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PPC 24 May 2024

How to Set a PPC Budget That Works for You?

Author Nevil Bhatt

Writen by Nevil Bhatt

Viewed 5 min read

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Do you need to invest more in a PPC campaign and get the desired results?

If yes, you must learn how to set a PPC budget that works for you. 

And for the same reason, we are providing this exclusive guide on How to set a PPC budget that works for you.

PPC is quite simple: To Earn Some Money, You Need To Invest Some Money.

The budget you want to spend, or you already are behind PPC campaigns, revolves around the LEADS you need. So, the following factors play a huge role when determining how to set a PPC budget. 

  • Visitor Frequency
  • Buying Cycle
  • Visitor’s Geographic Location
  • Lead Quality
  • Target cost per lead (CPL)

If you’re unsure where to start, consider working with an experienced adwords management agency that can provide guidance and expertise.

Step By Step Guide on How to Set a PPC Budget

So, without wasting much time, we are starting our read, which might help set a PPC budget to some extent.

We have divided the whole guide into a step-by-step process. Don’t worry if, at some point, things sound unfamiliar to you – Ask A Top PPC consultant just like us – we are happy to help.

Step 1: Identify the Best Keywords for Your Marketing Objectives

Keywords have their own importance and impact on the campaign, whether it’s SEO or PPC. You must understand people’s keywords when searching for your product or service. It is essential to understand that While this process may be straightforward for some businesses like retailers, it can become more complex if your product addresses a problem. 

One approach could be to focus on identifying keywords that indicate an intention to make a purchase. By prioritising high-intent keywords, you are more likely to improve conversion and click-through rates

Step 2: Run the Keyword Planner Report

Now let’s move on to the phase which includes generating the report using the Keyword Planner. Before you continue, tune your target audience and advertising budget through Google’s Keyword Planner. This tool provides functionalities such as;

  1. Finding keywords.
  2. Combining keywords.
  3. Estimating ad performance in terms of clicks and financial returns.
  4. Accessing historical and projected search data.

In each category, you’ll receive a list. Report that can be filtered based on factors such as monthly searches, ad impression share, and proposed bids derived from the cost per click (CPC) paid by similar advertisers.

Alternatively, consider using a platform like Ahrefs or Semrush to manage SEO and PPC.

Please note that There is some flexibility in figures, whichever tool you use. They are more of a ballpark figure from which you may get the worst and most significant possible outcomes (by operations like dividing and multiplying by 2).

Step 3: Do Some Calculations & Estimate Your Profitability 

Well, the next is the most important step in setting a PPC budget, as many of the PPC agencies apply a specific formula to determine an appropriate spending limit for advertising. 

First, use the information provided by your Keyword Planner report to establish your ideal search impression share. This should be between 50 and 70 percent and based on the monthly searches. This will provide you with an estimate of the number of times your advertisements may be seen.

Once you have established the total number of impressions, the next step is to compute the anticipated total number of clicks. To do this, multiply the number of impressions by the expected click-through rate (CTR).

If you need help calculating your click-through rate (CTR), analysing the CTRs of businesses within your industry can be beneficial. This analysis can provide insights and guidance.

To determine your budget, you can consider the expected number of clicks for pay-per-click advertising. Multiply this predicted number by the cost per click (CPC) provided in the report generated by the Keyword Planner. This calculation will give you an estimate of the expenses associated with your campaign.

Your formula should look like this:

The potential volume of clicks x Average CPC = potential ad spend

Return on ad spend (ROAS) is a common statistic used by marketers to assess the efficacy of marketing campaigns. Contrary to popular belief, determining a reasonable ROAS is quite simple. 

It assesses the profitability of a marketing effort by contrasting the return with the investment. 

Adding in consumer purchases might complicate return on advertising investment calculations. 

Subscription-based software as a service (SaaS) providers need to calculate their potential profit by factoring in both their return on investment (ROI) and the lifetime value (LTV) of their customers.

Your LTV (Lifetime Value) will be established by the revenue model and business strategy you implement. You will still have to estimate things like average customer life duration, number of transactions per customer, average transaction value, and customer churn rate.

Evaluating each campaign’s LTV about the CAC (client Acquisition Cost) or the amount spent to acquire a single client is also essential. This analysis will show you which tactics will bring you the most money.

The ideal case is when a customer’s lifetime value is three times larger than the cost of obtaining a client.

Wrap Up

That’s all you need to know how to set a PPC budget. It’s crucial to have a monitoring system for performance indicators (KPIs) and objectives. Remember to remember your KPIs throughout the PPC process, from planning to execution, evaluation, and refinement. Let them guide your decision-making at every step.

If you need any help, NFlow Tech is here to provide guidance. Take a look at our range of pay-per-click (PPC) services. See how they can benefit your brand.

Author Nevil Bhatt
Nevil Bhatt

Nevil is the owner of one of the fastest-growing digital marketing agency in India. Having a great knowledge of the IT field and business management, he decided to bring a revolution in the digital world by providing valuable and customised solutions across the globe. Whether it's real or digital, he knows how to handle sustainable relationships and meaningful interactions.

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