What is the Minimum Google Ads Budget for my Contractor Business?
For tradesperson/contractor/home improvement industries, your minimum Google Ads budget will depend on your industry and location, but anything under $1,000 a month will be considered “low budget”.
You’ll need to spend at least $1k a month to target keywords with high purchasing intent – these keywords generate more leads and boost your revenue. Instead of focusing on the investment, focus on your results
If you want qualified leads fast, you should be thinking about Google Ads.
Unlike ads in the Yellow Pages or printing out 5,000 flyers which will cost you a flat fee, Google Ads puts you in control of your spend.
You set the daily Google Ads budget which averages out over the course of a month. Your daily spend can go up and down, but you’ll never exceed your monthly limit – which is great because it puts you in charge of your own marketing spend.
This becomes a double-edged sword when contractors think “oh great, I can bring the cost right down and spend a few bucks a day to earn leads on Google”.
It’s true you CAN spend less.
But the lower your daily budget, the less clicks you’ll get before that daily budget is burned up. And with less clicks comes less customers.
Steps to take before starting any Google Ads campaign
Google Ads are a great way to get quick work, but you can’t just turn on an ad and expect the leads to come flowing in.
Before you start any Google Ads campaign you need to get your ducks in a row. That means setting up your website first. Since your Google Ad clicks will lead people to your website, you’ll risk burning through a LOT of cash if they land on a site that’s not designed to convert people into customers.
“Why can’t I spend a few bucks a day on ads?”
You can. But if you want more customers, this minimum Google Ads budgeting strategy isn’t going to get you there. Remember, more clicks means more customers.
You’ll also need to spend more than a few bucks a day if you want to be on the first page of Google when your target keyword is used. If you don’t have a high enough budget, your competitors can price you out of those crucial ranking spots. This is because there’s a link between impressions, clicks and new clients.
“What’s an impression?”
In marketing speak, an impression is every time your ad is seen by someone on Google. So when someone types in a keyword that’s connected to one of your ads, your ad pops up. The more times your ad is seen, the more chances you’ve got to land a new customer.
It would be great if every person who saw your ad called you up or made a booking, but that’s not reality.
Let’s look at a simple example here. You run a concreting business with a 10% conversion rate. Meaning for every 10 leads, you earn 1 new client. The rest of your leads weren’t ready to commit yet, lived too far away from your area, or were just tyre-kickers looking to price match.
Here’s what happens when you set your minimum Google Ads budget too low
Let’s say you’ve decided on a daily budget of $5 bucks. Here’s where that money goes…
- You have a daily budget of $5
- Your cost per ad click is $1 (as an example)
- That means you get an average of 5 ad clicks a day before your daily budget is exhausted ($1 x 5 = $5)
We’ve already seen it takes you an average of 10 leads to earn 1 client.
Here’s the bad news – someone clicking on your ad isn’t a lead.
They might not find what they were looking for on your website, they might think your prices are too high, or they might get distracted and forget to come back.
These people only become leads if they choose to fill out a contact form on your site and request a call-back. You might actually need 100 website visitors to earn 10 leads. And from those 10 leads you end up with 1 client.
If you’re only getting 5 ad clicks a day then you’re only getting 5 website visitors a day.
With just 5 people checking out your site through your ads, imagine how long it will take you to earn a single lead? And since it takes you 10 leads to earn a client, your low-budget ads could be up for days or weeks without ever helping you make any money.
Switch Your Marketing Spend to Us, and We’ll Increase Your Return On Investment or We’ll Give You $300
A low Google Ads budget is the fastest way to waste money, not save it
Even worse, spending a few bucks a day means your budget may be used up by people who aren’t ready to pay for your home improvement services yet. If your low budget gets wasted on unqualified leads, your ad vanishes for the day. So when someone jumps online who is genuinely keen to hire a landscaper or painter or electrician…you’ve got no budget left.
That means your ad doesn’t show, and that ‘ready-to-buy’ lead goes to your competition instead.
In short, you shouldn’t slash your ad spend because it punishes your business and limits the number of potential customers you can reach.
Not only this, but ads at the top of the page typically generate more conversion than ads further down). So when your business is spending less per month you’re not giving yourself the best odds of success by being near the top of the page and targeting the hungriest buyers.
Feeling nervous? Find out how to avoid a low-budget Google Ad campaign DISASTER
“Am I going to be putting financial pressure on my business to pay for Google ads then?”
Not at all.
The easiest way to map out your ad spend is to work backwards. Start with what you’re happy to pay each month in marketing costs and divide by 30. So if you’re keen to spend $1,000 on Google ads, that works out around $30 a day in ad spend.
If that amount of money being spent each day makes you nervous there’s a couple of simple ways to flip the script.
For a start, Google Ads return an average of $2 for every $1 spent. If you focus on what you stand to earn, not what you’re spending, the end result looks a lot more exciting than the initial spend
Secondly, think of what your average customer is worth. It sounds harsh, but it doesn’t matter what you think about your budget – only the numbers matter.
You don’t need to know the exact figure, but knowing your customer’s average lifetime value can help make it easier to invest in Google Ads knowing you’ll come out (way) ahead in the long run.
Consider some of the following average customer lifetime values by service industry and see where you stack up.
| Industry | Average Customer Lifetime Value |
|---|---|
| HVAC Company | $15,340 |
| Pest Control Expert | $2,103 |
| Solar Installation | $12,950 |
| Concrete Contracting | $29,931 |
| Tiling | $5,289 |
| Plumbing | $8,023 |
| Glazing | $4,919 |
| Bathroom Renovator | $17,003 |
| Kitchen Renovator | $18,453 |
Let’s say you’re spending $1,000 a month on ads and earning 5 new clients. If those 5 clients have a lifetime value of $5,000 then you’re generating $25,000 worth of revenue ($5,000 lifetime value x 5 customers).
Even when you factor in your other business costs, like tools, transit costs and materials, you’ll still be making a great profit.
It’s easy to get distracted by your ad spend, but the amount you’re willing to pay isn’t the only consideration.
Wondering how many keywords we’ll target to bring new bookings to your calendar? Find out how our keyword strategy works.
“So what dollar amount should I be budgeting each month at a minimum?”
As a minimum you should be looking to send $1,000 a month plus ad management and optimisation fees.
This figure will give you enough bankroll to target and rank for keywords that are going to bring you more work, and help you make a tidy profit.
“What should my minimum Google Ads budget be?”
This depends on your goals.
It’s better to figure out what your goals are as a tradie, then work backwards from there. If your goal is to spend as little money as possible then you can definitely do that, but you won’t bring in new customers.
If your goal is to bring in new customers, you’ll be able to work backwards and figure out how much you need to invest to rank for the keywords that will bring you the customers you’re after.
To work backwards, you’ll need to have a rough idea of:
- Your competition
- Your location
- Your budget
- How many pages your site has.
- Your business goals
A combination of these factors will help determine what you should spend.
But if you’re already in the mindset of “what is the minimum spend I can do”, you’ve probably already lost the war against your competitors.
Instead, think “what kind of budget will I need to help me achieve my goals this year?”
At Tradie Digital we optimise each Google Ads campaign to keep costs down. That means we exclude negative keywords and target long tail keywords with high intent to buy, so your daily spend goes further and isn’t wasted by time wasters and trolls.
At the same time we take your average customer lifetime value into account to make sure your campaign is profitable in the long-term (because looking at the day to day numbers can be misleading).
Your industry and location will impact your ideal figure, so if you’re based in Melbourne’s CBD you may need to budget more than a tradie based in Woy Woy. In a nutshell, $1,000 might get you started, but keep in mind the questions you’re asking yourself. If your main concern is “what’s the smallest amount I can spend” then you’ve already lost ground on your competition who are investing more in their own paid ads campaign.
Wondering if your business is eligible for a Tradie Digital Google Ads campaign?
