How do I know if I’m spending my PPC budget wisely?

Pay-per-click marketing is difficult to master. It can either boost your company’s profitability or drain its resources (if the campaigns are not optimized correctly). There are also so many variables to consider, like how much to spend on search versus display, and whether your PPC is focused on e-commerce or lead generation. To avoid losing money on PPC, it is worthwhile to take a careful look at how you are spending your PPC budget and what you can do to improve it.

Start with the Basics

The first question to answer in figuring out the best PPC budget for your company is what do you need to generate more quality leads? To determine this, consider the essential elements of leads:

• The frequency of visitors: How often are people coming to the site?
• The cycle of buying: What is the typical buying cycle of each visitor?
• Location of visitors: Where are the visitors located geographically?
• Quality of leads: How well do the leads translate into measurable results?
• CPL (target cost per lead): What is the cost for each lead?

Starting with these questions can help you paint an accurate picture of what your site’s activity currently looks like. Before you can envision a goal and create a path to get there, you need to know where your beginning point is.

Calculate Target Lead Goals

Once you gather this necessary information, you can distinguish your leads in terms of profitability and define your target lead. Some factors to consider in deciding what your target lead is includes the following:

• What is the ideal number of leads for our company’s goals?
• What makes a lead valuable?
• What is our CCR (current conversion rate)?
• How much money can we spend on each lead?

These are more difficult questions to answer but taking the time to do so will pay off as you enter the answers into formulas designed to make the most of your PPC budget. For example, you need to calculate how many new clients you need each month, what your close rate percentage is, and how much your cost per lead is. Using these numbers, you can figure out what your PPC lead goal should be and how much you need to spend to reach it. Let’s break that down into five steps with an example:

• Step one: calculate your goal cost-per-lead–$50 per lead
• Step two: decide on your new client goal—500 new clients per month
• Step three: calculate the close rate of leads—30%
• Step four: figure out your PPC leads (divide step two from step three)—1667
• Step five: establish the amount your company needs to spend per month (multiply step one and step four)–$83,350

Final Considerations

Fine-tuning your company’s PPC budget is an excellent way to ensure that your company is in a fiscally responsible position, as well as to analyze its marketing strengths and weaknesses. Rather than just looking at how many leads you’re generating, for example, you can break down the quality of those leads and hopefully discover ways to improve not only the quantity but also the quality of the leads. Some of the considerations that can help you do that include the following:

• Do leads from certain areas consistently result in higher conversion rates?
• Do certain times of the day produce more leads than another?
• How much time do visitors typically spend on our site?
• How user-friendly is our website concerning the number of clicks that a user has to make?
• Which search engine makes the most sense for us to use?
• Would negative keywords winnow out the leads that don’t lead to conversion?
• Should we adjust our bids according to traffic and pay more for leads during more profitable times or days?
• How well does our site perform on a range of devices such as tablets, and laptops?

After analyzing these factors, you’re in a much stronger position to create an optimal PPC budget that gives you the most marketing power for every dollar you spend. The investment you make in smarter marketing practices will pay off as your site becomes more productive in attracting and retaining users. Additionally, your site will generate more quality leads, and your conversion rates will increase as you analyze and then adjust the way you spend money on PPC. You will also have peace of mind knowing that your PPC budget is being spent wisely.