Digital Marketing Google Ads Google Ads Spending Guide: How Much to Spend on Contractor Google Ads?

Google Ads Spending Guide: How Much to Spend on Contractor Google Ads?

How Much to Spend on Contractor Google Ads

Asking a marketing agency how much to spend on Google Ads feels like asking a casino how much you should bet. It’s a loaded question in most tradie’s, contractors and home improvement businesses’ eyes.

The truth is, Google takes 100% of your ad spend. The amount you should spend should be enough to rank for keywords that generate leads in your location and industry. There’s no magic figure you should hit, instead, focus on running a profitable ad campaign.

If you’re going to be paying for every ad click, it’s natural to wonder how much you should be spending on a total Google Ads campaign.

As a small business owner, whether you work on the tools Monday to Friday or you’re in the office setting the schedule for your team, you want to keep costs low. There’s no point buying a $1,000 pair of pants when a $100 pair will get the job done.

With this cost-cutting attitude in mind, most trades businesses want to spend as little as possible on their Google Ad/Pay-Per-Click marketing. But that creates a HUGE problem…

Because you’re paying for ad clicks, low Google Ads spending can be exhausted quickly within a few clicks.

If the handful of people who clicked on your ad don’t become customers, you’re throwing money down the drain. You won’t be able to get more work with 1 or 2 people visiting your website each day. It’s scary to think about spending more on Google Ads, but think of the long game.

The more your ads are seen and clicked, the more chances you have to bring in new customers and make your money back – before making the profit that you signed up for.

In short, you should spend as much as possible on Google Ada – as long as it’s profitable.

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Understanding Google Ads spending

“A marketing agency telling me to spend more on my marketing sounds about par for the course. How do I know you’re not trying to fill your own pockets?”

We get it, us telling you to spend more on marketing seems suspicious. But here’s the truth…

Every tradesperson working with us pays us to manage their account and make sure their ads are optimised around the right keywords, to attract the right leads, because that’s how you generate revenue and turn a profit.

In this article, we’ll tell you why you should look to increase your Google Ad spend in 2022, explain why Google Ads spending has a direct impact on your leads, and leave you with a few tips to help your future Google Ads campaign get off the ground.

The risks of starting with a small Google Ads budget

Right now you could buy a small ad in the local paper for a few bucks and test your results.

If the ad gets you a few extra enquiries, you might upgrade to a full-page ad that costs more. In this example you’ve tested the low-cost ad, and only upgraded when the low-cost approach worked.

Unfortunately, paid ads don’t work this way.

If you spend $2 or $5 a day on Google Ads, you might get 1 or 2 clicks a day. This is because service-based keywords can be expensive. If an ad’s cost-per-click (CPC) is $5, a daily budget of $5 will get you ONE click before your budget is exhausted and your ads are turned off for the day.

Will that 1 website visitor want to request a quote or call you out for a service? Maybe, but with such low numbers of people coming from your ads to your website, odds are they’ll leave without turning into customers.

And since you’re only spending a couple of bucks a day, you won’t get enough website traffic to drive the increase in enquiries and leads you’re after.

Curious about leads? Learn how many leads tradies earn using paid ads

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A low budget also means lower rankings and fewer ad clicks

Starting with a low budget means you won’t rank very high on the page.

And with lower rankings comes a lower Quality Score as less people click on your ad – since you’re further down the page and the top spots get the most clicks.

Without getting too technical, your click-through-rate (CTR) helps determine your Quality Score, which helps determine your cost-per-click. So starting with a lower budget can actually mean you’re paying MORE per click, which isn’t great for your return on investment.

Want to learn more about improving your Quality Score? Find out how.

How to budget the right Google Ads monthly spend

Typically, trade, contracting and home improvement businesses fall into 3 major categories:

  • Some want enough leads to tick along and keep the status quo
  • Some want enough leads to grow the business and take on more staff
  • Some want enough leads to crush the competition and grow aggressively

All 3 of these stages require different budgets.

They’ll also likely require different products. For example, depending on your goals you could use a combination of SEO, Google Ads and Remarketing.

Only you can determine how aggressively you want to grow. Your marketing budget, goals and the control you have over cash flow will determine how quickly you can grow – but it’s up to YOU to decide at what speed growth should happen.

We recommend starting with a test budget

But make sure it’s decent for your industry otherwise you won’t drive up the Quality Score the way you want.

Because here’s a secret that most people don’t tell you about Google Ads – Google Ads optimize over time.

It’s important to remember this because this is where most trades, contracting and home improvement businesses fall off the wagon. They break even in the first and second months (or even fail to break even), and then quit.

They don’t realize that their account is learning over time (assuming you have a reliable agency working with you) which means your results will only increase the longer your campaigns run.

Another reason why contractors fall off the wagon is that they make emotional decisions.

They see slow results in the first month and fire their agency. At the same time, they get stuck with a “Google Ads doesn’t work” mindset and get defensive when someone suggests growing their business with paid ads.

But a bad experience isn’t the same as a bad marketing strategy.

Let your first month be the research phase of your ads campaign and use what you learn to make the following months highly profitable.

Oftentimes, there are other reasons that you’re not making money off your Google Ads like –

  • a poor sales process,
  • or you’re competing on price (poor marketing strategy and website).

Poor and low-quality digital marketing agencies will not recommend you adjust your tradie website before they start to run the ads. Why? Well quite simply, because the salesperson makes a commission on the sale. They’re not concerned with the performance of your ads nor the profit of your business.

Run far away from a company that does not suggest website improvements before starting a Google Ads campaign.

Our monthly Google Ads budget recommendations

Our recommendation depends on your industry, location, and competition, but generally speaking, we recommend a budget of $1,000 a month as a minimum and up to $15,000 a month depending on your goals.

But keep in mind, it’s not what you spend that matters – but how much money you make in return.

If you’re a home renovator and your average client pays $20,000 for your service, paying $30 a day to generate 1 or 2 qualified leads a day doesn’t sound like a bad deal at all. As long as your ads campaign is generating enough leads to cover the cost of your daily spend, it’s not a question of how much you should spend – but how many leads you want to generate.

Curious to learn more about the ideal Google Ads budget?

Learn more about running minimum budget campaigns for tradespeople and how to stretch your money further

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