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Setting daily and monthly campaign budgets

From: Pay-Per-Click Fundamentals

Video: Setting daily and monthly campaign budgets

The first rule of selecting a paid search budget of any Something has to change.

Setting daily and monthly campaign budgets

The first rule of selecting a paid search budget of any kind is to make sure that it's one you are comfortable with. If it's going to give you an anxiety attack, followed by obsessive logging in and checking out how much money has been spent, it is too high. The other caveat around PPC is that you cannot assume that you are going to make a million dollars out of the gate. I liken a first walk through PPC to a game of craps. Decide how much money you want to work with. And when it's gone at the end, stop. That's a cold table. Do not visit the ATM and pull out more cash. Assume that this money that you've set aside to try PPC is gone.

And do not assume an immediate return. You may very well find success early on. That's my hope. But too often, I've heard dismayed and frustrated advertisers lament about how PPC just doesn't work for them. Granted, some of them are right. PPC isn't for every industry, but more often than not, when I get to look at their account that they were running, I figure out why it wasn't working for them and it wasn't the search engine's fault. So, unfortunately, we're going to have to do some math here. Because your budget depends entirely on how much you can afford to spend to get one sale. Taking into account things like average order value and cost per click.

If your average sale value is $30 and it costs you, say, $20 for the product and you make a $10 profit per sale, how much of that $10 are you willing to spend to get the $30? This is only something you can determine. And you had better determine it before you turn on your first ad. Let's establish some facts. There is no guarantee that it will take you ten clicks or a hundred clicks to get a sale. Nor is there any guarantee that it will cost 15 cents or a dollar on your CPC. That's why you have to set an overall budget to start out with, and refine from there.

So, let's set an example budget. Say, $500 over the next two weeks. That equals $250 per week. Or $35 per day, every day. That is what you should set to be your daily campaign budget total to start off with. You can always change this later, depending on how much money you've spent. And when your audience is online. But use this as a baseline. So, let's take a look with our $500 budget and see how much did we actually need. Let's say that our conversion rate is 3%. Our spend was $500 which we know, because that was our budget.

And we got 15 sales for that. Those 15 sales, at $20 a pop, got us $300. We didn't so much as break even. We lost $200. So, we need to take another look at this. Something has to change. Let's say that you perform some optimizations on your paid search account, and are able to increase your conversion rate from 3% to 5%. Our spend is still $500. This time, because of the increased conversion rate, we got 25 sales. These 25 sales at $20 a pop, at least we broke even with the $500, so we're a little bit closer.

Don't be delusional. If your average sale is $40,000, because you sell a very fancy, high end, file transfer software solution, don't expect to see 25 cent CPCs and hundreds of leads with a $500 budget. Your budget has to match your industry. Competitive industries need competitive budgets. This is also why you need to start with one product or service, preferably your most popular or profitable one. This may or may not be the same thing. Pick something that will help you determine if you can sell PPC or not. It's not something that you want to sell to get rid of.

The product or service needs to be something that people actually buy. You need to find out what you can get out of PPC first. Or if it's even right for you before you expand. Ideally, commit yourself to running PPC for at least one month, so you can get enough traffic, sales and site interactions on which to make your determination on whether or not to continue. If you're truly managing the account on a per day, or per week basis, you should see improvements as the month goes on, and that should help you determine not only what next month's budget will be or whether or not you've expanded.

Now that you've settled on a monthly budget, let's move on to how to best utilize it.

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This video is part of

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Pay-Per-Click Fundamentals

34 video lessons · 3293 viewers

Elizabeth Marsten
Author

 
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  1. 1m 14s
    1. Welcome
      1m 14s
  2. 10m 9s
    1. What is pay-per-click (PPC) marketing?
      2m 2s
    2. Understanding PPC's role in your marketing mix
      2m 12s
    3. Pros and cons of PPC
      2m 30s
    4. Things to know before you get started
      3m 25s
  3. 14m 10s
    1. Creating a Google AdWords account
      5m 56s
    2. Creating a Bing Ads account
      6m 13s
    3. Setting up your account structure
      2m 1s
  4. 19m 32s
    1. Setting up campaigns in your new account
      6m 38s
    2. Choosing geographic targets and location-based settings
      4m 56s
    3. Setting daily and monthly campaign budgets
      3m 52s
    4. Creating ad groups without going overboard
      4m 6s
  5. 18m 32s
    1. Researching keywords
      5m 5s
    2. Selecting keywords
      5m 2s
    3. Selecting the match types for your keywords
      5m 4s
    4. Selecting negative keywords
      3m 21s
  6. 17m 13s
    1. Understanding what makes a good ad
      6m 31s
    2. Writing compelling ad copy
      4m 35s
    3. Testing your ad copy
      2m 49s
    4. Using dynamic keyword insertion in ad copy
      3m 18s
  7. 11m 41s
    1. What is quality score?
      3m 52s
    2. Using and improving your Google AdWords quality score
      4m 50s
    3. Using and improving your Bing Ads quality score
      2m 59s
  8. 16m 2s
    1. Using Google's Display Network
      7m 58s
    2. Understanding the Google and Bing search partner networks and how they work
      3m 51s
    3. Using the Bing Ads content network
      4m 13s
  9. 26m 43s
    1. Reviewing your metrics
      4m 32s
    2. Interpreting results
      6m 7s
    3. Installing conversion tracking
      8m 46s
    4. Troubleshooting common performance problems
      7m 18s
  10. 13m 14s
    1. Using the AdWords desktop editor
      2m 41s
    2. Using the Bing Ads desktop editor
      3m 9s
    3. Tips and tools for using offline editors
      7m 24s
  11. 1m 12s
    1. Next steps
      1m 12s

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