No matter where you are at in your eCommerce journey, building a Google Ads budget is one of the toughest challenges faced by both new and old drop shippers.
The process of planning an advertising budget for an eCommerce store can feel overwhelming, time-consuming, and daunting. However, a well-planned budget, especially in the beginning, is a huge part to many of our members' success.
You want to invest into advertising, because why wouldn't you? If you could spend money and make more back in the end. Members ask all the time, "Anton, how should I set my Google Ads budget if I'm just getting started?"
One of the questions many wonder about Google Ads is, is there a minimum that I can get away with? The reason people ask themselves this very reasonable question is many who are new to eCommerce are worried about investing their money into something they don’t know is going to work.
What is the Minimum Advertising Budget for Google Ads?
The goal with your Google Ad spend should always be to get the best return on your investing. Whether you have a million dollars in the bank, or you have $10 the truth is, there is no minimum advertising budget on Google Ads.
But what you need to realize when you're running paid traffic and when you set up your first ever Google shopping campaign, you have to know that the goal is not just to make sales. The goal in the beginning is to do market research. In the beginning, where your ad dollars are going is they're buying data.
So, you could do things before you start your first ad campaign, use the Google keyword planner and look around at your competitors or future competitors. What you have to realize is that the numbers that Google might show you, they're not as accurate as what you're going to get until you set up your own ads and people start actually seeing them in Google search results. The best data you're going to get is when you turn your ads on.
When you first start a Google Ads campaign just know that the goal is to get data so you see what's working and what's not. And then you can use that information to cut what's not working and then you’ll double down or quadruple down on what is working.
To keep things easy, let’s say that you had a drop shipping store that's currently converting at 1% from PLAs, from Google traffic, Google shopping traffic. Now, if it converts at 1%, that means for every 100 visitors that, you get one sale, right?
Let’s say that you set up your first campaign on Google Ads and it's costing you $1 per click. So that means you have $1 CPC. Now what that means is for every 100 clicks you get you're going to get a sale, right? Because you're converting at 1% and that means you're going to spend $100 on ads to get that first sale.
If you’d like a visual walk through of this, watch this video I’ve shared on the Drop Ship Lifestyle YouTube channel covering this.
Now hopefully you're following the Drop Ship Lifestyle system and have picked a highly profitable niche. So that sale was $1,000+. Know that this is kind of what you have to think about when you're trying to determine your budget.
If your budget was $100 per day that would equal one sale per day and also enough data to let you know what that product is that is converting.
Your First Goal When Setting up Google Ads
Now, let's say your budget was $10 a day, right? Because you were just getting started in eCommerce and you were like, "You know what? I feel comfortable with a $10 a day budget." Well that would mean you would get one sale every 10 days.
On the other hand, if you’re just starting out and are super nervous because you're so brand new to this you might be thinking, “I really don't want to put any money into this until I know it works.”
Then drop it down start with a Google Ads budget at $5 a day. Remember, there's no rule in Google where you have to pay them “X amount of dollars”. If you go into your Google Ads account you can change your budget to be whatever you’re most comfortable with.
But if your store converted at 1% and you had a $5 a day budget, that means you can expect to have one sale every 20 days. So it could in theory here take you 20 days to get your first sale with that $5 a day budget. Now what does that mean?
Does that mean you should wait 20 days to see what happens to see what's selling?
No, in my opinion, you shouldn't, because we can make this a lot easier, which I'm about to show you how to do. But, if you have this mindset of, "I'm just going to spend $5 a day.” And 10 days go by, 15 days go by and no sales come in yet. Well, if your store converts at 1%, then that's normal, because again, it's taking you more time.
How to Determine Your First Month’s Google Ads Budget
This might sound like a lot, but for your first month’s advertising budget, I want you to set it at $1,000. Stick with me here, you’ll see why that number is not so crazy sounding.
Setting your Google Ads budget at $1,000 for the first month comes out to spending about $33 a day. Like I mentioned before, if you’re getting clicks for a dollar, then every day you’ll have 33 “ready to buy” visitors.
If you do this and you have this type of Google Ads budget setup and you have that 1% conversion rate, then you could expect one sale per three days.
1% conversion rate is very low, I recommending aiming for 2.5%. But for the sake of this post, we’re working with 1% to make the numbers easy and clean.
Now, what's good about this advertising budget is you can actually get data fast. You're not rushing it in the sense where you're spending $100 per day, a number a lot of people are uncomfortable with in the beginning.
However, don’t say, "I'm going to spend $5 a day for the next year.” What you want to do is spend $33 a day for the first month and to monitor what happens on your Shopify store. What you're doing with this initial money is watching what's happening and feeling out the market.
Plus, it's very easy inside of Google Ads to actually see what you're getting in terms of impressions on your website. Impressions are how many people are actually seeing your different ads for different products. It's easy to see how many people are clicking the links to go to the different product pages on your site, and it's easy to see what percentage of search volume share you have.
What that means is you may find that you're spending this money and a few products are selling over and over and over again. That’s good news, because there's more paid traffic to be had because maybe you bid too low.
The whole purpose of doing this Google Ads strategy is you want to make sales, but you really want to get those analytics and do the market research. It’s basically buying the data so you can see what ads to cut and which ones to double down on.
My friend, paid traffic guru and founder of Search Scientists, Michael Erickson, calls this “trimming the fat”. He actually created our Google Ads for eCommerce course and goes deep into this strategy. But what it comes down to is this: raise your budget, get more traffic, see how your conversion rate holds up and make sure your ads are still profitable.
Just a reminder there is no minimum when you’re first starting out on Google Ads, but if you're planning on spending $5 a day, like I just explained, and your store is converting at 1%, expect about 20 days to see what's working and what's not.
And I know a lot of people don't want to wait that long, so if you want to wait three days instead of 20 days, then start with a higher advertising budget. Again, you could bid lower, you could wait longer. It’s all up to you and how you want to proceed with that.
Growing Your Advertising Budget...The Right Way
On the other side, what’s the maximum amount you should go with in Google Ads? Well, there is none! Your budget could be unlimited, I’m sure that would make Google very happy. This probably sounds crazy to a lot of people that are brand new to eCommerce, especially since I just told you to start at $33 a day, but here’s the thing…
The goal with spending money in business is to get a return on your investment. The same goes with setting a Google Ads budget, you want to get a good return.
If you could spend $100 in Google Ads that that earned you a $1,000 in sales and your profit was 30%, and you take out ad spend after that. You're making $200 per sale! Meaning you're spending $100 to get $200 net profit back out then.
How often would you want do that? As often as you could! Would you give someone $1 to get $2 in profit back? The answer is yes.
Once you know your return on ad spend, once you see what's actually working inside your Google Ads account and in the dashboard, that's when you start spending more on the products that are converting.
When I say spending more, I don’t want you to go crazy and double your Google Ads budget. Don’t think, "This worked at $1,000. Let me spend $10,000.” So just up your advertising budget a little bit.
Monitoring and Adjusting Your Google Ads Budget
After you increase your budget, go into your Google Ads account and pull the shopping campaign report. Look for where you're getting clicks and where you're not. You're going to see what people are buying, what they're not, and the things that they're clicking and not buying.
Then, you're going to optimize your eCommerce store to get people to choose those products and buy once they get to your store., and the things that they are buying you're going to make sure that as you're spending more money it's leading to you getting more clicks and more sales. As long as that falls into your target return on ad spend, then guess what? You're going to keep going up!
Depending on the size of your Google Ads account, you want to do this every two weeks. Sometimes you want to do it every month. If your account gets really big and you get to the point where you're spending $100,000 plus a month on ads, then you want to a monitor that every single day.
That's what we do at Drop Ship Lifestyle. We are literally in our Google account, in our Facebook ads account, every single day. My team is watching what's happening because we need to make sure that our return on ad spend is exactly where we want it to be.
How to Budget Your Advertising on Google Ads
Listen, if you can afford it, this is what you should do if you're comfortable: Set aside a $1,000, put it into your next month's advertising budget. Look at your data, see what's working, cut what's not, and then double down on what is.
And once you do that, you can get to the point where next month you can go ahead and just basically raise your bids, raise your budget, and keep increasing your revenue. At the end of the day that's what's going to bring your revenue up.
The more search share you can get, the more impressions, the more clicks, that all translates to more sales. This is how an eCommerce business can really grow from $100,000 a month to $300,000 a month to $500,000 a month. It's by getting really good at Google Ads.
Wrapping Up How to Set Your First Google Ads Budget
This post is a beginner’s overview of what to do with new stores and how to set up your advertising budget in the beginning. If you made it this far, I’m excited to share we just updated our Google Ads for eCommerce course.
I say update, but really it was a complete rebuild from the ground up. Michael from Search Scientists created it using the same strategies he uses for his clients’ stores. At this point, he’s spent MILLIONS in Google Ads, which is crazy to think about.
That’s why I brought him on for this course. He’s a genius and this new paid traffic training is amazing. If you want to check it out for yourself, head over here.
Either way, leave me a comment below. Let me know, how you feel about setting up your advertising budget?