That’s one of the main questions that baffles newbies and experts alike. For newbies, it often comes down to their limited budget. You have only $200 in the bank, and you don’t want to burn it in 2 hours. That’s understandable. For the experts, you often don’t know where the sweet spot is that allows you the achieve the right CPA for the company that you are doing business with. Let’s say you are working with an insurance company and you have been asked to generate leads for them with Google Adwords. There are many insurance companies that overspend and waste money on Adwords. You can of course copy them, but if your company doesn’t have that kind of budget or CPA tolerance, then you need to find where that sweet spot is where you get the best CPA for your client/company.

The concept of budget is really flawed in the advertising world. It really should be about cost per lead or cost per acquisition. Tell me, if your customers bring you $300 life time value (LTV), and you are paying only $30 CPA for them, why would you want to have a budget? The more you spend, the more profit you get it seems. Of course, many companies don’t work like that, but even if your EPC is $100 and your cost per click is $0.5, then you are making half a dollar per click. Would you want to make $50 a month by spending less or maybe $50,000 by maxing out those credit cards.

Newbies often are afraid to put their feet in the water. Remember, when you were learning to swim. You were probably afraid to jump into the water too. But once you got in there, it became second nature to you. It’s OK to be conservative and avoid breaking the bank, but you shouldn’t be too conservative. You don’t get to make a million by spending $10 a day unless you are converting 10 people a day and get paid handsomely for them. But with the hight advertising costs these days, I would be surprise if you make it with that kind of a budget. My advice to you is to put your budget as high as you are possibly comfortable with. Don’t let the fear stop you from dominating your market. Remember, if people can’t see you, they are not going to buy from you.