this, you’ve upped your daily maximum budget. It doesn’t take long for this addiction to lead to
one of two possibilities: either your entire advertising budget is completely consumed by your PPC
campaign, or, worse, your PPC costs have skyrocketed to the point that your advertising budget is
gone and then some.
When the PPC campaign takes over the budget, eventually the campaign will fail. It’s impossible to
realize any return on investment when the bids on a keyword skyrocket. And because there is no
ROI, your company is likely to cut your PPC campaign completely from its advertising budget, or
if you’re an individual, you could end up deep in debt chasing the best keywords.
That’s why it’s essential to start with the budget when designing your PPC campaign. Only with a
well-thought-out and strategically planned budget can your PPC campaign be both effective and
Before you can begin to determine your PPC budget, you must first determine what a goal conver-
sion is worth to you. Determining the value of a conversion can be a bit tricky. Note, too, that the
value of a conversion is different from the cost per conversion. The value of a conversion is how much
you stand to make when one of your PPC ads leads to a conversion.
If you have an e-commerce business, it should be easy for you to determine the value of a conver-
sion. It’s equal to the average profit per order. So, if your average profit per order is $5, you can
assume that the value of a goal conversion associated with your PPC campaign is $5.
If you’re not running an e-commerce business, determining the value of a conversion might be a lit-
tle more difficult. For example, if you’re operating a content site your targeted goal conversion might
be a newsletter sign-up. What’s the value of that newsletter sign-up to you? It varies from company
to company, but if your newsletter draws advertisers, your advertising income might be what your
conversion value is based on. So, as an example, if your monthly newsletter has 10,000 subscribers
and your advertising income is $10,000 a month, then a subscriber is worth $1. Therefore, a good
value to assign to your goal conversion (which in this case is for a site visitor to sign up for your
newsletter) is $1.
With your conversion value determined, you can begin to determine your PPC budget, and it starts
with determining how much you want to spend on PPC overall. This amount (whether it’s $50 or
$5,000) is your firm limit. Very often, PPC costs can increase over time, so it’s important that you
pay particular attention to your maximum spend.
Now, to budget for your different keywords, you need a few additional metrics for each keyword:
Average conversion rate
Goals for number of conversions desired
Cost per keyword
To find the average number of conversions, you need to multiply the number of clicks per day by
the percentage of conversions associated with that keyword. And finally, to determine your daily
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