• Aditya Sharma

How to Calculate the Right PPC Advertising Budget?

PPC Advertising is one of the most important modern advertising trend of recent time. Pay-per-click (PPC) marketing seems to be the best solution for getting the relevant traffic that will convert to leads and sales. Google Ads campaign are quite easy to identify.

In order to run the successful Google Ads campaign you need to know about the certain indicators and a simple formula for further calculations –

Required data

Here are the two simple formulas which you will have to use for the further calculations –

PPC Budget = (Number of Customers/CR2)/CR1*CPC

Number of customers = (Revenue/Sales Period)/Average Sale Amount

Let us consider some of the indicators from the formula above in detail –

. Number of customers

Each business advertiser sets their own business objectives and goals. Using the revenue indicator, business objectives can be estimated in budgetary value. So the advertiser sets the desired revenue and calculate how many customers they need to sell their product so as to achieve the desired result.

. CR2 (Conversion Rate 2)

CR2 is referred as the close rate of your sales team. In other words, CR2 is how many leads your salesmen closes as a percentage of the total leads. For example, if your sales team closes 1 out of 2 business leads for your business, then the conversion rate will be 50%.

. CR1 (Conversion Rate 1)

CR1 is referred as a conversion rate of your website visitors. In other words, how many of your website visitors turn into the potential customers. For example, if 1 out of 100 visitors turn into a business lead for your business after they visit your website, then the conversion rate will be 1%.

. CPC (Cost per Click)

CPC (cost-per-click) refers to the price of the each click. In other words, CPC is the amount of money the advertiser pays to the system for every click on their ads. Cost per click is affected by various factors such as – the ad itself, CTR (click-through rate i.e. the ratio of users who click on a link compared to the total number of users who view the ad).

At the same time, the advertiser must take into consideration the competition in the geographic regions where they want to advertise their ad and the times of the day when they plan to advertise their ad. The minimal cost for each click in Google Ads is $ 0.01.

Google offers its own CPC estimation tool i.e. Keyword Planner. Keyword Planner shows the maximum and the average cost per click of keywords you want to include in your advertising campaign. Here’s a small guide on how to use the Keyword Planner –

. Go to the Google Ads and log in to your Google Ad account.

. Click on the tools and find the planning column and click on the keyword planner.

. Now choose the get search volume and forecasts.

. Enter the keywords you are interested in separated by commas and click on the get started option.

. Fix the Max. CPC and Avg. CPC columns and look through the values displayed there.

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