How much to invest in PPC can be a bewildering task for business owners. We are often approached by companies that already have a PPC budget in mind, and just need us to help determine how to best allocate that budget. Just as often, though, companies have no idea how much they should be spending on PPC, and need some advice. Here are a few techniques we use to figure out a reasonable figure.
Determine your average sale amount. Get an average for the entire year if possible, as to account for any seasonal fluctuations in sales volume. (Note: in this article we’re focusing on e-commerce sites, but the same principles could be applied to a non e-commerce site by assigning theoretical monetary values to whatever actions you’re trying to drive, whether it be a newsletter sign-up, a phone call, or anything else you’re hoping will occur as a result of this advertising)
Estimate conversion rate. Typically PPC, when done right, produces higher conversion rates than most other sources of traffic to a site. And, as the campaign develops, you further qualify through optimization until you’re targeting only the highest-converting traffic. What to expect for an initial conversion rate can be tough to figure out with no previous PPC data to look at as a reference point. So many variables play into conversion rate (ad copy quality, landing page, overall site quality, etc.) Still, most search marketing companies that have been around awhile have handled campaigns in many industries, and may be able to give you an idea based on their past experiences.
Estimate average CPC. Run a handful of the most basic terms that describe your business through Google’s Traffic Estimator to see what you can expect to pay, on average, per click, for your most popular terms. Of course part of PPC is finding the less searched on, more qualified, cheaper and higher converting keywords, but this will work for a rough estimate.
In Part 2, we’ll show you how we can use this information to make predictions about what kind of return we might get under different budget scenarios.