How much should you spend on ppc advertising?

How Much Should I Spend on PPC Advertising?

Ever wondered, "how much should I spend on PPC?" don't worry, you're not alone.

This is one of the most commonly asked questions we're asked, from both new clients looking to explore pay-per-click advertising to existing users trying to enhance their current spend.

Because of the nature of PPC advertising, it's important to give your available PPC budget some real thought. Luckily, we're on hand (with the help of our PPC consultants) to offer some excellent advice on not only determining your budget but how setting a definitive cost can help your campaign soar.

Figure out your PPC campaign goals

The best place to start, as with any marketing campaign, is with the goals that you want to achieve. Are you looking to make a certain amount of sales on your site? Do you want to generate leads for your sales team? Maybe you just want to increase your subscriber count for a newsletter or blog and you're looking to utilise pay-per-click advertising.

In most cases, you're going to want to figure out how much a conversion from your PPC campaign is worth, particularly if you're selling a product or service. By figuring out how much a potential sale is worth, you can more easily determine your potential overall spend. This can also help your research into the cost of a click.

Research estimated click costs

As mentioned above, finding out the cost of an individual click is hugely beneficial when it comes to working out your potential budget.

Initially, take the top keywords you'd like to drive traffic for. You can then enter these keywords in a number of different online tools (such as the Google Keyword Planner) to determine traffic estimates and click costs.

At this point you can also see how 'competitive' a keyword may be. Depending on your overall strategy, you might be looking to grab a few high value keywords or focus more on the low competition, long-tail keywords. 

This is entirely up to you and the products you're targeting but often it's best to aim somewhere in the middle, you don't want to be spending all of your budget competing for high value phrases but conversely you don't want to be spending on keywords that no one is searching for.

Once your keywords are entered you'll be shown a list of suggested bids, with a variety of cost-per-click estimations. It's then just a case of finding a number you're comfortable with and utilising this throughout the process of working out your budget.

Work out how many leads you can handle

At this point, you should have researched your keywords and have an idea of what you want the campaign to achieve. You may have already roughly worked out how much you can afford to spend. What we would advise next is to consider how many leads you're looking for.

Now this is obviously down to what you or your sales team feel comfortable dealing with in a monthly period and will vary wildly from business to business. What is the same for everyone however is that working out the optimal number of leads is great for helping you decide on your ideal monthly budget.

This is mainly because a common way of building a PPC budget is to take your initial target number of leads and then divide that with the conversion rate of a previous campaign. Once you have the number of clicks required to meet that target, you can multiply that by the amount each click with potentially cost.

Now, obviously this may be your first campaign and you may not have past conversion rates or much of an idea on your target number of leads. If so, play around with the equation until you find the 'sweet spot', a budget amount you're comfortable with that is still bringing in a decent number of clicks.

It might be that you have to limit your target number of leads, it may be that your cost-per-click isn't as high as you thought and you have some money to play with.

In essence, generating a monthly budget that works is never as easy as it seems. It is based around a number of factors including your goals, the competitiveness of the market you're targeting and how well you can convert potential leads.

It's important to expect this budget to change, especially when you figure out what is working and what isn't.

What you will find by following this guide is the best practises to take with you into the process. By taking the time out to initially think up your budget, you can establish quickly not only your goals but the potential effectiveness of the campaign using accurate and proven data.

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