PPC Calculations: Determining Budget and ROI

ppc calculation

Pay-Per-Click marketing can be an incredibly powerful tool for any business. However, a PPC campaign isn’t something that you should let run wild, either. Fortunately, Pure Digital Marketing knows precisely how to optimize your PPC calculation.

Just like any marketing campaign, your PPC advertising needs to be carefully calculated, monitored, checked, and double-checked for success. If you don’t balance everything carefully, you could end up paying for more than necessary (or not enough) to get the results you need.

This guide will help walk you through calculating your PPC budget, determining your target ROI, forming goals, and more.

Building Your Budget

Building a budget for your PPC marketing campaign is anything but easy. Unless you have prior experience with building your budget and an existing frame of reference, it may take a few tries to get it exactly right.

PPC Calcultion Formula

In general, the PPC calculation formula most companies use looks like this: number of clicks needed divided by cost per click. Ask these questions to set a budget that will meet your revenue goals.

·   How many conversions does your PCC campaign need to generate to be lucrative?

·   How many clicks do you need to convert site visitors to paying customers?

·   How much does each click cost?

If you’re new to the PPC game, the best way to start is by setting concrete budget goals for your venture. If you’re experienced with search engine marketing (SEM), you should skip directly to working with analytics tools, tweaking your current strategies, and maximizing your overall profits.

Setting Goals: Leads, Profit, Awareness, and More

A successful PPC calculation starts with setting goals. While many businesses prioritize profits over everything else, a lot goes into calculating your ROI. 

For example, are enough people seeing your website and learning about your services? What does your lead generation strategy look like, and how effective is it? Are there any ads, links, or other holes in your marketing campaign that aren’t performing as they should and possibly affecting your budget?

First, narrow down the problem. Then, turn that problem into a concrete goal. For example, if you have trouble attracting customers to your site, set a goal to run more ads (or different ads) and spread brand awareness.

SMART Goals

When you need to set goals for you and your business, the SMART system is an excellent place to begin. The SMART goal system can be used for anything goal-related — not just your PPC campaign — so it’s a useful strategy for any business to know.

SMART is an acronym that outlines a set of simple steps. They are as follows:

●   Specific: Your goals should be clear and easy to understand but also relatively narrow in scope. Rather than saying, “I want to increase my ROI,” narrow it down even more to something like “I want to acquire 100 new customers, but spend $10 less for each customer acquisition than before.”

●   Measurable: Always propose PPC calculation goals with measurable, numeric figures rather than vague “higher” or “lower” descriptors. Also, use analytics tools as much as you can to measure these results (more on that later).

●   Achievable: While lofty goals can be very motivational, be careful not to set goals that are impossible to reach. Keep your goals modest — you can always set more later on when you have a clearer frame of reference to work with.

●   Relevant: Always make sure your short-term goals align with your long-term ones. If it won’t help you improve your business or profits as a whole, your time may be better spent elsewhere.

●   Time-Based: Always give yourself a time limit to work from, such as two weeks, one month, or one quarter. That’ll help you stick to your goals better, and it’ll keep your business growing and thriving, too.

Advertising Analytics

In today’s world, scrutinizing your marketing successes and failures is easier than it has ever been. Google Ads and Microsoft Advertising Intelligence both contain robust suites of marketing tools to help you measure your PPC successes, so consider starting with those or other similar programs.

For example, Google Keyword Planner is part of the Google Ads suite. You can use the keyword planner to help calculate your budget by projecting the cost (and profit) of your chosen keywords. You can also use it to find new keywords that may boost the reach and ROI of your PPC campaign.

Maximizing Your ROI

In the end, maximizing your profit is all about boosting your ROI. When you break it down, you can boost your ROI by doing any of the following things:

●   Lowering your cost per click (CPC)

●   Lowering your cost per conversion

●   Raising your profit per click

●   Raising the value of each conversion

While keeping track of clicks and conversions separately can seem tricky, it’s important to measure both to make the most out of your ROI and your budget. For example, if increasing your cost per click can also raise the profit of each click, it may be worthwhile to boost your budget to account for that change.

As long as you monitor your campaign through PPC calculation and use the analytics tools available to you, your ideal budget will eventually become clear. However, if you need help, advice, or Tampa, FL, PPC services, don’t hesitate to contact Pure Digital Marketing today at 813-536-3878.