Paid search, better known as pay-per-click (PPC), is an indispensable advertising tool for small businesses. Many have seen success in the form of great ROI and a steady stream of leads using Google AdWords alone, the search giant’s main paid advertising system.

If you’re getting started with it yourself, one of the many questions you might have is:

“How much should I spend on it?”

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When it comes to electing a PPC budget, Aspire Digital Marketing often starts with, “How much should you shell out to succeed with AdWords?” Adopting this mindset early on entails that one, you have clearly-defined goals; two, you have a game plan on how to go about these goals, and three, you’ve underlined the metrics to determine if you’ve met these goals.

Allow us to share this process with you.

Planning Your Google AdWords Budget

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To first step to making a baseline budget is to lay down your goals in detail. And the best place to go for actionable insights is AdWords itself. This system basically contains all the nitty-gritty details of your overall PPC strategy, including who you’ll advertise to, how your ads will be distributed, and how much you’ll pay for them. The Keyword Planner, in particular, is the perfect jump-off point for all your campaigns.

Here, you can gather data about the specific keywords you wish to bid and appear for. Prices range depending on the quality of the keyword. The more people are searching using those terms, the more businesses will vie for them. Hence, the higher the cost-per-click (CPC).

CPC is one of the most important units of measurement when setting a budget and determining success with PPC. It determines the average amount Google will charge you when your ads are clicked by users. You can get CTC estimates using the Keyword Planner, but don’t set things in stone. Be flexible with your estimate, should you need to adjust it based on the historical advertising data you’ll have once your ads go live. The average CPC is between $1 and $2 on the search network, but it can go as high as $50 for highly competitive industries.

You may get the average CPC for all the search terms you may want to advertise for using Keyword Planner. But bear in mind that you don’t always have to bid for the most coveted keywords. You can make do with what your budget allows for now and work your way up when you have money to spare.

Once you’ve gathered the estimates, set actionable, achievable goals.

What do you hope to achieve? Do you want to drive more qualified leads to your website? Get more phone calls and online appointments? More foot traffic? Or simply spread awareness of your brand?

With a clear goal in mind, you’re one step closer to running a successful campaign.

AdWords also has Audience Insights, a tool you can use to gain understanding into your target market. This takes out some of the guesswork in determining the right audience that you’ll spend money targeting. Take the time to study this data and build personas early on before electing a budget. When it comes to PPC, remember that the more laser-focused your goals are, the more successful your campaigns will be.   

Get Familiar with the Auction System

Due to steep competition for high-quality keywords, advertisers and businesses must fight to secure prime real estate in search engine results pages (SERPs) for text ads and Google’s Display Network for banner ads. Luckily, AdWords doesn’t judge how much money you can shell out. The priority is to deliver the most accurate information to people who are actively searching for a specific product or service.

The key, then, is to craft high-quality ad campaigns. This is the one true way to get better ad placement with lower costs.

Metrics That Matter

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Metrics are vital to have when you’re managing AdWords campaigns. They inspire focus and determination but also tell you if you should keep investing in PPC. Here are the metrics that you should focus on the most:

Quality Score: The quality of your ad campaigns matters just as much as every other metric. Diagnose campaigns using AdWords’ Quality Score tool to know the relevance of your ad and landing page. Refer to this guide.

Click-through-rate (CTR), or Conversions: CTR represents the percentage of people clicking on your ads against the number of times your ads appeared. Ideally, you may want to aim for 2 percent. It may not look much, but that’s already considered an above average CTR.

Conversion rate: The mantra in PPC is to increase conversions and reduce ad spend. The higher the CTR, the more chances of conversion. You can find how many people ended up paying for your service via PPC ads using your AdWords Editor.

EPC: While cost-per-click helps in setting a budget, EPC or earnings-per-click is a more important metric to monitor. By increasing your EPC, you can outbid your competitors and get more customers. The formula to get your EPC is:

Customer Value X Conversion Rate

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Mainstreetroi.com provides a more detailed guide to calculate the formula.

Maximizing Your Budget 

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Once you’ve set your budget, goals, and metrics, take your PPC game up a notch by building a strategy.

1. Build a PPC management strategy

You should always have a game plan before you run any PPC campaign. Targeting is the key term here, as AdWords is all about laser-focused ads, so Google doesn’t clutter people’s experience with arbitrary ads.

Target specific locations and audience segments and create specific campaigns that will drive more clicks. Make sure every campaign you launch is backed by data from AdWords and Analytics. As you go along, keep changing and upgrading your campaigns until you achieve your goals.

2. Master keyword grouping

Keyword grouping involves targeting a shared set of keywords to maximize ad spend and placement. It works this way: you gather the best keywords that form a theme related to the ad, set a bid, and target for all the keywords so that the ads appear to a broader audience. This takes plenty of research and creativity, so read up before you give it a try.

3. Monitor and adjust

PPC doesn’t end once your campaigns go live. Some keywords, ads, or landing pages may end up not working as planned. Always keep an eye on your campaigns, check their progress, drop those that aren’t working, or boost those that are. More importantly, always measure their performance against your metrics and goals to ensure success and higher ROI.

In an AdWords Guide by Wordstream, it is revealed that the average small business using AdWords spends between $9,000 and $10,000 per month on their paid search campaigns. So prepare to shell out that much to get more significant revenue and more customers turning up at your doorstep.

And one more tip: don’t put a cap on your PPC budget. So long as it’s earning and helping you achieve your business goals, it’s always worth investing in. There are many more techniques, like retargeting and display advertising, to explore to achieve bigger goals.

For more AdWords and PPC tips, give us a call. Our certified AdWords specialists at Aspire Digital Marketing will be more than willing to help.