“How much should we spend on Google Ads?” is one of the first questions we hear. The honest answer is: it depends. But “it depends” isn't very useful, so here's the framework we actually use to set budgets for clients.
Start with the value of a customer
Before thinking about ad spend, work out what a new customer is worth to you. Look at the average order value or contract value, your gross margin and how often customers come back. A boiler installation worth £3,000 supports a very different cost per lead than a £40 product.
Work backwards to a budget
Once you know what you can afford to pay for a customer, three numbers give you a starting budget:
- Average cost per click (CPC) for your keywords. Google's Keyword Planner gives a rough range.
- Conversion rate: the percentage of visitors who enquire. For a well-built landing page, 5–10% is a reasonable starting assumption for many service businesses.
- Close rate: the percentage of enquiries that become customers.
For example, if clicks cost £3, your page converts at 8% and you close 30% of enquiries, one customer costs roughly £3 ÷ 0.08 ÷ 0.30 ≈ £125 in ad spend. If you want 20 new customers a month, you'd budget around £2,500 per month, then refine it with real data.
Enough budget to learn
Google's automated bidding needs data to work well. Spreading a tiny budget across dozens of keywords means no campaign ever gets enough clicks to learn from. It's usually better to focus on a small set of high-intent keywords and do them properly, then expand.
Where budgets get wasted
- No conversion tracking. If you can't see which keywords generate enquiries, you're optimising blind.
- Broad match without negatives. Unchecked, you'll pay for searches like “free”, “jobs” or “DIY”.
- Sending traffic to the homepage instead of a focused landing page.
- Ignoring phone calls. For many local businesses, most leads come by phone, so track them.
- Set and forget. Search terms, bids and ads need weekly attention.
A sensible starting point
Many local service businesses start somewhere between £1,000 and £3,000 per month in ad spend, while competitive sectors such as legal, finance and home improvement often need more. The right figure is the one that produces enough leads to learn from within the first six to eight weeks, at a cost per customer your margins can support.
Treat your first two months as a paid experiment. The goal is to find the keywords, ads and pages that convert, then scale what works.
Our Google Ads management service builds campaigns around cost per lead from day one, with full tracking and weekly optimisation. Pair it with lead generation to follow up enquiries in minutes. Talk to us about a budget that fits your goals.
Written by
Abbas · Signature Marketing & Tech
Abbas works with UK businesses on digital growth, from search visibility and paid media to the systems and support teams that turn enquiries into customers.
