What Budget Is Too Small for Google Ads?

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I often get asked What budget is too small when you're just

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getting started with Google Ads?

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So I thought I would answer that question today.

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The answer is a little bit nuance.

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The examples that I have pulled up are with accounts that got

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started with budgets under 5k.

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This isn't enough budget.

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It's either going to.

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Um, A very, very, very long time for the algorithm to optimize, or

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we might find that it never will.

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They spent 4,500 in their first month and they were able to get 17 conversions.

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So this is right on the brim.

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Hey everyone, it's Regina Solutions eight.

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I often get asked What budget is too small when you're just

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getting started with Google Ads?

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So I thought I would answer that question today.

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The answer is a little bit nuanced.

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There's some logic, I have some examples pulled for you.

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And so I'm gonna get through all of that.

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The examples that I have pulled up are with accounts

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that got started with budget.

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Under 5k.

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Now I know at Solutions eight we work with budgets that are larger

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than 5k, but we created this sister agency that we call Starter ppc.

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And I'll put the link to it in the description below.

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And basically that agency is the same team as Solutions eight, but.

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We have a limited service , and uh, we also work with smaller budgets.

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We have a 5K max , for that ad service.

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So that's why I have all of these examples of accounts that got started

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with budgets that are under $5,000 and I'm gonna run through them in a second.

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So the answer to the question, what budget is too small when you're

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just getting started with Google?

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Varies from business to business and industry to industry.

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And I'll explain why.

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So the algorithm uses data points conversion data to identify

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patterns in the users that are interacting with the ads and then

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optimize the ads based on that data.

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So you.

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For example, let's say in your first month you get 30 conversions.

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That's an average of like a conversion every single day in the month.

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Well, the algorithm has a significant body of data to identify patterns,

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see who is buying, and in the next month it's going to probably be

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through its learning phase already.

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And you're gonna be able to start to either grow or make small

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optimizations and then grow.

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And so If you get started and in the first month you only have four conversions,

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well, let's hope that those were high quality conversions, first of all so

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that the data is high quality, but even if it is, that's only four data points.

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So the algorithm doesn't really have enough to know what to do yet.

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So it's been a month and the algorithm doesn't know what to do.

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The problem with four data points a month is this data gets old.

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So let's say it now is gonna take you six months to build up a body of data

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points that the algorithm can look at and know how to best optimize , the bidding.

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Well six months from now, this data from month one is gonna be, Really old, right?

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The seasonality happened, the weather changed, the new

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competitors entered, the market.

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Things shifted.

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That entire user base has already bought and disappeared from the data pool.

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So it just becomes old, it becomes harder for the algorithm to rely on that data.

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So sometimes the budget can be so small that the learning

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phase just never quite happens.

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So.

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It's oftentimes a guessing game , to figure out what that

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point is and when it's too low.

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But once you kind of understand how the algorithm thinks, you can

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at least make an educated guess on what your minimum budget will be.

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So think about it this way.

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Let's say you're selling furniture and, your average sale is $800.

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And so you wanna.

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Three times your money.

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I'll just use round numbers.

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So that's a three x return.

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let's say you're gonna spend a few hundred dollars on every single conversion.

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Well, if you start out with a $500 budget, you're only get like

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two conversions a month, right?

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Maybe one.

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So That's just not a big enough budget.

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Uh, If you're selling a product that costs $800 and you know that because

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of the cost per acquisition that you're expecting to pay if you're

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selling clothing and you know, your average order value is like 70 or $80.

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that's different.

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Now, if you're spending $500, you probably will get at

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least 30 conversions in a month.

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So that's probably enough for the algorithm to identify

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patterns and optimize.

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So if it's.

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Too low either.

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Sometimes it just takes a very, very long time, three or four months

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to get through the learning phase.

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And in the meantime, your business has overhead costs so that could be an issue.

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And if it's too, too low, then the algorithm sometimes will never optimize

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because by the time it starts to gather patterns, the data is too old.

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So the higher the budget is, the faster it's gonna get going, and

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finding that minimum is going to.

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A judgment call.

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If your account has some conversion history in it already from when

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you did ads, and if that conversion history is fairly recent, right, like

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maybe you paused the ads a month or two ago, then you're way better off.

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I'm gonna show you in my examples what I'm talking about.

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Let's take a look.

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So I pulled.

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A bunch of different client accounts.

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Here the first one is clothing.

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So you can see I have the first 30 days pulled up here that we managed

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their accounts, their account for them, they spent 2,700 in that

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first 30 days, and there were 115 conversions now for a clothing brand.

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That's to be expected.

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2,700 is plenty to get started and for the algorithm to get through

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the learning phase pretty quickly because it's getting 115 conversions.

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So we're golden.

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Let's move on.

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So this account is jewelry.

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They sell jewelry to a niche market actually, and they spent 3,500

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the first month they got 101.

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So again, this one is good.

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So because their average order value is low, they're getting

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many, many conversions a month.

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They're also spending $3,500 in, uh, spend.

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So they're golden.

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Now let's move on to the hard ones.

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We've got a wealth management firm.

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They got started with 2,800 and the first 30 days, there were only four conversions.

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Now because, this is a lead generation account.

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Not all of these conversions are high quality.

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In fact, when you're just getting a new lead generation account going,

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you're trying to hone the keywords, you're trying to get the algorithm

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pointed in the right direction.

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And I know for a fact that actually three out of these four conversions

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were low quality spam leads.

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So we had some trouble getting this account going.

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The algorithm now has three bad data points and one good data point in

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its first study days to work off of.

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This is way too little.

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So this is actually a fairly new account with us.

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Now that we are in our second or third month and we were able to get the

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quality going, we're going to ping the client and say, Hey we don't think the

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algorithm's ever gonna have enough to optimize with at $2,800 every 30 days.

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So you need to probably double your spend at least to 500.

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This is not a glitch.

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I'm interrupting because I need to remind you that I'm always looking

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for people to join our team.

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So if you're passionate about Google Ads and you wanna work with the best

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Google Ads agency on the planet, please go to so late.com/apply.

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Speaking of working with the best Google Ads agency on the planet, if you're having

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trouble with Google Ads and you want professional help, that's what we do.

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You can go to so late.com, that's s o l eight.com to apply for your

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free, no obligation action plan.

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And if I've.

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Any level of value at all, maybe think about giving me a thumbs

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up and subscribe your channel.

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That's how we juice the YouTube algorithm so they actually know

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that I know what I'm talking about.

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If you have questions, comments, concerns, or confessions, hit me

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below in the comments, and now back to your regularly scheduled program.

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Wealth management firm.

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This one is furniture.

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So the next three examples I have for you guys, these are all

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drop shipping furniture brands.

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So , this account, in their first 30 days, they spent $3,800 and they

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were able to get 20 conversions.

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So this is pretty good.

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And the reason why this happened is because this account had quite a bit

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of conversion history, so the algorithm was already nice and optimized.

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I cannot speak to how much they spent in their first 30 days in the account.

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But I wanted to give this example because a lot of times clients come to us with

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conversion history and they're asking.

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What their minimum spend should be.

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And the answer is even more nuanced than just knowing your average order value and

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making a basic math equation , to figure out how many conversions you might get.

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, it's an unknown because the algorithm, if it has conversion data and if that

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conversion data is old and if it was accurate, there's just so many factors

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in our estimates of whether or not.

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3,800 would be enough.

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If I had looked at this account and, and you had told me they were gonna

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start with $3,800 and, and their job shipping furniture, I would've thought,

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okay, you're, you're gonna get way less than 20 in your first month.

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But because of the conversion history they got 20 and I think

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it's perfectly fine to get 20

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I think, 15 would be my minimum personally 15 conversions in a month.

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If I think I'm gonna get less than that, I would not get started with

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a budget that was smaller than that.

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So this is another furniture brand, and they got started with 2,200.

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And as you can see, in their first 30 days, they only got.

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Four is not enough.

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This isn't enough budget.

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It's either going to take a very, very, very long time for

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the algorithm to optimize or we might find that it never will.

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So we're gonna probably ping the client asking them to double their spend soon

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if they wanna be sure that the algorithm is not going to have issues optimizing.

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There's really no way of telling and I don't wanna waste all that time.

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Running it at 2,200 not knowing if it'll ever get more than.

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And then the last one is a furniture brand as well.

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They spent 4,500 in their first month and they were able to get 17 conversions.

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So this is right on the brim.

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This is what I would expect from a furniture brand.

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The other two were kind of, kind of unusual.

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I think this one did have a little bit of conversion history though when they came.

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Yeah, I had no idea whether that conversion history was good quality.

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Right?

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Like, was the tracking set up correctly?

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Were massive changes done to the amount of products or the, the, the

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products that are being offered?

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Was there an entire re overhaul done on the website between then and now?

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I have no idea.

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So a lot of times the, the conversion history is just unknown, where we

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think the algorithm's gonna be able to.

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And then it can't, or we think it won't be able to use it and then it can, so it's

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just sometimes very difficult to tell.

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So that, hopefully gives you guys a better idea of how to guess what

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your minimum spend should be and answer that question for you guys.

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If you wanna work with Starter ppc check out the link in the description.

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I'm the director of Starter PPC and we are hacking Performance Max currently

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to get it to work for small budgets.

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So that is a.

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Focus that that we're working on over there at Starter ppc and yeah.

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Thanks for watching.

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I hope to see you guys there.