Interested in pay-per-click advertising but unsure how much of your total marketing spend you should invest? This short guide explains how to calculate PPC budget to generate the best ROI.
How to calculate PPC budget
When it comes to marketing, every pound you invest in promoting your business needs to generate profit and PPC advertising is no exception.
Based on an auction model that sees you bid on specific keywords, PPC can deliver fast and effective results when you need to drive sales quickly, which is one reason so many marketeers favour it. After all, you only pay when people actually click on your ads.
When it comes to setting a PPC budget, however, you need to decide how much you’re willing to spend overall and what you’re willing to pay for each unique click. With this in mind, we’ve put together this handy checklist to help you calculate your PPC budget and ensure every pound is being spent effectively.
Use a keyword planner
Key to the success of any PPC campaign is ensuring you target the right keywords. Rather than pluck these out of thin air, make use of a keyword planning tool such as Google Ads keyword planner. This will enable you to determine the most highly searched key terms in relation to the business, product, or service you’re promoting, as well as what you’ll likely have to bid for them.
Using a keyword planner in this way will ensure your ads are optimised and help you to set a realistic PPC budget. Just bear in mind that higher converting keywords will be more popular and cost you more, but they’re also likely to yield the results you’re looking for in a shorter amount of time. Most keyword planners, including Google’s, allow you to run reports on keywords to determine useful insights such as CPC – cost per click – which will help with PPC budgeting.
Set SMART goals
Marketeers often go down the PPC route when they want to achieve a specific goal in a set timeframe. Understanding what outcome you’re looking for, and by when, is a key part of setting your budget for PPC activity.
When it comes to establishing your end goal, always follow the SMART formula. Make your goal Specific, Measurable, Attainable, Relevant and Timely. For example, instead of saying “i want to make more money” set yourself a specific benchmark for how much you want to increase profits by that includes a hard deadline.
Making your goals measurable in this way allows you to better inform your PPC campaigns and determine the budget you need to achieve your goal in the allotted timeframe.
Do some simple projections
Information, as they say, is power and within any keyword planning tool you’ll find a wealth of information that can help you calculate PPC budget.
We recommend starting with a simple projection that involves multiplying the average monthly searches for the keywords you’re considering bidding on by a set search impression share. This will give you a reasonable idea of how many impressions your ad is likely to get per keyword.
The next step is to multiply these potential impressions by the click-through-rate you’d anticipate your ads getting. Google Ads provides data around the average CTRs by industry, which you can use to benchmark your CTR. This will give you a figure for your estimated click volume.
Multiplying your CTR by the CPC, as determined by your Google Keyword Planner, will then give you a projected total for your potential PPC ad spend.
Still not sure how much to budget for PPC?
PPC is a technical process that hinges on bidding on the right keywords and attracting customers with intent to purchase. If you have a target you need to reach in a short time, speak to us today about how a professional PPC campaign could help you to achieve your goal.