15 Jun Adwords Budget: Budgeting for your PPC Campaign

Adwords Budget: Budgeting for your PPC Campaign
Your budget will depend upon the competitiveness of your business niche. Click costs are calculated on a keyword basis and the demand for each keyword phrase. While the costs can vary, we have seen phrases that generate good traffic range from 50¢ to over $100 per click!

Google AdwordsMany businesses begin with a monthly budget based upon the competition. The budget is divided into a daily ad spend limit which allows the budget to be spread out equally over 30 days. Without a limit, the clicks and costs can be shockingly high. If this occurs before you have determined your money keyword phrases, it can be a financially painful experience.

What to Watch Out for When Choosing a PPC Resource
What we noticed most when discussing our clients’ previous PPC experiences was that most vendors will usually only send traffic to the home page. Most of the clients had no idea of how much traffic they were receiving that actually converted into customers. Vendors would show them the traffic statistics and say, “Look how we are delivering for you.”

To be fair, a vendor cannot be responsible for your business, what you sell, or if people will buy it. So it is safer and easier to just send traffic to your site. With this approach, the results can be disappointing as there is no conversion tracking.

When you hire a PPC firm, they should advise you on the way a proper PPC campaign needs to be incorporated into your online marketing and advertising campaigns. Even if they do not provide you with landing page support, they ought to instruct you on how it should be done correctly. They can even recommend a web designer to create your landing pages. However, the web designer should understand the function of a landing page and be able to build it with the proper layout and call to action. What you don’t want is someone who can just create a standard web page and has no idea about how a landing page functions.

PPC Fee Structures
There are a variety of ways that PPC firms charge. The following are the most common:
• Set up Fee | Fixed Monthly Charge
• Set up Fee | Monthly Management Fee
• Set up Fee | Monthly Management Fee | Percentage of Ad Spend
• Set up Fee | Mark up click cost

Set Up Fee
The set up fee is charged to create your PPC campaigns and ads within Google and the other search engines where you will be advertising. This is a one-time charge, although sometimes it is waived in order to get your business.

Fixed Monthly Charge
This is a program that charges you a fixed monthly amount and includes the PPC budget and management fees. Many vendors have you pay Google directly and invoice you separately for the management fee.

Monthly Management Fee
This is charged to monitor and manage your PPC campaigns.

Percentage of Ad Spend
In addition to the monthly management fee, many firms will charge a percentage of how much money you actually spend on your PPC campaign. This can add an additional 5 to 10% cost to your PPC budget.

Mark Up Click Cost
Rather than charge a monthly management fee, many PPC firms will mark up the cost per click. For example, if your actual click cost is 52¢, they will charge you 55¢ or so. Google has cracked down on the historic price gouging and if you select this pricing model, then make sure you work with a reputable firm that is Google certified.
As mentioned above, sometimes smaller firms will establish a PPC account for each search engine in the client’s name. This allows you to directly pay Google and the others for your ad costs using your credit card. The set up and management fees are paid directly to the PPC firm.

Is Using PPC Advertising Right For My Business?
The best way to determine this is to do the math. First, determine how much a new customer is worth in added revenue. Is it a one-time sale or will it produce recurring revenue? See what the average PPC cost is per click; since not everyone buys, estimate that it may take 10 clicks or more to gain a new customer. This is more easily determined once you find your money words. Professional PPC programs test daily to manage your account. The first two months of testing will provide the converting keyword phrase trends that are a good benchmark for SEO and content marketing plan.

For example, if a new customer spends $100 and it takes 10 clicks to gain a new customer at $2.50 per click, then the $100 sale costs you $25. This is a $75 gain. If the average cost per click is higher than your return then you need to discuss your alternatives with a PPC professional.

Recommendation
With all the PPC firms and payment options available, we recommend that you avoid firms charging a percentage of ad spend on top of a management fee. You should also avoid the firms that charge a fixed monthly fee that includes your ad spends. We have run the numbers and this is not a good business decision. In order for a PPC firm to be profitable using this model, they need to include bidding on less expensive, low demand keyword phrases. Furthermore, most do not roll over any remaining ad budget to the next month.

As an example, one of our attorney client’s primary converting keyword phrases was $7 per click. The PPC vendor he was using at the time included bidding on phrases that had only a few clicks a month for a cost of only 5¢ per click. These phrases were not converting. At $7 per click the ad spend would not go very far since it included the management fee. The vendor would not share how their fees were earned when we reviewed our client’s account. Avoid this scenario even though it appears to be a better deal.

Another suggestion is to ask for a list of the keyword phrases and Google’s suggested cost-per-click. See if the math works and then ask the hard questions.
We recommend that you work with a firm that actually is Google certified. It means they understand the science, as well as the mechanics of how PPC works. Here is some additional information about budgeting for your PPC campaign.

Questions to Ask
If you wish to use a PPC vendor, then ask them the following questions:

  1. Are you Google certified in PPC? If no, why not?
  2. Are you experienced running Facebook ad campaigns?
  3. How does Google AdWords differ from Facebook?
  4. Does your firm actually run PPC campaigns or do you outsource to another vendor?
  5. Do you conduct the keyword research? Will you include the estimated cost per click for the keyword phrases so I can gauge expenses?
  6. Can I review and approve the keyword list?
  7. How do you determine the keyword phrases that buyers use as opposed to the shoppers?
  8. Do you know how to spy on my competitors PPC keywords to determine which are converting?
  9. Will you continually test my PPC campaign, and how? What do you perform to help with conversions?
  10. Are you planning to continually test my landing page to help increase conversions?
  11. What are your fees and is a contract required? Explain.
  12. If my monthly ad spend is not completed, does the balance rollover into the next month?
  13. Do you require a contract? If so, for how long?
  14. If your campaigns are not performing, how do I get out of the contract?
  15. Will you provide a list of your current PPC clients who can be used as references?
  16. What kind of monthly reports will I receive? Will you review the results with me to make sure I understand how these results impact my business?
  17. All PPC firms offer traffic, so how are you different from your competition?
  18. Give me three reasons why I should work with your firm.

NOTE: Google recently introduced a set it and forget it PPC program called Adwords Express for local businesses. You create an ad, determine whether to send traffic to your Google Maps Place page or website; and Google recommends a budget based upon the ad competition. Additionally, you can also set your own budget. Be aware, though that you are responsible for measuring the conversion rate that ensures you are running a profitable campaign.

Conclusion
Improperly conducting a PPC campaign can prove to be a costly mistake. Traffic without conversions is motion…not productivity. We’ve seen instances where businesses loved that the phone was ringing but were shocked to find out they were actually losing money. We suggest that you do your homework and have a true PPC professional advise you properly and manage your campaign according to sound PPC principles.

Our Niche Dominance digital media marketing strategies are designed to evolve with the rapidly changing search engine environment so your business can achieve a competitive advantage in today’s growing competitive landscape.

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