How to set a Google Ads budget that actually makes sense

I am asked regularly "how much should I spend on Google Ads?" The honest answer is: it depends on your goals, your margins, your competition, and your conversion rate. Here is the framework I use to get to a number that is grounded in actual data.

Start with the revenue target

What does the business need Google Ads to contribute in revenue or leads this month? Start there. Not "what have we always spent" but "what do we need it to deliver". Work backwards. If the target is 20 qualified leads and your average conversion rate from lead to closed client is 25%, you need 80 leads from paid search. If your landing page converts at 5%, you need 1,600 clicks. If your average CPC is £3.50, that is £5,600 in spend. That is your budget.

The CPC reality check

Use Google Keyword Planner to get CPC estimates for your target keyword set. These are estimates - actual CPCs depend on your Quality Score and competition - but they give you a realistic range to work with. If the CPC estimates for your target terms are £8 to £15 and your budget is £500, you are going to get 30 to 60 clicks. If you need 1,600 clicks, the budget is structurally insufficient for the goal. That is a conversation to have early.

Starting budgets for new campaigns

For a new campaign with no historical data, I typically recommend enough budget to generate at least 5 to 10 clicks per day. This gives you data to learn from and allows smart bidding strategies to begin collecting signal. Too small a budget means too little data to optimise from. The learning phase is particularly important in month one.

Budget distribution

If you are running multiple campaigns - brand, non-brand, competitor, PMax - allocate budget based on strategic priority and expected ROI. Brand campaigns typically get 10 to 20 percent of total budget because CPCs are low and conversion rates are high. Non-brand campaigns get the majority because that is where new customer acquisition happens. Competitor campaigns, if run at all, should have a capped budget with clear CPA expectations before scaling.

Reviewing and adjusting

Budget is not set and forget. Review spend rate weekly in the first month - are campaigns hitting their daily caps? Are they underspending? Both tell you something. Consistently hitting caps means you could profitably scale. Consistently underspending means either the volume is not there or targeting is too narrow. Adjust based on data, not on a quarterly calendar review.