How much to invest in Google advertising if I'm just starting?

Nikola Kalincevic
Nikola Kalincevic
19/05/2020   /   0

If you are starting a new business, creating your first website, or embarking on online advertising and you are not sure how much money you should invest, there are a few things you need to know.

You must determine the criteria by which you calculate the return on investment. This depends on whether you are advertising services or products and on which platforms, channels, you want to advertise.

If you have an online store, the return on investment is calculated as follows:

Product ROI = (Revenue - Product cost price) / Product cost price) * 100%

If you advertise services, the return on investment is calculated as follows:

ROI = (Total Revenue - Total Cost) / Advertising Costs) * 100%

If you need to calculate more simply whether advertising pays off for you, you can do so by calculating the cost per acquisition.

The cost per acquisition is calculated as follows:

CPA = Campaign Cost / Sales

The cost per acquisition, CPA, should not be greater than the profit made by that same acquisition, otherwise, the campaign will not pay off for you.

Now that you know how to look at the most basic measurable values, we need to look at the process if you are advertising on multiple channels.

If you are just starting, you don't have a clearly defined budget allocation plan. In short, the more channels you have, your total investment must be divided.

In cooperation with you, based on the industry, previous experience, and based on mutual agreement, we determine the initial plan for the distribution of the budget by platforms. In addition to Google, most new brands are also advertised on social networks, so the same budget is distributed to bring the most results.

In the following period, mostly for a month, all advertising channels, in this case, the budgets of Google advertising, are monitored and corrected based on the results.

Monitoring analytics and optimizing campaigns is very important to get the return on investment as high as possible.

The goal of this test period is to determine the exact budget allocation by platform, product, or service and to plan a budget increase so that each channel, in this case, Google Ads, can be the most cost-effective.