How much should a small business spend on Google Ads?

Google Ads will happily take whatever number you type in. That is the problem. Set it too low and you get a trickle of clicks that never adds up to a customer. Set it too high before you know what works and you burn through a month of budget learning things a smaller test would have told you.

Here is how to set a Google Ads budget for a small business, and how to tell whether it is working before you have spent a fortune finding out.

How much should a small business spend on Google Ads?

Most local small businesses should start at 500 to 1,500 dollars a month on Google Ads, and the right number inside that range depends on what a click costs in your industry. The rule that matters most is that your monthly budget should buy at least 150 to 300 clicks, because below that you do not get enough data to tell a good campaign from a bad one.

So the calculation runs backwards from your cost per click, not forwards from what you feel like spending. If clicks in your trade cost 4 dollars, 800 a month buys 200 clicks and a real test. If clicks cost 25 dollars, that same 800 buys 32 clicks, which tells you almost nothing.

What does a Google Ads click actually cost?

Average cost per click on Google search for US small businesses generally runs between 2 and 6 dollars, but the spread by industry is huge. Home services such as HVAC and plumbing commonly run 8 to 20 dollars a click. Legal and insurance are among the most expensive categories anywhere, often above 50 dollars. Restaurants, retail and local events usually sit at the cheap end, often under 2 dollars.

You do not have to guess at your own number. Google’s Keyword Planner is free with any Ads account and shows estimated costs for the exact phrases you are considering, in your area, before you spend anything. Half an hour in there will tell you more about whether Google Ads makes sense for your business than any article will.

How do you set up a Google Ads budget yourself?

You can set up and run a small Google Ads budget yourself, and for a single service in a single town it is a reasonable weekend project. The honest version of the job looks like this:

• Look up the cost per click for your main phrases in Keyword Planner, then multiply by 200 to get a sensible monthly test budget.
• Pick five to ten phrases someone types when they are ready to buy, not researching. “Emergency plumber near me” is a buying phrase. “How does a water heater work” is not.
• Use phrase or exact match rather than broad, or Google will spend your budget on loosely related searches.
• Build a negative keyword list on day one with words like free, jobs, salary, DIY and cheap, and add to it weekly from the search terms report.
• Send clicks to a page about that specific service, not your homepage. This one change moves results more than almost anything else.
• Turn on conversion tracking for calls and forms before you spend a dollar.

Where people lose money is not the setup, it is the weekly upkeep. An account left alone drifts, and the search terms report is where the waste hides.

Target Marketeer builds and runs marketing for small businesses nationwide, based in Greensboro, North Carolina, and a well set up account is the cheapest way we know to stop ad money leaking. If you would rather have it built properly the first time, our local ads setup runs $475 and covers the account, the campaigns and the keyword groundwork. Our paid advertising page explains how we manage it month to month.

How do you know if Google Ads is working?

Google Ads is working when you can trace a phone call or form back to a specific click, and the cost of getting it is less than what that customer is worth to you. Everything else, impressions, click through rate and quality score, is a diagnostic rather than a result.

That means conversion tracking has to be in place before the first ad runs, not added later. An ads account without tracking tells you how much you spent and nothing about what you got. Give a new campaign 30 days before you judge it, because the first two weeks are the platform learning who to show your ads to.

Should you start with Google Ads or SEO?

Google Ads brings traffic this week and stops the day you stop paying. SEO usually takes three to six months to move and keeps working after. If you need customers now, start with ads. If you want calls in two years’ time as well, do both, with ads covering the wait.

Many small businesses run ads for a few months to learn which phrases actually turn into customers, then use that list to choose what to target with SEO. If you are still deciding between platforms, our post on Facebook ads or Google ads covers which suits which kind of business, and how much a small business should spend on marketing puts the ad budget in context.

Quick answers

What is a good starting budget for Google Ads?

For most local small businesses, 500 to 1,500 dollars a month. Work backwards from your industry’s cost per click and aim for at least 150 to 300 clicks a month so you have enough data to make decisions.

How long before Google Ads works?

Expect about two weeks of learning and a meaningful read at 30 days. Judging a campaign in its first week is the most common and most expensive mistake, because early results are not representative.

Is Google Ads worth it for a small business?

Google Ads is worth it when a customer is worth several times what a click costs and you can track which clicks became customers. It is a poor fit for low value one off purchases in expensive click categories.

Do I need a separate landing page for ads?

Not always, but sending ad clicks to a page about the specific service you advertised, rather than your homepage, reliably improves results. It is usually the cheapest fix for a struggling campaign.

Whatever you decide to spend, decide how you will measure it first. An ads budget without tracking is not a marketing investment, it is a subscription. If you want help fitting ads into the rest of your plan, the Plan Builder is a good place to start.