How To Budget For PPC Advertising

Date: 
Saturday, September 23, 2017

While some companies have millions of dollars to spend on their Pay-Per-Click (PPC) campaigns, most businesses must operate with a strict budget in mind. Since ad costs fluctuate, how do you know of you’ve budgeted enough for your PPC campaign? Here’s your straightforward guide to setting your PPC budget.

Identify your goals

First, set your goals. Is there product or service you need to sell within a specific time frame? If not, should the ads be geared towards a more long-term target? Is your focus brand awareness? How much are you willing to spend per person? If your PPC goal is sales-driven, you need to focus on the conversions or people who purchase through the ad. If your main purpose is increasing brand awareness, then redirect your attention to impressions or the number of people who’ll see the ad. Make sure your goals are SMART: specific, measurable, attainable, relevant, and time-bound.

Observe historical data

Your previous PPC campaign data can give you a rough estimate of the range you should expect when it comes to keywords. If your company has never used PPC before, you can use information on site visits and site conversion rates for data. These metrics offer insight into the projected cost and the likelihood that a site visit from the ad would translate into a sale. You can also check sources for industry averages, but your own company data would be the best to use as a main reference.

Calculate for the traffic needed

The necessary traffic is determined by dividing the number of customers needed by the conversion rate. To get the range of traffic you should aim for, divide by number of buyers needed by the lowest conversion rate, then again with the highest conversion rate.

Determine the expected cost

Aside from your previous PPC campaign, another useful tool is the Google Adwords Keyword Planner. There, you can check the indicated costs for the keywords you want to apply to your new PPC campaign. Even with this tool, the actual cost-per-click (CPC) may still vary due to several factors like your site’s Quality Score. Write down the costs for each then determine the average CPC. Multiply the highest average CPC with the highest amount of traffic, then the lowest average CPC with the lowest estimated traffic to get the range of your budget.

Compute for profitability

To know whether the profit margins from the campaign are worth it or not you can determine the revenue on ad spend (ROAS). To do this, multiply the average order value of past purchases with the expected number of customers. Then subtract the total cost of the ads from the revenue and divide the result by the total cost for the ads. For the ROAS range, use the highest expected number of customers first then the lowest expected number of customers.

Determining an appropriate PPC budget can be tough. Before you get overwhelmed, let the team at BlueWing HVAC can help you figure out the most achievable budget for your PPC campaign. Contact us today to get started: 8779603292

 

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