How Much Should You Spend on Google Ads in Australia?

The short answer

There is no single right Google Ads budget, but here is a realistic starting point: many Australian small businesses begin somewhere between $1,000 and $5,000 per month in ad spend. Where you land in that range, or above it, depends on three things: what a customer is worth to you, how much a click costs in your industry, and how many leads you need. This guide shows how to work it out properly, rather than guess. 

Work back from what a customer is worth

The best budgets start at the end, with the value of a customer. If a new customer is worth, say, two thousand dollars to your business, you can afford to spend far more to win one than a business whose customer is worth fifty dollars. Work out your average customer value and how many new customers you want each month, and you have the foundation of a sensible budget. 

This is why a good budget is a business decision, not a number plucked from the air. It flows from your economics. 

Understand your cost per click and cost per lead

Google Ads costs vary enormously by industry, because you are bidding against competitors for both clicks and ad rank. A click in a low competition niche might cost a dollar or two, well below the average cost per click in busier categories. In competitive fields like law or trades, it can cost many times that, though long tail keywords can still offer a more affordable way in. Your cost per click, shaped partly by your Quality Score, combined with how many clicks it takes to generate a lead, gives your cost per lead, and that is the number that really matters. 

You will not know your exact figures until you run campaigns and review campaign performance, but a good agency can give you a realistic estimate for your industry before you start. 

Set a testing budget first

When you begin, part of your budget is buying data. The first few weeks of conversion tracking reveal which searches, ad copy and pages convert, and which waste money. Set a budget large enough to gather that data in a reasonable time, then use what you learn, including landing page experience, to focus spend on what works. Starting too small starves the campaign of the data it needs to improve. 

Ad spend and management: two separate costs

It is worth being clear that Google Ads involves two costs. There is your ad spend, the money that goes to Google each time someone clicks, and there is Google Ads management, the cost of setting up and running the campaigns well. Management is what turns raw spend into results, through the tracking, targeting, bidding strategies, landing pages and ongoing optimisation that most businesses do not have time to do well themselves. 

At Studio22, we charge a flat monthly management fee, set according to the size of the campaign, so you always know exactly what you are paying. For a tailored figure, it is best to book a free strategy call so we can look at your goals and market. 

Why spending too little can waste money

It sounds odd, but too small a budget is often the least efficient. With very little to work with, a campaign cannot gather enough data to optimise, cannot compete for the better positions, and struggles to reach the volume of leads that makes the work worthwhile. It is usually better to fund one channel or campaign properly than to spread a tiny budget thinly across several. 

How to scale once it is working

Once your campaigns are producing leads at a cost that works for your business, scaling is straightforward: increase the budget on what is proven to work, while keeping an eye on your cost per lead as you grow. The goal is not the biggest budget, but the most profitable one, spending more only while each extra dollar keeps returning more than it costs. 

For the full picture of how Google Ads works, see our complete guide to Google Ads. And when you want a realistic budget for your business, book a free strategy call and we will give you honest numbers. 

Budgeting across different campaign types

Not all Google Ads spend behaves the same way, and the type of campaign you run changes how far your budget goes. 

Search ads, plain text ads triggered by what someone types into Google, are usually the most expensive per click because you are bidding on clear, high intent searches. They are also usually the highest converting, since the person is actively looking for what you sell right now. Shopping campaigns work differently, showing your product with an image and price, and tend to suit ecommerce budgets better than a straight search campaign. 

Video ads on YouTube and display ads across Google’s wider network generally cost far less per interaction. They convert at a lower rate too, since the audience is not necessarily searching for you at that moment. They suit building awareness on top of an existing search budget, rather than replacing one. Performance Max campaigns blend several of these channels into a single automated campaign. It is efficient once you have enough conversion data, but harder to see exactly where your budget is going channel by channel. 

If your budget is limited, it is usually better to fund one well targeted campaign type properly than spread a small amount thinly across several. For most lead generation businesses starting out, that means putting the bulk of the budget behind search ads first, where buying intent is clearest. 

Getting more from the same budget

Before increasing your Google Ads budget, it is worth checking how much more you could get from the amount you are already spending. 

Quality Score is the biggest lever most businesses leave on the table. A higher Quality Score, Google’s measure of how relevant your ad and landing page are, means you can win the same ad rank for a lower cost per click. Improving ad relevance, writing more specific ad copy that matches the search term closely, is one of the more straightforward ways to lift it. 

Trimming irrelevant traffic matters just as much. A tighter negative keyword list stops your budget being spent on searches that were never going to convert, freeing that money up for searches that will. Reviewing your search terms report regularly, rather than setting the campaign up once and leaving it, is how you catch this early. 

Smart bidding strategies, once your account has enough conversion data to support them, generally get more from a fixed budget than manual bidding. None of this requires spending more. It means making sure every dollar you already have is working as hard as it can, before you commit to a bigger budget. That review is usually the first thing we do with a new account. 

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