How much should a small business spend on Google Adwords?

That depends on a lot of factors. I’ll share some advertising truths that I’ve learned over the years. They might help you make your decision.

Your advertising budget should be diverse. You don’t want all your eggs in one basket. But you also need to spend money on the advertising channels that are bringing in revenue. When you’re starting off, you should try many different options to see what works for your business.

But it shouldn’t be too diverse. Because in general, you’ll find that 20% of the ads you run bring in 80% of the revenue. To figure out which ads, you need to track and measure your campaigns. So drop the non performing ad campaigns.

Sales are critical to success. You can hide a lot of problems with a business if you can get sales. So your marketing budget should reflect this truth. If you can spend a dollar to make a profit, then spend it! If your ad campaigns are run efficiently then investing more will lead to more growth. If they’re bloated then you’ll just be bleeding money.

Google Adwords isn’t the best fit for every business. Don’t get me wrong. Google Adwords is an awesome platform and you should dedicate a budget to testing it. But it’s not for every business. You might see better results on Facebook Ads. Even Bing is competitive in some verticals. But don’t assume anything. Test out different advertising channels and see what converts.

With all that said, a healthy ad budget is around 10-20% of profit. Invest more if you want to grow faster and you know what you’re doing. But be cautious. Growing too fast can cause problems. And throwing money at ads without understanding the metrics is a good way to lose money.

Credit: Hardeep Heer