How to Determine PPC Budgets

PPC | Strategy

A PPC (pay-per-click) budget is obviously one of the most important pieces of a new or existing ad campaign. Setting a budget that makes sense for your business goals and matches the competitiveness of the ad space is a fine balance. When determining a PPC budget, it’s important to review your business goals, keyword search trends, and competitors. Let’s talk about all of these things plus how to best allocate your new budget to campaigns.

How to Determine PPC Budget:

1. Establish your goals

When starting a new marketing effort it’s always important to identify what you are looking to achieve. Having a set goal is helpful in determining how much you want to spend because you can reverse engineer your PPC budget based on conversion rates, click-through rates, and keyword cost-per-clicks. This equation can help you set a monthly budget based on a specific profit goal:

# of sales x avg. order value x profit margin % – profit goal $ = budget

2. PPC Keyword Research

Keywords are the basis of building a successful PPC campaign. Keywords that are highly relevant, match the content on your website, and have good search volume will set up your campaign for success. You can find keywords using the Google Ads Keyword Planner to create performance forecasts for the keywords you want to target. This will also help you determine how much a group of keywords may cost on a monthly basis.  sing this data can allow you to see how much PPC budget you would need to hit your initial marketing goals. 

3. PPC Competitor Analysis

When determining your PPC budget it’s also good to know what competitors are doing PPC and how they are advertising. This analysis will give you a better idea of how much it takes to be competitive in the market. Sometimes we can’t compete with the big spenders but we can try to optimize as best we can to take some of their clicks. You’ll want to research your competitors’ keywords, ad copy, and what products or services they advertise. You can find this information using tools like SEMrush and Google Ads itself (if you are currently running a campaign). This will give you a great starting point for your PPC campaign strategy.

Allocate Your Established PPC Budget

Once you have established a PPC budget, you can start to think about how to divvy up the spend in your PPC campaigns. There isn’t a “correct” number of campaigns to have in PPC, it all depends on your business goals and KPIs. Each campaign will have ad groups that have their own sets of closely related keywords grouped together. Creating campaigns with different focuses is best practice so you can better control the ad spend per business goal. So you can allocate more budget to higher priority campaigns and less to others. Your budget can be flexible, so if you have a seasonal product, you can shift budget allocations easily when needed. If you need help managing your PPC budgets and campaigns, we can help!

Let us help you determine a PPC budget that works for you, and optimize your campaign strategy. Contact us today!