Speaker 1: Your money is valuable, so the last thing you want to do is throw it away on an unoptimized PPC campaign. Learning how to calculate a PPC budget will help you figure out just how much you need to invest to hit your business goals. That's what I'm going to teach you in this video. I'll go through a breakdown of what goes into a PPC budget and how to get the most from your spend. If you're looking for a specific section of the video, check out the timestamps in the description. PPC Budget Basics With PPC, which stands for pay-per-click advertising, you pay when people click your ads. More on how to calculate PPC budgets in a bit. First, let's cover some basics of PPC advertising. PPC ads work via an online auction. When you launch PPC ads, you typically tell the ad platform how much you want to spend on your entire campaign. Then, you set a bid for the amount of money you'd like to spend on every click. Keep in mind, you're trying to beat out other advertisers for a chance to get in front of your audience. The cost-per-click, or CPC, may fluctuate since it's a bidding system. Factors such as your ad's quality, targeting, or competition may impact your CPC. When running PPC campaigns with a platform like Google Ads, you'll find the average CPC in your campaign menu. On social media, you'll likely view your CPC in your platform's ad management tool. You can calculate an estimated average cost-per-click with this cost-per-click formula. Cost to advertiser divided by number of clicks equals average cost-per-click. We have a tool that will calculate CPC for you if you prefer not to manually estimate your cost. If you're targeting certain keywords with your ads, use a tool like the Google Ads Keyword Planner to get an idea of the search volume and the cost of those keywords. Whatever ad platform you use may make recommendations based on your targeting. You also need to be aware of your ad campaign's return on ad spend. While you should, without a doubt, pay attention to your budget, the return you get from your campaign is just as important. You don't want to spend more than you make from your campaigns, so if you notice that's the case, it's time to re-evaluate your spend and how you've optimized everything for your audience. The return on ad spend calculation looks like this. The total revenue divided by total cost equals your return on ad spend. Setting goals remains a crucial part of every campaign you run. When you know what you want to achieve, you can easily figure out the investment it takes to get there. Make those goals specific, measurable, attainable, relevant, and timely, aka set SMART goals. Saying you want to increase website conversions by 25% over your business's fourth quarter is much easier to plan for than saying you want more people on your website. What's the end goal there? There really isn't one number that says whether your PPC calculation is good or bad. If you hit your goals, see a positive return on ad spend, and stay within your budget, those are the signs of a good campaign. Oh, I probably should mention that you'll want to think about all aspects of your digital marketing before you budget for PPC. You don't want to sink all of your money into ads and then not have enough to pay a web designer or SEO specialist. Think of the big picture. Next, I'm getting to the good stuff, the calculations. How to Calculate Your PPC Budget UpCity laid out a great revenue-focused process for calculating your PPC budget on its website. You start by figuring out how many customers you need to hit your goals. The formula looks like this. Number of customers equals revenue target divided by number of sales periods the campaign will run divided by your average sales per customer. Once you have that number, you can plug it into your PPC budget formula, which looks like this. PPC budget equals number of customers divided by sales team conversion rate divided by website conversion rate times cost per click. If you have a target budget already and just want to see how much you should allocate for each day, here's the formula for that. It's much simpler. Daily budget equals monthly budget divided by 30.4. Don't start the next video yet. I have a few tips for getting the most from your investment. Be flexible. You and your team may be in love with an ad campaign, but it's not a guarantee that your audience will love it. Pay attention to your campaign metrics. If you notice a lower than normal click-through rate, your ad copy or creative may not be grabbing the attention you thought it would. If your ad CPC is extraordinarily high, you may want to refine your targeting. The solution will come with some digging and testing. Refine your keyword targeting. If you are targeting keywords with your PPC ads, use negative keywords to limit the number of unqualified clicks you get on your ads. With a platform like Google Ads, this tactic ensures that you don't show up for unwanted searches, saving you money and reaching an audience that's more likely to make a purchase. We have a video on negative keywords if you're looking for more details. Use automation. It's the robot takeover. Just kidding, it's the automation takeover. Many ad platforms have built-in automation tools to help you get the most from your campaigns. Use them. Whether you take advantage of automated bidding, testing, or reporting, let technology take some work off your plate. Use Google's smart bidding. Use third-party tools to optimize your social media ads. Partner with us for our marketing cloud effects technology. If you have any additional tips for how to calculate a PPC budget or how to optimize your ad campaigns, drop them in the comments below. 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