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How to set a PPC Budget

When I first meet with a client to discuss Pay Per Click, after all the excitement is over, I have to talk about how much. It generally goes like this:

Me: What kind of budget do you have?

Clients: Well, how much do you think we should spend?

Me: You can spend as much or as little as you want; how much does your average sale cost you at the moment?

Generally, they look a little dumbfounded and either hasn’t got a clue or got them all through networking, so they insist the leads are free.

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Pay Per Click Expectations

Then there is the expectation, I remember working with solicitors a few years back, and we carried out a local PPC campaign for them. Their budget, however, was set at 1,000 a month. 

After the first month, they were already talking about halting the campaign; they got 15 conversions. They converted 4 into sales (and there were a couple outstanding). 

They hadn’t expected leads through Pay Per Click to cost so much. After all, Google is free. I have always told a client how much a lead could cost from this point on. 

In some sectors, you may be looking at pounds. In most sectors, you will be looking at tens of pounds. In competitive sectors, such as debt management, solicitors, no win, no fee etc., you could get t0 over a hundred pounds per lead.

The lead cost doesn’t really matter; what matters is how many qualified leads it takes to make a sale and how much each deal is worth to the business in profit. 

If it takes 5 conversions to lead to a sale of a product or service that costs 100, but the leads cost 30, it’s not worth it; you can try to drill down a bit more with the keywords; however, you’ll find then that the client isn’t happy about the volume of leads.

The volume of leads through Pay Per Click

First of all, remember that not everyone regularly uses the sponsored ads links, so you’re not going to get the total volume of clicks that you would if you had a position 1 organic ranking. 

Secondly, as with everything search, the volume is in the investigations, not in the results, i.e. if there are not very many searches being carried out, no matter how much you reorganise a page to make it a better landing page, you aren’t going to get proportionately more conversions. 

The answer in this situation is to break out the AdGroups further with new keywords.

All of this does, however, cost more money; it costs more money in the short and long term; in the short time, you have the try and see the approach of marketing where you have to dip your toe in and see what happens. 

Usually, you will find a niche that works well; however, you will find that other people start bidding on this niche, and your costs go up; at some point, the client will come back and say, Woah! We’re spending a bit too much on the leads now. 

Or it’s too competitive. We are missing the leads because they complete our form as soon as they come to us and are off to another competing site to fill in their form. It’s time to find a new niche, so we’re back at phase 1.

PPC as Lead Generation vs Advertising Model

Back in the olden days, people didn’t really care about the return on their marketing spend, at least not in the same way they do now. 

When I started marketing way back, there was an acceptance that it was a bonus if something got a return on investment; that was always the goal, of course. 

But if it didn’t happen, at least the product had been advertised. That’d because marketing back then was so much less traceable – we didn’t know how a marketing campaign affected purchasing habits. 

Now we know for a fact where people come from, how they found us, how they contacted us, and brand marketing has given way to bottom-line marketing.

I think this is a bit short-sighted, and in time, we’ll find a brand marketing approach to reappear, especially for the small fry.

Setting the budget

That all being said, you have to be able to go back to the client with an idea about how much they should spend and hopefully an idea about what they’ll get back for their money.

There are loads of bits of software that give you a rough idea about how much people are paying for clicks. From that, I tend to work by this model:

So 10% of impressions will click through to the site 3 – 5 % of click-throughs will convert.

That’s not a hard and fast rule. Still, it will give you an idea of how much your PPC marketing should cost. But, of course, each market sector is different, so you need to reassess this regularly and let the client know where things are up to.

As with everything internet marketing – good communication is the key.

How To Set Up A PPC Budget

If you would like to set up a PPC budget, give us a call. We would love to talk to you. Email, phone tel:016170620012

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