How Much Should You Be Spending On Your PPC Campaign?

DSM Digital School of Marketing - PPC Campaign

We all know how important search engine optimisation (SEO) is to modern marketing. Climbing the organic ranks is imperative to your success. However it also takes time. Frequently, it can take more than six months before you begin to realise a return on your investment.

Fortunately, there’s a more immediate option which can work on its own or alongside SEO — pay-per-click advertising (PPC). With PPC, you are able to get instant results on the globe’s most popular search engine. As soon as you trigger your campaign, you’ll see loads of web traffic heading to your site.

If this seems far too good to be true, fear not. PPC is very real and quite doable. But what does it cost? The most honest answer you can get to this question is, “It depends.” This isn’t a cop-out. This is because as the advertiser, you’re in control of PPC pricing. It’s based on your chosen budget as well as target keywords.

What is PPC?

PPC stands for pay-per-click, which is a model of internet marketing where advertisers will pay a fee each and every single time one of their ads is clicked upon. Ultimately, it’s a way of buying visits to your site, rather than trying to “earn” those visits organically.

Search engine advertising is by far one of the most popular forms of PPC. It gives advertisers the opportunity to bid for ad placement in a search engine’s sponsored links section when a person searches on a keyword which is related to their business offering.

Every time our ad is clicked, so sending a visitor to our website, we need to pay the search engine a small fee. When PPC is working properly, the fee is trivial as the visit is worth more than what you pay for it. Put another way, if we pay $3 for a click, but the click results in a R3 000 sale, then we’ve made a substantial profit.

A lot goes into putting together a winning PPC campaign: from researching and selecting the correct keywords, to forming those keywords into well-organised campaigns and ad groups, to establishing PPC landing pages which are optimised for conversions.

Search engines reward advertisers who are able to create pertinent, intelligently targeted pay-per-click campaigns by charging them a lot less for ad clicks. If your adverts and landing pages are beneficial and rewarding to users, Google charges you far less per click which results in higher profits for your business. So if you want to start utilising PPC, it’s important to learn how to do it right.

How much does a PPC campaign cost?

Pay per click advertising costs vary considerably because fees vary significantly from term to term. The most commonly used keywords or search terms will sell for a far higher price per click as opposed to terms that are searched less frequently. This means that managing PPC ad spend is quite important.

Very generally speaking, you can assume to be paying several thousand per month for a complete PPC advertising campaign which includes bid management, conversion-checking, reporting as well as 24/7 support:

  • A small business can expect to pay approximately $1 000 to $2 000 for an effective PPC campaign.
  • Mid-sized firms should be budgeting in the $7 500 to $10 000 range.
  • Larger organisations can expect to pay somewhere from $10 000 per month to upwards of $50 000 per month.

What is a good ROI for PPC?

Return on investment (ROI) is a statistical formula that investors and PPC managers can use in order to evaluate their investments and also to judge how well a specific investment has performed as compared to others.

An ROI calculation is frequently utilised with other approaches to create a business case for a given proposal. The overall ROI for an enterprise is utilised as a way to grade how well a company or PPC campaign is managed.

Average conversion rates for PPC campaigns (or, put another way, PPC ROI) range between 2% and 5%. When examining what your target PPC conversion rates should be, you need to keep an eye out for the average in your industry. For instance, finance has 5% average conversion rates, while eCommerce’s average is much lower: 1.84%.

What is a good amount to spend on paid ads?

Generally speaking, companies should expect to pay $1-$2 per click in order to market on the Google search network. On average small businesses, together with medium-sized organisations, spend monthly between $5 000 and $9 000 on PPC depending on the time during the year.

When it comes to determining your budget for your PPC ads, you should first do your keyword research. Then you should have a look at your products, customers together with website analytics, in order to pinpoint your conversion rates or the cost at which likely customers are developing into actual clients.  The logic is quite simple – the higher the rate of purchase along with higher ticket cost on a particular sale means a bigger budget to spend on your PPC campaign.

Finally, once you have seen that your campaign will be profitable, you can begin customising the most optimal budget. You need to invest as much as you possibly can as long as you’re remaining profitable. If your PPC campaigns are driving much more money than they’re setting you back, you should absolutely continue what you are doing.

Get in touch with the Digital School of Marketing

Would you like to discover more about PPC advertising? If you do then you need to do our PPC and Web Analytics Course. Follow this link for more information.