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How the recommended budget is calculated

On a Search campaign, the Monthly budget bar of the second step starts at a recommended monthly budget. Hero Marketer calculates it from the keywords of the cluster that you pick. The Recommended budget tag shows while the budget matches the recommendation. You can keep the recommendation or change the budget before you launch. The recommendation estimates how much it costs to capture most of the search volume for those keywords. It is not tailored to your CPA target, your runway, or your conversion value.

The Search recommendation follows the keywords in the cluster. If you archive keywords, or add keywords from the Archive, the recommendation changes. If you pick a different cluster, the monthly budget changes to the recommendation of that cluster. If you archive keywords after you change the budget, the wizard keeps your amount.

Performance Max and Demand Gen also start at a recommended budget, but Hero Marketer does not calculate it from the keywords. See The recommended budget of Performance Max and The recommended budget of Demand Gen. Search retargeting and Demand Gen retargeting have no recommended budget, because search volume cannot size a list. For these types, you type the monthly budget. See Set your monthly budget.

The math behind the number​

Hero Marketer runs the same calculation for each keyword in the cluster, then adds up the results. For a single keyword:

  1. Estimate the searches that show your ad. Take the keyword's average monthly searches. Assume that your ad shows for 80% of them.
  2. Estimate the monthly clicks. Assume that 5% of the people who see the ad click it.
  3. Estimate the cost per click. Take the middle of the keyword's low and high top of page bids from Google's data. If Google has no low or high bid for a keyword, Hero Marketer uses the middle price of the keywords in the list that have both bids. That price is in your account currency. The middle price is the price that has half of the priced keywords at or below it. One expensive keyword, for example a competitor brand, cannot pull it up. If no keyword in the list has both bids, the keyword adds no clicks and no cost.
  4. Multiply the clicks by the cost per click to get that keyword's expected monthly cost.

Some keywords are the same search. Google Keyword Planner puts the keywords of one search in a group and gives each keyword the numbers of the group. These numbers are the monthly searches, the 12-month trend, the top of page bids, and the competition. The words can be different: another word order, a plural, or a word with the same meaning. For example, seo software for agencies and software for seo agency are one search. Your keywords show your ad for the same searches, and Google uses only one of your keywords for each search. So Hero Marketer counts the search one time. The other keywords of that search add no clicks and no cost.

Keywords with the same words but different numbers are different searches to Google, so each keyword counts.

Hero Marketer adds up the monthly cost of each keyword in the cluster and rounds the total to a whole amount. The minimum is 31 in your account currency, which gives a daily budget of about 1. That number is the recommended monthly budget. A keyword with 0 monthly searches adds nothing. A cluster where no keyword can be priced gets no recommended budget, so you type your own monthly budget.

The same calculation also gives the estimated clicks of the cluster each month. On a Search campaign, the budget bar shows them as Expected clicks at the cost of the cluster, for example About 93 a month. If the cluster costs less than 31 a month, the recommendation is the 31 minimum, which buys more than 80% of the searches. Expected clicks at the recommendation can then be up to 1.25 times the estimated clicks of the cluster. A Performance Max campaign shows no expected clicks, because it also spends outside Google Search. Both figures are Hero Marketer's own estimate from Google's search volume and bid data. They are not a Google forecast, and they are not guarantees.

On a Search campaign, when you change the budget, Expected clicks changes too:

  • At the recommended budget or above it. All of the keywords run. The clicks change by the same ratio as the budget. They stop at 1.25 times the estimated clicks of the cluster, which is all of the searches. The recommendation already assumes that your ad shows for 80% of the searches. When the 31 minimum applies, the recommendation already buys more than 80% of the searches, so the clicks at the recommendation can be up to 1.25 times the estimate, and a higher budget adds no more clicks.
  • Below the recommended budget. The wizard keeps only the keywords that the budget covers at 80% of their searches. The other keywords move to the Over budget list. Expected clicks counts only the keywords that run. The rest of the budget buys more clicks on these keywords, up to 1.25 times their clicks. See When your budget is below the recommended budget.

Below the recommended budget, a Performance Max campaign keeps all of its keywords, because they are search themes.

Keyword research in Hero AI uses the same estimate for its Est. clicks and Est. budget columns. See Research keywords in chat.

What the recommendation reflects​

The Search recommendation is a fixed formula, sized to the keywords that you chose:

  • No check for learning volume. Google's auction needs a minimum click count before it can optimize. The formula does not check whether the result gives Google enough clicks to learn. For a low volume cluster, check the Expected clicks figure yourself.
  • Cost from Google's bid data. The cost per click is the middle of Google's low and high top of page bids. A top of page bid is a bid, not a cost. In the auction, a click often costs less than the bid.
  • Scaled to your keywords. A cluster of high CPC or high volume keywords produces a higher recommendation than a cluster of cheap, low volume ones, because the math runs on each keyword's own data.

What the recommendation does not account for​

Hero Marketer derives the recommendation only from the cluster's keyword data. It does not know:

  • Your CPA target. If you have a maximum acceptable cost per acquisition, the recommendation does not aim for it.
  • Your runway. If your total paid search budget is fixed, the recommendation may exceed what you can actually spend.
  • Whether this is a test or a scale campaign. Test budgets and scale budgets differ. The formula is the same for both.
  • Your conversion value. A $50/year product and a $50,000/year product get the same logic, even though they can justify very different click costs.

When the recommendation fits​

The recommendation is a good fit when:

  • This is your first campaign in the cluster.
  • You want to see what the cluster can produce.
  • You do not yet have a specific CPA or volume target.

The wizard publishes the monthly budget that shows on the Launch button. Before you launch, change the budget in the budget bar of the second step. After the campaign is live, ask Hero AI to change the daily budget. Hero AI shows the change on an approval card, and you click Approve and apply. You can also change the budget in Google Ads. Change the budget when you have a specific target that the recommendation cannot reflect:

A CPA target​

Your conversion rate sets how many clicks each conversion needs. At a 2% conversion rate, one conversion needs about 50 clicks. At a $5 CPC, that is $250 for each conversion. If that is above your CPA target, the cluster cannot hit the target at this CPC. To size the monthly budget, multiply the conversions you want each month by the CPC. Then divide the result by your conversion rate. Use your own conversion data when you have it.

A capacity constraint​

If sales can only handle 10 new leads a week, a budget likely to produce 30 is not useful. Set the budget to match your downstream capacity.

A learning phase budget​

For a brand new cluster, run a small budget for two weeks. Use about half the recommendation. Type it in the budget bar before you launch. Below the recommendation, a Search campaign launches only the keywords that the budget covers. Check the Over budget list before you launch. See what converts. Then scale based on real data.

A scale phase budget​

For a proven cluster, scale gradually. Do not jump from $500/month to $5,000/month in one move. Google's algorithm needs days to recalibrate, and a sudden large change resets its learning.

When the recommendation is materially off​

In these cases, the default misses. Change the budget before or after you launch:

  • Very competitive clusters. A cluster, for example "CRM," carries CPCs well above the typical SaaS range, so the recommendation can be too low to compete.
  • Very low volume clusters. A cluster with only a hundred monthly searches across all its keywords will not reach Google's minimum click volume at any budget. The recommendation can look reasonable while the campaign never gains traction.
  • High value, low volume products. A product with $100,000 deals can justify much higher CPCs than a $10,000/year product, but the recommendation treats them the same.

A Performance Max campaign starts at Google's own budget recommendation for a new Performance Max campaign. Hero Marketer asks Google for it when you leave the Choose what to target step. Google uses your landing page, your country, and the bidding of the campaign. Google can also give no recommendation, for example when it has too little data.

If Google gives no recommendation, the budget starts at the cost of 50 conversions at your account's cost per conversion. The cost per conversion is the cost of your account in the last 30 days, divided by its conversions in the same days. Hero Marketer uses it only when the account had at least 15 conversions in the last 30 days, because Google needs about 15 conversions a month for a campaign that bids for conversions. B2B advertisers often test Performance Max for 30 to 50 conversions a month. If neither number is available, the budget bar has no recommendation. Type a monthly budget to continue.

The Performance Max recommendation does not change when you pick a different cluster or archive keywords. A budget that you typed stays. To see where the recommendation comes from, click the information icon next to Monthly budget.

A Demand Gen campaign starts at a test budget of about 100 US dollars a day. Google suggests about 100 a day for one Demand Gen ad group. Run the test for 6 to 8 weeks before you judge it. Google also gives a rule of 10 to 20 times your cost per conversion each day. At B2B costs per conversion, that rule asks for hundreds of conversions each month, so Hero Marketer does not use it.

The amount is in the currency of your Google Ads account:

CurrencyA dayA month
USD1003,040
AUD1504,560
CAD1404,256
NZD1705,168
GBP802,432
EUR902,736

In other currencies, Demand Gen has no recommended budget. Type a monthly budget to continue. The Demand Gen recommendation does not change when you select a different audience card.

What the monthly budget controls in Google Ads​

The wizard sends the monthly budget to Google as a daily budget: the monthly budget divided by 30.4, rounded down to the cent (or to a whole unit in currencies that Google Ads takes without cents, such as yen and won). For example, $500 a month becomes a daily budget of $16.44. Google then paces delivery against the daily budget. It may spend more than the daily amount on a high opportunity day and less on a slow one. But in one month, Google does not charge more than 30.4 times the daily budget, so it does not charge more than your monthly budget. To see the daily budget before you launch, click or tap the information icon next to Monthly budget.

Google charges you for clicks only. Impressions do not cost anything. Cost accrues when someone clicks. To adjust your budget after the campaign is live, see Set your monthly budget and Actions Hero AI can take.

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