How to calculate your PPC Budget?

How to calculate your PPC Budget?

PPC is not optional anymore. It has become the main method for all business types to grow and connect with the right audience. There are currently no faster ways to gain exposure, increase sales and build long-term relationships with your clients, other than with paid advertising campaigns.

Even if this process is extremely popular, there are still plenty of businesses out there that are asking – How much should I spend on my online advertising campaigns? How can I determine my PPC budget? How much return am I going to get?

There are several factors that come into determining the right amount and we are going to review all of them.

1. Audience size

Every market has an audience size, meaning potential clients or users that are actively looking for products/services similar to yours. Google has been gathering user data since the beginning of online advertising giving marketers the opportunity to make budget decisions based on that. The bigger your audience the higher the number of possible clicks your ad might get.

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If your daily budget is limited then your ad will stop showing throughout the day and you will lose potentials impressions, clicks, conversions and give your competitor the advantage of attracting your audience. Also, please keep in mind that users shop around before settling for a product/service, meaning they will more likely interact several times with your ads before taking an action.

2. Marketing channels

Every online marketing channel you add to your PPC strategy comes with an audience number and a minimum required budget. Adding more marketing channels will ultimately benefit your overall return because you can attract several funnels and grow your business. However, because each channel requires custom strategies, a minimum PPC budget, optimization techniques, content creation, ad copy, graphic design and/or landing pages. At the end of the day, it might become a very costly strategy and you need to make sure you have the funds for it. 

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It’s not just about your monthly budget that goes directly to your ads. Most marketers and agencies charge extra fees or an hourly rate based on the complexity of the work and the number of hours they need to invest per project. Even if most businesses believe that they can get around with a couple of hundreds of dollar, in reality, we are talking about ten-thousands of dollars as it requires putting together a team of professionals with different skills sets in order to successfully reach your goals.

3. Campaign types 

As many of you already know there’s not just one type of pay-per-click advertising campaign. Each of them can help you reach a different business goal. However, one thing that business owners do not necessarily know is that campaigns do not have the same cost or bring the same value in return.

For example, display campaigns bring more brand awareness, have a low CTR and get a higher number of impressions. These campaigns are designed to improve brand awareness or get your business discovered by new users. That being said, they need a lower budget and don’t bring any conversions. The more you move closer to the conversion funnel the higher the budget needed. Why? Because that means that the client is ready to take an action and you can make a profit. From a business approach, the cost per advertising must be directly proportional to the cost of your service/product.

4. Keywords

When running online advertising you are participating in a live auction. Meaning, there are several players in the game that want to show their ads for the same keywords and depending on their overall quality score and budget they determine the min. CPC for the top page bid. One of the most popular tools in PPC is the AdWords Keywords Planner. After you select the location where you want your ads to show, include your URL or main keyword,  language, and time frame, it will show the average monthly searches for each keyword you select. These numbers are based on the historical data gathered by the Google.

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You can also see the level of competition at the keywords level, the necessary bid for top page low range and top of page big high range. Further on, you have an overview of how your keywords are going to perform. Everything from clicks, impressions, CTR, Avg. CPA, cost, avg. CPC, max CPC, and cost are included in your plan.

In the example below, anything below $770 per month will not be enough and your ads are not going to stop running at any point throughout the day.

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There are other tools besides the AdWords Keywords Planner available for marketers. Some of the most popular ones are SEMrush,  WordStream, and SpyFu.

5. Competitors

Most businesses forget that they are not the only one advertising online and there are plenty of other competitors, even ones that go global, that can steal their audience anytime. It’s very important to have this in mind whenever you start planning a budget for your PPC campaigns.

Brick-to-mortar businesses might think they have the same competitors both on the web and offline, but that’s not the case. There are several tools you can use, both free and paid, that marketers use in order to determine the online competition.

Once you identify your top 3 competitors you will need to at least match their budget in order to be at the same level and get the attention of your audience.

We hope this post will give you a better understanding of all the factors implied in the process of determining a PPC budget. Don’t forget that we are always here to help you and if you want to start promoting your business online you can always contact us for a Free Quote and other specialized marketing services.




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