How to create a PPC budget

Creating a PPC Budget 


    Pay Per Click (PPC) advertising is an internet marketing formula used to price online ads. Advertisers pay internet publishers the agreed upon PPC rate, regardless if a sale is made or not. A well-planned PPC budget helps increase revenues without cutting into profits. Below is a guide that may help you create and manage your PPC budget.

1. How much can you afford to spend per click?

      Figure out three elements:

• site conversion ratio (the number of visitors converted into sales)
• average ticket price (average amount of money earned per sale)
• cost per sale (amount you are willing to spend to get a sale)

      If you have a sales-oriented website:

• Multiply the conversion ratio by the cost per sale 

   Cost per click = conversion ratio X cost per sale 

       Ex:       Conversion ratio=13% $/sale= $60   

                        13% X $60 = $ 7.80 /click

      If you have a lead generation website

• You’ll also need a closing ration ( how many of your leads turn into a sale)

      Cost per click = closing ratio X cost per sale X conversion ratio 

      Ex:       Conversion ratio=13%    Closing Ratio= 10% $/sale= $60   

                        10% X $60 X 13% = $ .78 /click 

1. How many jobs do you want out of this campaign to realize how much you’re willing to spend?

• Ask yourself how many jobs you would like to bring in through  PPC campaigns

      Total PPC spending = Total jobs X Cost per sale 

       Ex:       Total Jobs from PPC: 500 jobs         $/sale=   $60 

           500 jobs X $60 = $30,000 total PPC spending 

1. Set amount of maximum cost per click based on previous calculation.
2. Determine if PPC is right for you.

• Some online medias are saturated and if you end up paying above your budget, look into the numerous other medias that will be a better fit for you.
• If you can’t stick within your budget in order to achieve you revenue goals, Start Over.

Tips:

• Discipline is the key to any successful marketing campaign. Track your campaigns and ensure you are hitting the target
• Medias you can consider:
  • Google
  • Yahoo!
  • MSN
  • Lycos
  • Ask Jeeves
  • WebCrawler
  • AltaVista
  • Excite
  • HotBot

Helpful Sources:

http://www.searchengineguide.com/jennifer-laycock/help-set-your-budget-with-payperclick-calculator.php

http://www.google.com/adwords/learningcenter/text/65851.html

http://www.webmasterworld.com/forum22/2971.htm

http://www.clickz.com/showPage.html?page=3362641

http://www.propayperclickmanagement.com/ways-to-stretch-your-ppc-budget.php