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How Much Should You Spend: A Practical Guide to Master Your Boutique Hotel's Google Ads Budget
Roxana from Infrared
October 21, 2024
Note: This guide dives deep into Google Ads budgeting for search campaigns with real numbers and examples. It's designed for boutique hotel owners who want to understand and optimize their ad spend. Get ready for some practical insights!
As a boutique hotel owner, mastering Google Ads can set you apart. Let's break down how to budget effectively. Maybe you’ve been asking yourself how much I should invest in this advertising type. Or maybe your agency hasn’t given you a breakdown.
Here’s what you need to know first: You can opt for an average daily budget or a shared budget for your campaigns. This is how Google measures your ads investment.
Campaign Daily Budget: The amount you set to spend on a single campaign per day. Google Ads will aim to average this amount over the month, accounting for daily variances.
$50 per campaign per day = ~$1500 per month
Shared Budget: Allows you to allocate a single budget across multiple campaigns. The budget is distributed based on the demand and performance of each campaign, ensuring optimal spending.
$50 per multiple campaigns per day = ~$1500 per month
So what should you choose if there’s no difference in the bottom line?
Choose depending on your type of campaigns and objectives. Here’s the gist of it and more detailed below:
Daily Budget: Use for precise control over individual campaigns with unique goals, such as seasonal promotions or special events.
Shared Budget: Ideal for multiple campaigns with common objectives, like brand awareness. This method allows flexible fund distribution based on performance, simplifying management and optimizing overall spending.
Feature | Daily Budget | Shared Budget |
|---|---|---|
Definition | Budget set for each individual campaign. | Budget shared across multiple campaigns. |
Best for | Specific campaigns with unique goals. | Multiple campaigns with a common goal. |
Budget Control | Precise control over each campaign’s spending. | Flexible distribution based on performance. |
Ease of Management | More time-consuming to manage multiple budgets. | Easier to manage fewer shared budgets. |
Risk | Over-spending on high-performing campaigns. | Under-spending on low-performing campaigns. |
Performance Optimization | Limited optimization per campaign. | Better optimization across campaigns. |
Example Use Case | Seasonal promotions, or special events. | Brand awareness campaigns across regions. |
Flexibility | Lower | Higher |
Control | High | Moderate |
Now Calculate Your Budget
A) Daily Budget
First, estimate your daily spend:
Monthly budget ÷ 30.4 = Daily budget
Example: $1,500 ÷ 30.4 = $49.34/day
Then estimate your daily clicks:
Daily budget ÷ Average cost per click (CPC) = Estimated clicks per day
Example: $49.34 ÷ $2 = 24.67 clicks/day
Note that the $2 value for the average cost per click (CPC) is an example and will be obtained through keyword research and planning. The cost for a click varies a lot based on keywords, context, competition etc.
You can set a cap on how much you’re willing to spend for a click that goes to your landing page. This is a different topic that we’ll cover, remember for now that this is what you actually pay for in a typical search campaign.
Add up campaign budgets:
Sum of all campaign daily budgets = Total shared budget
Example: Campaign A $20 + Campaign B $30 + Campaign C $50 = $100/day
Calculate monthly spend:
Total shared budget × 30.4 = Monthly shared budget
Example: $100 × 30.4 = $3,040/month
So you’re setting here an initial budget for your campaigns (A, B, and C) and this sums up to the total shared budget. Google will automatically redistribute each campaign’s individual budget based on performance, but keeping the total capped at your total shared budget figure.
How Much is the Minimum Google Ads Budget?
There is no fixed minimum budget for Google Ads, but a practical starting point is at least $10 per day, totaling about $300 per month.
Average CTR (click through rate) from Google Ads for the travel industry - 8.24%, which is the highest across all industries.
When you run search campaigns, your ads are showed based on your targeting to a number of people. But not all of them will engage with the ad.
In the travel industry, statistics tell us that about 8.24% of the people will click on an ad. The others will be attracted to other ads, other search results or will not click on anything.
So for 100 searches that match the keywords I set in my campaigns, about 8 people click on my ad and I will pay for each click an amount. The average of the amounts you pay for each click is the Average CPC mentioned earlier.
Suggested Monthly Budget for Google Ads for Hotels
To determine your best budget:
Allocate 5-10% of your annual revenue to marketing.
Allocate 20-50% of your marketing budget to Google Ads.
Example: If your annual revenue is $500,000:
Total marketing budget: $25,000-$50,000
Google Ads budget: $10,000-$25,000 annually, translating to $833-$2,083 per month.
Industry benchmarks: If the average CPC in your industry is $1.63 and you aim for 1,500 clicks per month, you need around $2,445.
Guidelines based on business size:
Small businesses: $1,500 to $8,000 per month.
Mid-size businesses: $7,000 to $30,000 per month.
Enterprise-level businesses: $20,000 to $50,000 per month.
Why should we pay for each click?
Everything seems to revolve around clicks here. The click is an interaction with your ad that directs the person who searches to an action like a phone call or visiting one of your website pages.
This is what it means for a platform like Google to bring potential clients to your door. They say the rest is up to you: how you answer the phone calls or manage visitors on your website.
Tips to Optimize Your Budget and Reduce Advertising Costs
Use past data to create accurate spending forecasts
Try Google Ads Budget Planner to see estimates on clicks, impressions, and conversions
Adjust based on performance and focus on high-performing campaigns
Real-World Example
Let’s assume a goal of 100 bookings/month
Website conversion rate: 5% (that means that out of 100 people that cross our website’s door, 5 will make a booking based on previous statistics)
Clicks needed: 2,000 (we need to bring 2000 people to our door and we’re getting them from Google Ads campaigns)
Impressions estimated: 24,271 (Google will show the ad to this number of people to get the clicks above)
Budget needed: 2,000 × $1.63 = $3,260/month
Start with this budget, then adjust based on your results. Remember, in Google Ads, every dollar should work hard for your boutique hotel.
Need help setting up your Google Ads strategy? You can learn more and get support in our 10K Hotelier Marketing Club or schedule a private risk-free audit.