“How much should we spend on Google Ads?”
The usual answer is “start with £500 a month and see”. Which is how businesses end up nine months in, £4,500 down, with a handful of enquiries and no idea whether that’s good.
There is a better way to arrive at the number, and it takes about twenty minutes with a calculator and figures you already have. You work backwards from what a customer is worth to you. Everything else — the clever bidding, the keyword research, the ad copy — is downstream of getting this right.
Work it backwards, not forwards
Four numbers. Get them from your own business, not from an industry benchmark.
1. What’s a customer worth?
Take the profit on an average job, not the invoice value. If you’re a business people come back to, use twelve or twenty-four months of profit rather than one sale — that’s the honest figure, and it’s usually far bigger than people assume.
2. What proportion of quality enquiries do you convert?
If one in four enquiries becomes a customer, you need four enquiries per customer.
3. So what can you afford to pay for an enquiry?
Customer value ÷ enquiries per customer, then decide what share of the profit you’re willing to give up to acquire the work. A third is a reasonable starting point for most SMEs.
4. What does a click cost in your market?
Google’s Keyword Planner will tell you, free, in ten minutes. Typical UK ranges I see: £1–£3 for general local services, £3–£8 for trades and home improvement, £8–£20+ for legal, insurance, financial and high-value B2B.
A worked example
A commercial cleaning firm selling annual contracts.
- Average contract profit over a year: £3,000
- Enquiry-to-customer rate: 1 in 5
- Willing to spend a third of first-year profit to win one: £1,000 per customer
- So per enquiry: £1,000 ÷ 5 = £200
- Clicks cost about £4, and a decent landing page converts around 5% of clicks into enquiries — so 20 clicks per enquiry, at £80
£80 to acquire something worth £200 of allowable spend. That works comfortably, so the question changes from “can we afford it” to “how many enquiries can we handle”. At £80 an enquiry and capacity for five new customers a month, that’s 25 enquiries, or £2,000 a month.
Now that’s a number you can defend to yourself — and a number you’d know how to cut.
The minimum that isn’t a waste
Below a certain point you’re not buying customers, you’re buying data too slowly to learn from.
As a rough floor: you want at least 15–20 clicks a day, so the account gathers enough signal to be improved.
- £2 clicks → around £900–£1,200 a month
- £5 clicks → around £2,250–£3,000 a month
- £12 clicks → you need real budget, or a very narrow, very specific set of search terms
If that’s beyond you, don’t split a small budget across everything. Narrow the target until the budget is adequate for something: one service, one town, and only the search terms where the buyer clearly has their wallet out. Emergency electrician [your town] beats electrician every time on a small budget.
And if the numbers genuinely don’t work, don’t advertise. Put the money into local SEO and your Google Business Profile, which cost time rather than daily spend. I’d rather tell you that than take a management fee for spending your money badly. Local SEO →
Where the money actually leaks
Six things account for most of the waste I find in small accounts.
- Broad match with no negative keywords. You’ll pay for free, jobs, DIY, courses, near Manchester. Check your search terms report weekly for the first month. This single habit typically saves 20–30% of spend.
- Sending clicks to the homepage. The ad promises one thing, the homepage offers eleven. Every campaign needs a page that answers the exact search. Web design →
- Not tracking conversions properly. If you can’t see which keywords produced enquiries, you’re optimising on clicks, which is optimising on the wrong thing entirely. Set up form and call tracking before you spend a penny.
- Advertising when you’re closed. If enquiries need answering to convert, don’t run ads at 11pm unless a form gets answered at 8am sharp.
- Bidding on your own brand name and calling it success. Sometimes justified defensively. But those customers were coming anyway — don’t let it flatter your figures.
- Judging it at four weeks. The first month is a learning period, and results in month three look different. Give it ninety days or don’t start.
What management costs
Two things get paid for: the media spend, which goes to Google, and the person managing it.
- Agencies typically charge 10–20% of ad spend, or £300–£1,000 a month minimum, whichever is higher.
- Freelancers and consultants charge £250–£500 a day. I charge £350 a day: usually one to two days to build and launch an account properly, then a half-day to a day a month to manage it.
The maths that matters: if management costs £350 a month on a £1,000 media budget, it needs to make that £1,000 perform 35% better than you would unmanaged. On most small accounts I look at, that’s not a stretch — the waste above is usually larger than the fee. But it’s a fair question to ask whoever’s charging you, and you should ask it.
When Google Ads is the wrong answer
Honestly, quite often.
- Nobody’s searching for what you sell. New category, or a product people don’t know exists. Paid social or content will do more.
- Your website can’t convert. Ads amplify what’s already there. Sending traffic to a page that doesn’t persuade is buying visitors, not customers. Fix the page first, always.
- Your margins are thin and your order values small. If a customer is worth £40 of profit and clicks cost £3, the sums rarely work.
- You can’t answer the phone. The single most expensive fault in paid search is a missed call. If enquiries wait two days, don’t turn ads on until that’s fixed.
Common questions
How much should a small business spend on Google Ads?
Work it backwards from what a customer is worth: take your profit per customer, divide by how many enquiries it takes to win one, and decide what share you’ll spend to acquire it. Then compare that to click costs in your market. In practice most small businesses need at least £750–£1,500 a month for the account to gather enough data to improve — below that, narrow the targeting rather than spreading the budget thinly.
How much does Google Ads management cost in the UK?
Agencies typically charge 10–20% of ad spend with a minimum of £300–£1,000 a month. Independent consultants charge £250–£500 a day. I charge £350 a day — usually one to two days to set up an account properly, then half a day to a day a month to run it.
How long does it take for Google Ads to work?
Expect a learning period of two to four weeks, meaningful data by six weeks, and a fair judgement at ninety days. Enquiries can arrive on day one, but the cost per enquiry in month one is rarely representative of what it settles at.
Is Google Ads or SEO better for a small business?
They answer different needs. Ads buy visibility immediately and stop the moment you stop paying; SEO takes three to six months and then costs nothing per click. If you need enquiries this month, advertise. If you need a sustainable position, do the SEO. Most businesses should do both, starting with whichever their cash flow allows.
Why are my Google Ads not converting?
The three usual causes, in order: the ad sends people to a page that doesn’t answer the search, the account is paying for irrelevant search terms because negative keywords haven’t been set, and conversions aren’t tracked properly so nothing can be optimised. Check the search terms report first — it’s usually obvious and often expensive.
Want a second opinion on your account?
Give me view access and I’ll spend an hour in it, then tell you what I’d change and roughly what it’s worth. Free, no obligation, and if it’s already well run I’ll say that too.
