How Much to Spend on PPC Advertising?

6 Minutes

Once you’ve taken that first step and decided to start PPC advertising – congratulations! – you’ll have an important question on your mind: how much should I spend on PPC advertising?

This is an important question and unfortunately, there’s no one answer. So, we’ve created a guide and poured in all our expert knowledge about PPC advertising to help. We will take you through what you need to consider when working out your budget, and how to evaluate whether your campaign has enough funds.

Oh, and don’t forget to bookmark this article and come back later. It’s important to re-evaluate your spend from time to time!

The Short Answer

The short answer to the question “how much to spend on PPC advertising?” is “it depends.”

It’s not an overly helpful answer, but it is true. Be wary of any that claims there’s a one-size-fits-all approach to PPC budgets.

In reality, there’s no right or wrong answer to how much a business should spend on PPC, it depends on many factors, including:

  • How much budget your business can afford,
  • How many leads or conversions are needed to hit your revenue targets.

Budgets shouldn’t be static and should be flexible according to seasonality, businesses needs and how well your campaigns are performing.

Researching, looking at keyword costs, and learning about Google Ads is all important, but without a goal, it could just be a lot of wasted time.

Below, we’ll take you through how to set a goal and get ready for your first ever PPC advertisement. If you’re already feeling overwhelmed or unsure, get in touch! Creating PPC advertisements is our specialty (especially Search Ads) and we’d love to help you figure out a plan of attack.

What to Consider When Setting a PPC Advertising Budget

When we are helping a client work out how to set up PPC advertising for their business, this is the process we go through.

Setting Goals

As Antoine de Saint-Exupéry said, “A goal without a plan is just a wish.”

It’s important to set goals for your campaigns – and these need to be clear rather than vague i.e.:

As a business, we want to generate 100 leads per month, paying no more than £50 per lead.

There are some key things to think about when you create a goal:

  • Be specific, not just “we want more business in general”,
  • Set a time limit and schedule that’s realistic (we can help you with that) and measurable,
  • Be clear with your budget – work out how much you have to spend, don’t just estimate.

A goal doesn’t just need to be more business. With PPC advertising, you can also set goals for brand awareness or use it to grow your audience, e.g., sign up for a future product or register their interest.

Setting a goal is important for two specific reasons:

1. You can spend money wisely and with a strategy in place, which ultimately leads to better returns,

2. You’ve defined what success would look like, so you can measure and track how successful or unsuccessful your campaign is – and therefore you know when to make adjustments.

Creating a PPC advertisement just to see what happens or by guessing what will work, ultimately leads to a lot of wasted time and money!

How Much to Spend on PPC Advertising?

Traffic Requirements

The essence of this step is to ask yourself; to achieve my goal, how many clicks do I require? If you’ve used PPC advertising before, you can find conversion rates from your past campaigns, which will be incredibly helpful.

If not, don’t make the mistake of thinking that every click will become a lead – it depends on how well your landing page converts, your industry, and what your goal is. Finding the average conversion rate for your industry will help, but it still varies from business to business.

Note: Your conversion rate for organic traffic or referral traffic won’t be the same as paid traffic – the customer is in a different mindset.

So, if you need 50 leads in a month and you get 1 conversion for every 10 clicks (yes, a 10% conversion rate is quite unrealistic, but it’s easy to calculate for our example), you’ll need to budget for 500 clicks per month.

You can see why evaluating your PPC campaign regularly is important! The more data you know about your conversion rates, the better you can adjust your budget to fit the traffic requirements.

At iLeads, we can help you determine an estimate conversion rate to get started with, if you’ve never attempted a PPC campaign before.

Pay Per Click

Once you understand how many clicks you require, next you need to look at the costs per click – this will give you an idea of the required budget.

At this point, you might need to re-evaluate your goals. If your goal is £50 per lead, as in the simplistic example above, and you have a 10% conversion rate (1 in 10 clicks becomes a lead), then your cost per click should be no more than £5.

With us so far? 10 clicks, at £5 each, should result in 1 lead for £50 total ad spend.

When you start your campaign – or work with us to get it set up – you may find that the costs are more or less than you had budgeted for. Costs will also fluctuate as your goal changes and ads are fine-tuned.

Where do I find the cost per click?

If you’re using Google Ads, you can see the estimated cost per click of any keyword by using the ‘Keyword Planner’ tool.

Next Step: Launching Your PPC Campaign

Once you’ve set your goals and know how to measure your campaign, plus you’ve figured out your conversion rate and cost per click, you should be ready to get started.

Google Ads can be a bit complex to get your head around, especially if you’re attempting to manage multiple PPC types (e.g. video and search) or using multiple platforms (e.g. Google and Bing). So don’t be afraid to get in touch to find out how we can help!

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