$500 or $5,000? How Do I Choose the Right Spend for My PPC Campaign?

When the team at Kiwi Creative onboards a new client for a Pay Per Click (PPC) campaign, a question that we always get is, "How many conversions will I get?" This question is challenging to answer. There are so many factors that play into the success of a PPC campaign. From the target keywords to compelling ad copy to engaging landing page experiences, Google takes into account a multitude of factors before it shows your ad on a SERP, let alone have it clicked on by a user who then converts.

In our recently-released 2020 State of the Industry Report, we found that 50% of the tech company respondents use digital advertising tactics. Out of this group, 75% use paid search, better known as PPC. When it comes to PPC strategy, campaign spend is crucial for our favorite group of people: the might tech marketers.  Unlike organic search, tech marketers need to pull from their annual marketing budget for PPC advertising to appear on SERPs. 

What does this mean? You want to make sure that you're a) spending enough and b) showing your ad to the right users. 

There is a big difference between spending $500 a month and $5,000. Plus, you could inadvertently spend thousands of dollars on a campaign that does not produce any results. In this blog, I am going to share some tips on how to determine the most efficient budget for your PPC campaign for high ROI. 

Let's Go Over Some Fundamental Terminology

I always laugh at the sheer number of acronyms that exist in the PPC realm. When you click around in Google Ads, there are columns upon columns of acronyms that give you a humongous jargon-filled paragraph for “explanation.” So let's master the fundamental terminology before we dive into strategy:

  • PPC = pay-per-click, or another term for paid search
  • CPC = cost-per-click, or how much you pay for someone clicking on your ad
  • Max CPC = maximum cost-per-click, or how much you are willing to pay for someone to click (i.e. your bid in the auction)
  • CPM = cost-per-mile (Latin for thousand), or how much you pay per thousand impressions on your ad
  • CPA = cost-per-acquisition, or how much you pay per conversion (e.g. a sale)
  • Long tail keywords = it’s not an acronym but you’ll want to know the definition! Consider long tail keywords to be a phrase rather than 1-2 words

Not confusing at all, right?

When it comes to determining your PPC spend, we tend to focus on CPC and Max-CPC, especially when in the research phase. However, when building your campaign, you may choose a different bidding strategy.  You can check out the different bidding strategies in this article from AdEspresso

Start With the Basics

Before you determine your PPC spend budget, you need to think about what the overall goal of your PPC campaign is. We frequently look at what stage of the sales funnel users who will see your ad reside in. Knowing where users are in the sales cycle for your campaign is crucial as it determines the keywords you will target, which then determines your budget.

Let's use a practical example: you’re a SaaS company advertising your new workforce scheduling software. Which of these options meshes with your strategy?

  1. Awareness: You want to show your ad to users who do not know your company and/or what a workforce scheduling software even is. You wish to drive traffic to informational landing pages. As such, you'll target high-level keywords relating to workforce scheduling software without any brand name modifiers.
  2. Consideration: You want to show your ad to users who know what workforce scheduling software is and are looking for a company to purchase the software from. You wish to drive traffic to landing pages for gated resources (e.g. whitepapers). As such, you'll target long-tail keywords relating to workforce scheduling software with an emphasis on your software's unique traits.
  3. Decision: You want to show your ad to users who are ready to purchase  workforce scheduling software. You wish to drive traffic to a landing page so they can schedule a sales call or demo or even submit their contact information. As such, you'll target brand name queries and long-tail workforce scheduling software keywords.

Do you see the difference between all of these? The types of keywords you target are directly related to the stage of your audience within the campaign. Once you determine which stage of the sales funnel your campaign falls into, then we can move on to estimating an efficient budget.

Surprise: Google Gave You a Free Gift!

Similar to SEO strategy,  you want to target keywords in PPC that have a high search volume with a low-to-medium competition level. Using Google Ads' Keyword Planner, you can research relevant keyword opportunities, and forecast their performance for free! That’s the surprise.

To start, go to the Keyword Planner and use the "Discover new keywords" feature. You can enter up to ten keywords and/or a website URL to generate ideas. When Google Ads lists out keywords, it includes the query, the average number of searches per month, and the competition level. 

However, a key feature are the two "Top of page bid" columns. These two columns show you, on average, what CPC advertisers are paying on the low and high ends for the words or phrases you want. This instantly gives you a sense of the type of budget you will be looking at. Keywords that are between $5-$10 will make your budget last longer than those between $25-$40!

In the tech industry, a lot of tech marketers find that the keywords relevant to their product or service are quite expensive. While this can be overwhelming, remember that you can play around with match types (broad, phrase, and exact) and longer-tail keywords to lower the CPC.

After getting a sample keyword list together, drop it into the "Get search volumes and forecasts" feature. Under the Forecasts tab, you will be able to see how a campaign using these keywords would perform. There are a chart and table that appears at the top, giving you an option to see the forecasted number of conversions and clicks, along with your max-CPC. At Kiwi Creative, we tend to focus on the number of clicks. 

Revise the Max CPC based on both the low and high top of page bids you analyzed when performing research and on how much you wish to spend each day. As you increase or decrease your Max CPC, your monthly campaign spend, daily budget, clicks, impressions, and CTR all change. I personally often look at the line graph Google creates, showing the relationship between the number of clicks and Max CPC, to get a sense of where my budget falls. For example, if there is exponential growth in the number of clicks between a Max CPC of $10 and $30, then perhaps I would put my Max CPC at $20 to be right in the middle. It's important to be competitive in these PPC auctions, but for tech marketers, we also need to be mindful of our budgets.

While Google's Keyword Planner is not perfect, it does provide a great look into the type of budget you should allocate to your PPC campaign so that it reaps the most benefits for your tech company. With PPC, it's crucial to build out a thorough strategy on the front end so that your campaign spends your money wisely. While we're seeing more tech marketers take advantage of PPC, it continues to be important to optimize all aspects of your marketing strategy. 

To help you, download our 2020 State of the Industry Report to get some awesome ideas and tips for the second half of 2020.

State of the Industry Report: Download Now