4 Factors to Consider When Setting Your PPC Budget

December 12, 2017

Updated: 12/11/17

It’s a common question that we, as digital marketers, get a lot; “How much should I spend in pay per click (PPC) advertising?”

There are many factors that come into play when determining the size that your PPC budget should be. It even takes a bit of research to be able to provide a good recommended estimate.

Here are a couple of the factors:

  • Account Size

  • Geographical Area

  • Industry Cost Per Click (CPC)

  • Conversion Rate

These are all important factors to figuring out your budget, so let’s break them down.

1. Account Size

The bigger your account the more likely you’ll need a heftier budget to keep your ads active throughout the day. This factor is probably the biggest when determining the size of your budget.

The amount of campaigns, ad groups and keywords that are in your account are what will define this size.  

2. Geographic Area

Another factor that plays into the price is the geographic location(s) you’re targeting. If the areas you’re targeting have a higher population, your budget will need to be higher to accommodate this.

To get an idea of the estimated traffic for a particular geographic location Google offers the free Google Traffic Estimator.

3. Industry CPC

Depending on your industry or niche, the keywords that you’re targeting could have a higher cost per click. Some may cost only a few pennies, but more competitive keywords can range between $5-$25. The more expensive your advertising space is, the higher your budget will need to be to compete. 

To find an average cost per click in your industry, use the free Google Keyword Tool, search for a related keyword and locate the “Estimated Avg CPC” column. 

4. Conversion Rate

Conversions can be many things to many businesses depending on your goals. Some businesses consider a conversion to be capturing a prospect’s information, while others look at monetary sales as their conversion.

Depending on what type of conversion you’re after and what type of offer you have, your conversion rate can fluctuate.

When you’re selling a physical product, the conversion rate is likely to be lower than when you’re giving away something for free in exchange for personal information, such as a white paper or video series. It is also unlikely that a brand new account is going to get anything above 5% without at least a few months of optimization.

There are always exceptions to the rules but generally it’s best to expect a lower conversion rate at the start.

Test & Fine-Tune

The process of selecting the right PPC budget for your business is never perfect at first. The idea is to set a budget using the data at hand then adjust it based on the performance of the account.

If you set your budget to low, it may take much longer to see the results you want. PPC is a data-driven platform. This means that the more data coming in, the quicker certain pieces can be tested and improved. If there isn’t any data then the improvements and ultimately conversions will take much longer to show.

Another benefit to testing some ads is that you will begin to see how much it costs to get a conversion. By finding these figures, you can plug them into a simple equation to figure out just how much you should be spending on PPC.

Managing a PPC campaign can get expensive very fast if not handled in the correct way. By ensuing that you are targeting the right audience at the right time, you can keep costs down, although it still varies by industry and location.

Sales & Marketing Technologies’ team of experienced digital marketers can handle PPC campaigns and budgets of any size. For more information about how a PPC campaign could get you results, give us a call today at 407-682-2222.


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