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AdWords Budget Guide

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AdWords Budget Guide

AdWords is a marketing platform that lets you reach potential customers from around the world.

Ads that you create display in the search results and are only triggered for keywords you bid on. The actual amount that you pay for each click depends on a number of factors. But in general the higher demand there is, the more you can expect to pay. If you are not careful it can be incredibly easy to quickly run through your daily budget.

Here we take a closer look at how to make the most of your ad spending.

Estimating a PPC Budget

The answer ultimately depends on your objectives. But you can do some basic calculations with the following information:

  • Business objectives
  • Estimated value on a lead
  • Current conversion rate
  • Lead needs

The answers to these can help you better estimate a PPC budget for your business. Here is an example of how this might look:

Client goal: 50 new clients per month

Cost per lead: $15 per lead

Close rate of leads: Average rate is 15%

PPC leads: Approximately 333 leads from PPC ads

Estimated budget: $4,995 (333 leads x $15 per lead)

If your business goal is to attract 50 new clients per month from PPC and your average close rate is approximately 15%, you would need 333 new leads. Converting 15% of them would deliver 50 new clients. But if the cost per lead is $15, you would need to allocate a budget of approximately $4,995 (or about $166 a day) to attract that many leads.

This is only an example but putting down the numbers gives a clearer picture of how much you can expect to spend to achieve your goals.

Factors That Affect the Value of a Lead

The value of a lead depends on these factors:

Geography: Are leads determined by location? For most local businesses this is the case as a majority of their customers are based in a certain area. This will be an important factor to consider as you start bidding on certain keywords.

Frequency of interaction: Before someone makes a purchase, they are exposed to numerous marketing channels. These interactions can impact how likely a lead is to convert.

Bounce rate: What do visitors do after landing on a page? Are reading through your offer or interacting with other pages on the site?

Google understand that not all traffic is equal.

AdWords contains a number of features that let you better control the quality of the leads your campaign is bringing. These include negative keywords (filtering out certain phrases), site exclusions (excluding certain sites), and dayparting (adjusting your bids on the time or day or the week). Taking advantage of each of these features allows your campaign to attract better quality leads.

For example, you would likely not want clicks from people who search for the keyword phrase “free” so you can add this to your negative keyword list. If you notice that the quality of leads is higher on the weekend than during the days, you can adjust your ad scheduling and allocate more of your budget during those times.

Getting Ad Forecasts

Google includes a feature within its Keyword Planner tool that provides forecasts based on the keywords and daily budget you enter. Click on Tools at the very top and click Keyword Planner from the dropdown menu. Then scroll down to the “Plan your budget and get forecasts” section.

Enter in keywords relevant to your products or services then click the Get Forecasts button. Here you can see a daily forecast for the next 7 days (or a time frame you specify).

You can also enter in an estimated daily budget to see approximately how many clicks you would get. Using this feature can help you plan your budget.

Things to Consider When Setting Budgets

Other scenarios that will affect your budget include:

Keywords: Some keywords are simply more valuable than others. As your campaign is running, it is a good idea to analyse the data in your reports. Consider allocating more of your budget to those keywords that are performing well.

Search versus the Display Network: Ads that you create can also be displayed on Google’s Display Network. Some industries see higher conversions on the Display Network than through traditional search.

Search engines: Google isn’t the only search engine where you can display text ads. Yahoo and Bing also have their own PPC platforms.

Device: As more consumers use mobile devices, it may be worth targeting more of these users through your campaign.

Your budget is an important part of your PPC campaign. Use these strategies as outlined above to estimate how much you can afford to spend. But keep a close eye on your campaign and adjust accordingly to maximise your conversions.

In the next section we cover key AdWords metrics to monitor in more detail.

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