Setting Your PPC Budget: What Should You Pay Per Click?

PPC budget is an integral part of your PPC strategy. It means how much money you can spend to bring traffic to your website and generate leads. But, how much should you pay per click? How to set the right PPC budget for your Ad campaign? Whether you are just starting PPC advertising or want to determine if you are investing correctly, here, we’ll let you know everything about setting your PPC budget.

What Budget Do You Need In PPC?

In order to evaluate the PPC budget, you need to find out the characteristics of your leads, like how frequently they visit your site, their buying cycle, their geo-location, etc. However, if you don’t know much about your target leads, decide how much you can afford to spend. How many leads do you need to meet your PPC goals?

To get the answers to these questions, you need to:

Identify your Goals:

Think about why you are starting the PPC Ad campaign in the first place. Do you want to generate leads, generate revenue, or spread brand awareness? Once you have defined your PPC goals and targeted your audience, you want to know how much you should spend to get desired results.

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Suppose you are using Google Ads for PPC advertising. To set the right PPC budget, you need to determine both the minimum daily amount and monthly budget to spend on Google Ads. It depends on the following factors-

  • Cost of keywords.
  • Conversion rate.
  • Value of your customers.

For example, you have an Ad with a CPC of $0.75, and you want to receive 200 clicks on the Ad daily. This means the estimated daily budget is: 0.75×200=$150. Thus, you will have to pay 75 cents if 75 cents is the max CPC. If you set your CPC to 75 cents/click, you won’t pay over this.

Identify the Relevant Keywords:

Conduct keyword research before planning your budget to get a realistic idea of your spending and other things.  This is very important as paid search campaigns will not spend money on keywords that don’t have high volume and reach. You can try tools like Google Ads Keywords Planner to identify the click-through rate and volume.

Analyze your Previous Ads:

If you have a previously paid search campaign running, use it to analyze your spending and keywords. Keep an eye on the impression metrics, as it will help you gauge the people who have seen your ad.  The other thing to look at is the ratio of impressions. Let’s say your ad has 1000 reach, but your content gets around 10,000 impressions; this means every person from your audience has seen your ad about ten times.

What Is The Formula To Determine Your PPC Budget?

To calculate your PPC budget, there are some numbers you should know beforehand-

  • Website conversion rate.
  • Number of customers you need to click the Ad.

With these two figures, you can calculate the estimated traffic you require to meet your PPC goals using the formula-

Required Traffic = Customers you need/conversion rate

Once you find the required traffic, you can set your CPC budget using the following formula-

Total CPC Budget = Average CPC X Traffic

You can also estimate the highest and lowest range of your budget with the formula-

Highest Budget = Highest avg. CPC X Highest Traffic

Lowest Budget = Lowest avg. CPC X Lowest Traffic

Is The Traffic Worth The Extra Cost?

Now that you know how to estimate your PPC budget, you want to know, ‘Is it good to increase the cost per click for growth opportunities?’ Well, you can control the quality of the leads you bring to your website through strategies, like controlling the Ad placements, filtering the negative keywords, or adjusting the bids based on time/day of the week.

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However, you might think if it is good to double your budget to get more leads. Or, how much profit will you make for each dollar you pay per click? It’s quite tricky to determine how the changes in your budget will affect the results. But, you can use Google tools for this.

For example, when you get a ‘limited by budget’ notification in your Google Ads account, you can use the Google Ads traffic estimator to know how Google sees your growth opportunities. It will help you know how to track the budget settings, adjust your bids, or other changes to make.

How To Make The Bids Work For You?

Your PPC budget and CPC bids go hand in hand. As both these metrics affect your Ad placement, ensure that they are optimized for results. With Google Ads, you can optimize the budget as it considers how much you can pay per click.

Keep in mind all the PPC goals and then see what budget is available to spend. When you are researching for keywords, the average bid per click will let you know the expected spending range. Look how the bids will affect your overall budget, and then plan accordingly.

Conclusion

Setting the PPC budget doesn’t have to be a tough task. Get clear on your PPC goals and know how much traffic you need to reach these goals. This will make it easy for you to set the budget. However, keep the key performance indicators at the front while deciding the maximum CPC amount. You can use resources like Google Analytics or insights from your previous PPC campaigns to gather data. Doing so will help you create realistic PPC goals, set the right PPC budget, and save you from spending the budget unnecessarily.

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