Mastering PPC: How to Determine the Right PPC Budget

This is the fifth part of our eight-part series on mastering PPC

Budget is clearly an important element of your PPC campaign. Your budget is not determined by what you want to spend on PPC, it’s determined by what you have to spend on PPC. If you go in with the mindset of “I’ll spend what I’m okay with losing,” then you will never win. A budget is derived from a math equation, there’s no rabbit or magic hat.

There are four key factors in determining what you have to spend to be successful:

  1. Number of winnable searches
  2. Number of winnable searches inside of the geography you are pursuing
  3. Average cost per click (that is set in place by what your competition is willing to spend per keyword)
  4. Factoring in an average clickthrough rate (1% is a safe number)

A simple math equation:

If you have a $1,000 budget with an average cost per visit of $5 across a 30-day time period, you’ll receive about 6 visits per day or 200 visits per month. So, what is your average conversion rate from visit to lead? With a budget of $1,000 you can expect about 14 leads (if we use an average conversion rate of 7%). Out of those 14 leads, what is your average conversion rate from lead to sale?

Factoring in searcher intent:

It’s also important to consider that you can never control the intent of your searcher. Meaning, you bid on the keyword “esthetician schools” assuming only potential students will convert into a lead. However, people familiar with the industry know that esthetician schools offer discounted services provided to the public by their students. Further explaining that you can’t control the intent of the searcher, this particular searcher is looking for an esthetician school to set up an appointment for a facial, but uses the keyword “esthetician school.” So, you have to utilize the right budget to allow enough visits to your site to deliver the right amount of leads necessary to produce an ROI.

Budget can be a difficult thing to determine. A trusted online marketing company can help you figure out the best budget for your PPC campaign and use processes like conversion-based optimization to make sure your budget is being spent in the right way.

Read More from Our Mastering PPC Series

Lindsay Christensen

Lindsay is a Sales Manager with ReachLocal and has been with the company for over 7 years. She loves the fast-paced, ever-changing world of digital advertising and has a diverse background in the full digital space. She enjoys showing clients how to make data-driven decisions about what is working and what isn't as well as trouble-shooting campaigns and coming up with solutions.

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