How to Set a Realistic PPC Budget

This article will include a clear introduction, detailed guidance on budgeting for PPC, real UK-based examples and tools, common pitfalls, performance tips, and a concluding paragraph to tie it all together.

Please hold on while I write the full piece.

How to Set a Realistic PPC Budget for Your Business

Setting a realistic PPC budget can be the difference between steady growth and wasted spend. Whether you’re a small local business or a growing ecommerce brand, having a well-planned pay-per-click budget helps you stay in control, understand performance, and scale results over time. But the right budget isn’t just about what you can afford, it’s about what you want to achieve, how competitive your market is, and how efficiently your campaigns are managed. In this article, we’ll look at how UK businesses can set a PPC budget that supports their goals while avoiding the common traps that lead to overspending or underperforming campaigns.

What Is a PPC Budget and Why Does It Matter?

A PPC budget refers to the total amount of money allocated to paid advertising campaigns on platforms such as Google Ads, Microsoft Ads, Meta Ads Manager, or Amazon Ads. It can be daily, monthly, or campaign-specific. Setting a budget helps define the scope of your strategy, control costs, and measure return on investment. In the UK, where competition across industries like legal, finance, trades, and retail is strong, getting the budget right is crucial. Spend too little, and you may not gather enough data to optimise your campaigns. Spend too much, and you risk paying for unqualified clicks or stretching your resources without results.

Start With Your Goals

The first step in setting a realistic PPC budget is to define your objectives. Are you trying to generate leads, sell products, increase foot traffic, or grow brand awareness? Your budget should align with your most valuable conversion. For example, a law firm might want to drive phone calls from people needing conveyancing, while a florist may want to boost online orders before Valentine's Day. Knowing what success looks like will help you choose the right bidding strategy, keyword targeting, and daily spend. For lead generation campaigns, your budget should reflect the expected cost per lead and how many leads you want to generate per month.

Understand Your Industry Benchmarks

PPC costs vary widely depending on your industry and target keywords. In the UK, legal and financial services typically see cost-per-click (CPC) figures upwards of £5 to £10, while trades and ecommerce sectors often pay between £1 and £3. Tools like Google Keyword Planner, Semrush, and Ahrefs can provide estimates for average CPCs in your niche. Start by researching the keywords relevant to your services or products and identifying the average CPCs and competition level. This will help you estimate how far your budget can go and what kind of volume you can realistically expect. For example, if your average CPC is £2 and you have a £600 monthly budget, that gives you roughly 300 clicks to work with.

Calculate Budget Based on Conversions and ROI

To set a budget that supports growth, work backwards from your revenue targets. Start with your average customer value and how many customers or conversions you need each month. Let’s say your average sale is worth £200 and you want to make 20 sales per month. That’s £4,000 in revenue. If you’re aiming for a 5:1 return on ad spend, your budget should be around £800. You’ll then need to estimate your conversion rate from click to sale. If it’s 5 percent, you’ll need 400 clicks to get 20 conversions. At £2 per click, that works out to an £800 spend, which matches your target. This method ensures your budget is tied to outcomes rather than guesswork.

Use a Testing Budget Before Scaling

If you’re new to PPC, it’s sensible to start with a testing phase. A monthly budget of £300 to £500 is often enough for small businesses to gather data, test ad creatives, and identify high-performing keywords. During this phase, focus on tracking conversions, reviewing search terms, and improving Quality Score. This will help reduce your cost per click over time. Once you understand what works, you can confidently scale your budget based on performance. For example, if a £500 monthly spend is bringing in five customers worth £300 each, increasing the budget to £1,000 could double your returns, provided performance remains consistent.

Decide on Daily vs Monthly Budgets

Google Ads allows you to set a daily budget per campaign, while Meta Ads Manager uses campaign or ad set level budgets. Start by dividing your total monthly budget by 30.4 to get a daily amount. For example, a £600 monthly budget gives you roughly £20 per day. If you have multiple campaigns running (e.g. brand, service, remarketing), split your budget accordingly based on priority. Keep in mind that Google may spend slightly more or less than your daily limit on any given day, but will not exceed your monthly cap. Daily budgets allow for more granular control, especially if you want to pause or adjust campaigns quickly based on performance.

Allocate Budget Across Campaign Types

Depending on your strategy, your budget may need to cover search ads, display ads, shopping ads, or remarketing. For most local service businesses, the majority should go to search ads, where intent is highest. For ecommerce, Google Shopping and Performance Max campaigns may demand more budget. Consider allocating a small percentage to remarketing campaigns, which target users who previously visited your site. These often deliver lower cost-per-acquisition and higher conversion rates. Meta Ads Manager can also be used for retargeting, especially for ecommerce or lead nurturing. Make sure each campaign has enough daily budget to generate meaningful data.

Monitor Performance and Adjust Accordingly

Once your campaigns are live, monitor them closely using GA4, Google Ads, or a platform like Semrush or Supermetrics. Key metrics to track include cost per click, conversion rate, cost per conversion, click-through rate, and Quality Score. If your campaigns are meeting your targets, consider increasing the budget to scale results. If not, analyse the data to identify problem areas. Sometimes reducing spend on underperforming keywords and shifting it to better-performing ones can improve efficiency without increasing overall cost. PPC budgeting should be flexible, with room to adjust based on seasonal trends, business performance, and campaign outcomes.

Avoid Setting It and Forgetting It

A realistic PPC budget isn’t just about the numbers, it’s about your commitment to managing it actively. One of the most common mistakes small businesses make is setting a budget, launching a campaign, and then ignoring it. Ad platforms are designed to spend your budget whether or not it’s performing well. Regular reviews, bid adjustments, creative testing, and keyword refinement are all part of running a healthy campaign. Even five to ten minutes a day can make a meaningful difference to your return on investment. Budgeting for PPC also means budgeting time or resources for someone to manage it effectively.

Include Management and Creative Costs

If you’re outsourcing PPC to an agency or freelancer, your total budget should include both media spend and management fees. For example, if you have £1,000 to spend, and the agency charges £300 per month, your actual ad budget is £700. Similarly, creating high-converting landing pages, writing ad copy, or producing product imagery may also involve additional costs. It’s better to be transparent about your full budget and goals so your strategy can be built accordingly. Trying to squeeze too much out of too little often leads to poor results and frustration.

Plan for Seasonality and Market Conditions

PPC budgets should also be adjusted based on seasonality, competition, and business cycles. Retailers may increase spend during Q4, while accountants may boost campaigns in the run-up to tax deadlines. If your competitors raise their bids, you may need to increase your budget to maintain position. Google Ads auction insights and impression share data can reveal how your visibility compares with others in your industry. Planning your budget across the year ensures you are prepared for high-impact periods while avoiding unnecessary spend during quieter months.

Conclusion

Setting a realistic PPC budget is not about picking a number at random. It’s a strategic process that starts with understanding your goals, your market, and your numbers. By working backwards from your desired results, using UK-specific benchmarks, and starting with a test-and-learn approach, small businesses can build effective PPC campaigns that deliver real value. Whether you’re running local service ads or scaling an ecommerce store, the key is to invest wisely, manage actively, and be prepared to adapt. With the right budget in place, PPC can become one of your most powerful and measurable marketing tools.