is a metric which Google gives you which measures the percentage of time which your ads show the targeted keywords that you're targeting via your keywords, and also your location targeting. And the simple way to calculate this is that if you have a search impression share of 13%, that means that out of every 100 related searches, your ads are appearing on 13 of those. And if you want to take it a little bit further, you can also review your top impression impression share and also you search absolute top impression share. Now, if you do want to see what your metrics are for the search top impression share and also the search absolute top impression share, you just need to go into this column section, modify columns, and then type in search and you'll see these different metrics come up here. And if you're unaware of what these actually is. So we've already explained what the search impression share is, but when we come to the search top impression share is that this is looking at the percentage of times search that your ads appear in the top four positions. And then your search absolute top impression share goes through the amount of times your ads appear in that number one position. So you can see with this campaign, we've got a total search impression share of 31%, we've got a search top impression share, so we're appearing those top four positions 21% of the time. And then with that absolute top, the number one position, we're appearing under 10% of the time. Now, when you are launching your Google Ads campaign, you want to make sure that you're getting a search impression share of at least 10%. But ideally you should be going for at least 20% with your initial search impression share. And once you start getting that 20% impression share, you know that you've got more than enough budget to be able to start optimizing and scaling your campaign. Because once you get to a search impression share of 20%, the focus is then with your Google Ads campaign to focus on your optimizations so that you can actually improve your conversion rate and bring down that cost per conversion down to a level where you are comfortable with. So for example, if you're wanting a cost per conversion of $15 so that you're paying $15 in ad spend for every single conversion and you're currently at $20, my recommendation is to not increase your budget until you've actually reached that cost per conversion of $15. Now, you will be getting some recommendations from Google who will pop up in the recommendations tab saying that you need to increase your budget. But the reason for why we don't want to increase budget yet is because increasing your budget does not improve the performance of your campaign. The only thing that it does do is that it magnifies the current results that you are seeing in your Google Ads campaign. So right now, if you've got a digital agency and they are telling you that the only way you can improve the performance of your Google Ads campaign, and you know you've got that search impression share which is above 20%, you need to run and run far away because that Google agency has no idea what they are doing. Think of it like this. If you're at the casino and you're playing poker and you've got a pair of twos and you lose, you did not lose that hand of poker because you didn't bet enough money. You lost that hand of poker because you had a really bad hand. And the same is true with Google. Just by throwing extra money at your campaign doesn't mean that your campaign performance is going to change. And especially with Google, you can't bluff Google. They will always win. So that is why it's really important when you're setting your budgets in Google Ads. You need to firstly make sure that you're getting that 10%, but ideally 20% search impression share. And then once you've got that, that's when you go through the optimization process so that you can bring that cost per conversion metric down to a level that is profitable for your business. And then the second question that you need to ask is what is your current cost per conversion versus your individual budgets? And this is a big mistake that I see people make is that when I go through and review their Google Ads campaigns, you can see that the campaigns where they're spending the most amount of money a lot of the times actually have the highest cost per conversion, meaning they've got the lowest conversion rates and the highest acquisition costs. And then there's other campaigns which have a really low acquisition cost. So they've got a high conversion rate, they're actually spending the lower amount of money in the Google Ads campaigns. And this is because people have got their budgets all mixed up. And let me show you what that actually looks like. So you can see in this account, they've got all of these campaigns running down here. And we've filtered this out by cost and as you can see through here, these top three high spending accounts actually have some of the worst ROAs or cost conversion value scores and the highest cost per conversion. So if we look here, when we come down to this 4 4th campaign here, it's spent nearly $1,000 less than this top spending campaign, but it's actually generated over double the amount in sales and the conversion value is actually three times the amount of 24. So they're getting $24 for every dollar they spend in Google Ad versus this top spending campaign which only gets $8 for every dollar it spends in marketing in Google Ads. And then on top of that, when you actually look at this top performing campaign, you can actually see that the search impression. So what that is showing us is that because this campaign has the budgets all set wrong, it's spending more money in these top three accounts which have worse results versus this fourth top high spending campaign which is not even reaching 10% of the total market share that it could do for the keywords that it is reaching. And it's severely affecting the total performance of this account because the budget setting on this campaign is limiting the spending, meaning that all of these extra conversion values are being missed because the campaign budgets have been set incorrectly. So for for an account like this, we could very, very quickly increase the results just by changing the daily budgets on these top four campaigns with no other optimizations. And now we've come to our third and final question which is all about what is your search impression share versus your daily budget? So once we're happy with that cost per conversion, we then want to start looking at what our search impression share is versus our budget. And I touched on this in our previous point is that when you're actually happy with that cost per conversion on or the conversion metrics you've got for that campaign, you then need to start looking at your budgets versus your search impression share. And what we're looking for here is that if we're really happy with those conversion metrics and we've got a low search impression share, that's giving us the green light for us to be able to start increasing that budget and scaling the campaigns. But I do have some golden rules here because once again, this is an area where people can make mistakes and around setting up their budgets. And what my golden rule is is that I'm happy for people to scale their Google Ads budgets up to when they have a search impression share of 65%. And the reason for that is because my experience has shown is that up to 65%. So if you're looking to scale your budget and increase your budget and you've currently got a search impression share of around 20%, you are safe to scale that account all the way up to 65% and you will see those same conversion metrics. Remember what I said earlier is that increasing your budget just magnifies the current results that you're seeing in your Google Ads campaign. So for example, if you're currently seeing a cost per conversion of $10 and you're spending $100 a day, if you were to scale that budget up to $200 a day, you would see very similar results of a cost per conversion around about that $10 mark. Sometimes it can go up to about $11 and sometimes it can go down to $9, but that variance is very small. And those metrics are going to be safe up to when you get to 65% of your search impression share. And let me show you why 65% is such an important number. And the reason for that is because you have to remember when Google gives that hundred percent, it's not only looking at those high converting keywords and products, it's also looking at any similar or related keywords. So I've always found that top 50% we're smack back on when we're looking at those high converting keywords or products. When you start moving out above the area, you start to get through some similar and related keywords. Now I found up to 65%, this actually works very well. After 65%, it really does depend on your products and your niches. So my confidence isn't as high. And the reason for that is because as you can see through here is that we've got that core traffic. So those high converting keywords and high converting products and then when we move further, further and further out to get to that total 100% that Google is giving you, some of them are only similar keywords and related keywords. And especially when you get out to these related keywords, the conversion metrics just are not the same. So that's why I say only scale that budget when you get up to that 65%. And if you do want to scale further, once you're past that 65%, just be very, very careful because you may see some changes in your conversion metrics. And one last final point, when it comes to setting your budgets correctly in Google Ad, and when it comes to that time when you're ready to start scaling your budgets, you want to make sure that you're not increasing your budgets by any more than 20% at any given time. And if you want to find out the reasons for that and how you can properly scale your Google Ads accounts, I want you to go through and watch this video right here. Or if you're confident in that and you want to make sure that you're not making any of these other core errors in Google Ads, I want you to go through and watch this video right here. Thank you for joining me, and I look forward to seeing you in one of these two videos right now. See ya.