Comprehensive Guide to Calculating Your PPC Budget

Step 1 - Define your goals

Before you do any mathematical calculations or attempt to create a budget you need definitive goals. Having a definable goal for your PPC campaign gives you something to work towards and it gives you parameters to work within and use to estimate your budget.

Examples of potential PPC goals include:

  1. Sales volume.
  2. Profit percentages.
  3. Profit share.

For example, you may simply want to increase sales and meet a specific sales volume per month through your PPC campaigns. Alternatively, you may want to make specific profit margins from your PPC conversions.

The goals for your PPC campaigns should align closely with your overall business strategy and objectives so you can keep everything cohesive and everyone working on the same page.

Step 2 - Formulate a budget that can achieve your goal

With a steadfast goal, you can now look to calculate a budget. Essentially, you are calculating the minimum spend on PPC required to meet the goal. This will vary depending on the goal you set but the basics remain true.

Regardless of the goal, your budget will depend on different factors like your expected average order value, cost per acquisition, and CPC for your PPC ads. 

I can’t give specifics but you need to estimate using averages and looking at industry benchmarks. Initially, the budget will be just that – an estimate. But as your campaigns progress you can start to gather data and gain a clearer idea of the reality of your PPC costs and how much it will actually cost to get the results you want.

Step 3 - Create Your PPC Campaigns

With an estimated budget established, you can start creating your PPC campaigns. There are numerous steps to this including detailed keyword research, creating high-quality Ad copy, choosing the right Ad layouts, and sorting the targeting settings so your Ads are displayed to the right people.

Other important factors to consider include negative keywords to make sure your ads are more streamlined and targeted, and competitor keywords.  

At this point, you technically haven’t spent anything still as the ad won’t start costing until you get positive actions such as clicks.

Step 4 - Schedule Regular Monitoring and Reviews

Once your PPC campaign is live you now get a chance to see if your budget is realistic or if it needs adjusting. To start, your ads will probably need some tweaking and adjustments so I advise you to schedule regular PPC reviews.

This should be done weekly to monitor progress carefully and check how much you are spending. Google Ads has a host of analytical tools available and costing info and you can also get more info by linking your Google Analytics account to Google Ads.

Monitoring is essential to keep track of your spending and to make fine-tune adjustments to your PPC budget.

Step 5 - Compare Your PPC Progress to Your Goals

Once the PPC ads are live and you start to get data you can see if your budget was realistic and if it yielded the expected results. It may transpire that your averages were underestimated and you have exceeded your goals with less expense.

Alternatively, it could transpire that the estimated budget fell drastically short and that you didn’t get the expected conversions.

Step 6 - Make Improvements and Re-Assess

With a clear idea of the accuracy of your budget, you have two tasks. Firstly, you can choose to increase your budget based on the actual data to get the desired results.

However, before doing this, it could be a better idea to look at improving your PPC ads and assessing areas where they need improvement. For example, you could be using the wrong keywords, or your ad copy may not be engaging or targeted enough.

Fine-tuning your ads is preferable to simply increasing your budget as just throwing more money at a problem rarely yields positive results. Hopefully, if you are not meeting your goals with your budget, you can make improvements and stick within your desired expenditure.

Step 7 - A PPC Budget Allows You to Control Spending and Have a Goal to Work Towards

If you want to use PPC marketing, you MUST establish a strict budget. Without a budget, your costs could soon spiral out of control and this will ultimately diminish the effectiveness of your Google Ads. 

The process is simple – set a clear goal for your PPC marketing and from that establish a realistic budget. With a budget in place, you can then create your ads, monitor their progress, and keep a tight reign on your expenditure with analysis and reviews.