One of the most difficult things for a new AdWords account manager is to determine the best initial budget for an account. Here are a few of my tips that will help get you thinking.
1. Start with the highest budget initially that you can. It is easier to ramp down than to ramp up in a brand new AdWords account due to the way that Google AdWords will serve a brand new account in the first week.
2. Use the AdWords Keyword Planner. This tool is found in your account in the drop down under tools. Typically I will sit at my computer with this tool open and run numbers for a brand new client before we even go to contract for management services to help set an appropriate budget. There is nothing worse than taking on a new client only to find that you cannot get performance for them due to an unrealistic expectation of what they need to pay to get into the AdWords auction.
3. Know that the AdWords Keyword Planner dollar figures for keywords are estimates only. In the real auction you will typically pay about 20%. The tool estimates are on the low side.
4. A good rule of thumb is to remember that the higher the final sale the higher the click cost will be and so the budget should be higher. For example if a client is selling $10 widgets, you will want to have your click cost be low. It the sale is a $50,000 software platform, your click cost will be high. Surprisingly you will find many who do not understand this and will expect to pay $1 or so for clicks when their cost of sale is high.
5. Once you have roughed in a typical high/low click cost using sample keywords using the Keyword Planner with the client, then work backwards to ascertain how high the daily budget should be. If the Keyword Planner says the typical click cost is $2.50 to $3.50 know that you will most likely be using a maximum cost per click setting of $4.00 to $4.50 in the control panel on set up. Make sure that you and the client set a high enough daily budget to accommodate the ability for Google to serve the ad during the day. At this click cost the best daily budget would be $30 and up or a 30 day ad spend of $912, to start.