Google Ads and Shopify for SMEs: How Much Budget Do You Need?

In today's digital marketplace, Google Ads (formally Google AdWords) has emerged as an indispensable tool in the e-commerce arsenal, particularly for those managing Shopify stores.

Through this article, I aim to guide and share real insights from my hands-on experience in the field. My journey in the e-commerce world extends beyond running CC Digital; it includes a collaborative role with Dean at The Hubb (The Hubb), a marketing agency specialised in hassle-free marketing solutions for founders, where I spearhead the Google Ads initiatives.

This partnership has allowed me to dive deep into the nuances of marketing smaller Shopify stores. From this vantage point, I bring to you not just theories or best practices, but real data and proven strategies that have propelled these stores to success. I’m not talking about “industry averages” or bs large-scale studies, but real data from the accounts we actually manage.

Whether you're just starting out or looking to refine your existing approach, this article is packed with actionable insights on how to effectively allocate your Google Ads budget to maximise your Shopify store's reach and growth.

Understanding Google Ads for E-com

t's important to note that Shopify stores typically engage with specific types of Google Ads: Shopping ads and Performance Max (PMax) campaigns. Shopping ads are highly effective for e-commerce sites as they showcase your products directly in the Google search results, complete with images, prices, and your store name. This visual format is not only appealing but also provides potential customers with essential information at a glance, leading to higher conversion rates.

Performance Max campaigns, on the other hand, are a newer addition to Google's advertising suite. These campaigns use Google's machine learning technology to optimize ad performance across all Google networks, including YouTube, Google Search, and the Display Network (although I generally recommend running feed-only pmax to force spending on shopping as this is where you’ll likely see the largest returns). PMax campaigns are particularly beneficial for reaching a wide range of customers across different platforms and devices, ensuring that your Shopify store gets the most out of its advertising efforts.

While this article won't delve into the technical intricacies of these ad types, understanding that Shopping ads and PMax campaigns are the go-to choices for Shopify stores is crucial. This knowledge ensures that when you're ready to invest in Google Ads, you're armed with the insight to choose the ad types most likely to amplify your store's online presence and sales potential.

Average Cost of Google Ads for E-commerce (SMEs)

When discussing the average cost-per-click (CPC) for Google Ads in the e-commerce sector, it's vital to clarify the scale of businesses we're focusing on. This article primarily addresses the needs and strategies pertinent to smaller, average e-commerce stores — specifically, those with monthly revenues ranging from £3,000 to £100,000. It's important to recognise that larger businesses, often operating with substantially higher budgets and different marketing strategies, will have a distinct approach to Google Ads, not covered in this context.

It’s also important to note that these benchmarks not only vary by sector but also depend on factors like product type, competition, and market trends. Recognising these nuances helps in setting a realistic and effective budget for your Google Ads campaigns. This budgeting is not about a one-size-fits-all number but about finding a cost-effective strategy that aligns with your store's specific financial thresholds and marketing objectives.

Spend and Budget: Insights from Real Data

When it comes to allocating budget for Google Ads in e-commerce, especially for smaller stores, the adage 'you have to spend money to make money' often holds true. However, the amount you spend and the results you achieve can vary significantly. Our analysis of recent data from various e-commerce clients highlights this variability and offers valuable insights for setting your budget.

Our Own Client Averages

• Average Spend: The average advertising spend across our e-commerce clients has been £491.42 in the last 28 days.

• Average Return: More importantly, this investment has yielded an average return of £4,748.78. This return is a testament to the effectiveness of well-optimized Google Ads campaigns, especially when they are strategically aligned with the store's target audience and product offerings.

• Average Return on Ad Spend (ROAS): The average ROAS stands at an impressive 7.81. This metric is crucial as it goes beyond mere revenue figures; it highlights the efficiency and effectiveness of the ad spend. A ROAS of 7.81 indicates that for every pound spent on ads, our clients are seeing a return of roughly £7.81.

• Here’s some real life data from 28 days towards the end of 2023:

What Can You Take From The Data Above?

• The average spend over the 28 period (across all client accounts) was £491.42.

• The Average sales (return, or conversion value) from that spend was £4748.78.

• Spend can vary for SMEs. The lowest spend in the 28 period of data we looked at was just £194.36.

• While the highest spend was £1,514.91.

Google Ads Needs A Big Budget: Debunking Common Misconceptions

There's a widespread belief, often perpetuated by many agencies and freelancers, that Google Ads are less effective for small businesses operating on lower budgets. But this just isn’t true (as is demonstrated by the data shown above).

The Reality Behind Google Ads for Smaller Budgets

1. Misconception About Budget and Effectiveness: There's a common misconception that Google Ads only work well for businesses with large budgets. This is far from the truth. Our data demonstrates that even with an average spend of £491.47, businesses have achieved substantial returns, indicating that Google Ads can indeed be a viable option for SMEs.

2. Why Some Avoid Smaller Accounts: The hesitancy from some agencies and freelancers to manage smaller Google Ads accounts often stems from the challenges associated with them. Smaller budgets mean less data, and less data can make account management more complex. This 'snowball effect' from the results due to data scarcity often deters many from taking on such accounts.

3. The Opportunity for SMEs: However, this should not discourage small business owners. The success of our clients at The Hubb is a clear indicator that with the right strategy and a focus on continuous optimisation, even smaller Google Ads budgets can yield impressive returns. What's required is a keen understanding of the business's unique market position, customer base, and a tailored approach to ad creation and management.

Implications for Your Ad Budget

This data is particularly insightful for small to medium-sized Shopify store owners aiming to establish a realistic and effective ad budget. Here's how you can apply these insights:

• Setting Realistic Expectations: Knowing the average spend and ROAS can help in setting realistic expectations for your ad campaigns. It provides a benchmark against which you can measure your own ad spend efficiency.

• Budget Allocation: With an average spend of just under £500 yielding significant returns, it's clear that even modest ad investments can be highly effective if managed correctly. This should encourage store owners to invest in Google Ads, even if they are operating with limited budgets.

• Focus on Optimization: The high ROAS underscores the importance of optimizing your ad campaigns. This involves refining target audiences, using high-performing keywords, creating engaging ad content, and continuously monitoring and adjusting your campaigns based on performance data.

The Role of Expert Management in Google Ads Success

As we delve deeper into the intricacies of Google Ads and their impact on SMEs, it’s crucial to underscore a key factor behind the impressive results we've discussed: these are accounts actively managed by us.

Expertise Makes the Difference

1. Acknowledging Our Role: It's important to be clear that the results we've shared come from accounts that are under our careful management. And while I’m not here to “toot my own trumpet” our data skills and expertise in this field play a pivotal role in achieving these outcomes.

2. Why Expert Management Matters: The world of Google Ads is complex and ever-evolving. Navigating it successfully requires an understanding of the platform and a deep insight into marketing strategies, consumer behaviour, and data analysis. This is where our proficiency comes into play. We bring a combination of experience, skills, and an adaptive approach that’s crucial for maximising the return on ad spend, especially for SMEs with limited budgets.

3. A Cautionary Note on Self-Management and Other Agencies: It’s also worth noting that self-managed accounts or those managed by other agencies and freelancers might not yield the same level of results. This is not a dismissal of self-management or other professionals in the field but an acknowledgement that the outcome of Google Ads campaigns can vary significantly based on the expertise and approach of the account managers.

Setting Realistic Expectations

This observation is crucial for setting realistic expectations. While Google Ads offers immense potential for businesses of all sizes, the success of these campaigns often hinges on the quality of management. As a business owner considering Google Ads, it's vital to understand the importance of expert input and management in crafting and maintaining successful campaigns.

Shopify Google Ads FAQ’s

• What is a good average CPC for Shopify stores?

  £0.38 ($0.48) has been the average CPC (cost per click) for our smaller e-com clients in the last 28 days.

  CPA (cost per acquisition or cost per conversion) was, on average, £14.40.

  ROAS averaged 7.81 meaning for every £1 spent, on average our smaller ecom customers got £7.81 back.

• How often should I review my Shopify Google Ads performance?

  It's essential to review your Google Ads performance regularly, ideally weekly but bear in mind data delay.

  This allows you to monitor the effectiveness of your campaigns, make necessary adjustments, and respond to changing market dynamics.

• Can I adjust my Google Ads budget at any time?

  Absolutely. Google Ads offers flexibility in budget adjustments, enabling you to dynamically respond to campaign performance and business needs. If certain campaigns perform exceptionally well, you might consider reallocating more of your budget to them, and vice versa.

• Can small businesses with limited budgets succeed with Google Ads?

  Yes, small businesses with limited budgets can achieve success with Google Ads. Our experience at The Hubb shows that even modest budgets, when managed expertly, can yield significant returns. It's about strategic planning, understanding your market, and continuous optimization.