Yes, the thing no one likes to think about, talk about, and is mostly trivial in its effect on the lives of people, is what I want to discuss: budget. Not YOUR budget, so stop running for the hills. I want to talk about how to plan and set a budget for PPC marketing campaigns. While many may think setting a PPC budget is as arbitrary as a personal budget, I can assure you it isn’t. Your marketing campaigns and business can directly benefit by setting a PPC budget the smart way. A plan for setting your budget is what you need. It’s not as difficult as you might think, and there are actually several things that make the process easy. But it can be tricky, so we’ll also need to consider the unique obstacles for setting a PPC budget. Let’s start with some things to consider and utilize for how to set a PPC budget with ease.

The Ease of Setting a PPC Budget

PPC deals almost exclusively with data and numbers. Because of this, many tools, research, and reports have been developed to give marketers a starting point for PPC budgets. Taking advantage of these different resources is important, easy, and greatly beneficial as you set your own PPC budget.

Google AdWords Keyword Planner & Bing Ads Keyword Planner Tool

These 2 tools are some of the most important to utilize when setting a PPC budget. Each tool takes the historical search data from the respective search engine on a given keyword or set of keywords and displays 3 basic types of data for budget planning purposes:
  • there is keyword volume (the # of searches for that keyword(s)) usually shown by month
  • the level of competition for that keyword
  • the suggested bid
Though the last figure (suggested bid) is the only one in dollar value, both volume and competition will have an impact on your PPC budget. Each of these are helpful pieces of information and should definitely be considered when setting your PPC budget.

Various Industry Benchmarks

Given the rise in PPC marketing and wealth of data that has accompanied its popularity, insights into performance and costs can be found for a specific business vertical or industry. Some can be specific to a certain platform like Wordstream’s AdWords Benchmarks, or they can be more encompassing. Hanapin Marketing releases reports throughout the year on a quarterly and annual basis full of industry insights on the State of PPC. Whatever your business might be, chances are data is out there you can use to help set your PPC budget. The great thing about these reports is they come from experts and organizations whose main focus is PPC. They are on the front-lines of the digital marketing world and know their stuff.

Availability of Data & Real-time Flexibility

Have I mentioned PPC deals with a lot of data? The important numbers are readily available. Marketers and businesses can directly access costs and the other numbers that affect costs. It isn’t instant, but it’s pretty close. This is a huge benefit. Maybe you choose to set your PPC budget at a certain amount, but then realize you’re spending too much. You can adjust. Or maybe the opposite happens, where you see you’re not spending enough. You can raise your budget to spend more. The availability and flexibility make setting your budget easier as you get into the various keyword auctions, learning what works best for your business goals.

The Difficulty of Setting a PPC Budget

Those are just a few points that illustrate the ease of setting a PPC budget. While these tools are helpful, they can’t make the decision for someone. In fact, without using those tools properly, the PPC budget you set could be doomed from launch. Before we get to the plan of how to set a PPC budget, consider these variables that can make it difficult:

Inaccurate Keyword Planner Data

While the keyword planner tools are a helpful place to start, especially given that they are based on actual historical data, that’s just the problem. The data is historical. Any data shown in the keyword planner tools doesn’t reflect the current state of the keyword auctions. But how quickly could the cost of keywords change in a year, or in a month? Freakishly fast! All it takes is a business with deeper pockets than you, or one with an inexhaustible marketing budget, to drive up costs. On top of that, I’ve worked with accounts where the suggested bid for a keyword was ~$0.35, but then once the keyword was live, the bid had to be north of $1.50 to appear on the 1st page (that’s a +300% difference!). So the keyword planner tools are a place to start, but they need to be used and relied on with a healthy dose of caution. You won’t know for sure a CPC and what’s to be expected until you start bidding in the keyword auctions.

Industry Benchmarks Aren’t My Data

Similar to the point above on keyword planner data, industry or platform benchmarks aren’t data-specific to your business/account. Averages or aggregates of data can help set expectations, but there are simply too many variables not accounted for in the different reports. They also don’t account for major shifts that can occur in an industry. As with the keyword planner data, take the numbers from these reports with some healthy skepticism.

Availability & Flexibility are My Enemy

It may seem like I’m contradicting myself, but hear me out. I love data, numbers, #allthemetrics…whatever. It’s great that so much is available. Throw in the flexibility to make decisions nearly in real-time, and who wouldn’t want that kind of control over the marketing and business? Well, the bad news is having such direct access to those things can tempt you make poorly informed decisions or ones that are just plain bad. If I constantly monitor the data available to me, always looking to make changes, I’m interfering with strategy. To put it another way: hasty decisions made without sufficient data can keep your PPC marketing from being effective. It’s tempting to do this whether your account spends $100/day or $20,000/day. Trust me, I’ve experienced both. But if I haven’t said it before, I’ll say it now: PPC is all about data. To understand what the best budget is for your PPC campaigns, enough time has to be given for data collection so analysis and optimization can occur. Without this process, you won’t know what the ideal cost or budget for your keywords should be. If you want to set the best budget for your PPC campaigns, develop a solid strategy and allow it to run as planned.

A Plan for Getting Started

Hopefully, it’s clear that setting a PPC budget can be both easy and difficult. There are reasons why some companies have been wildly successful with PPC marketing, and why others turn into horror stories because they blow thousands of dollars or more when trying PPC. I want you to be in that first group. Here’s my suggested plan for how to set a PPC budget in the midst of both the ease and difficulty.

Assume You Will Spend More

First, it’s just safer to go into launching your PPC campaigns assuming you will spend more. Given how quickly things can change in any keyword auction, the number of external variables you have no control over and how important business context is, assuming higher cost-per-click is the mindset to have. If you get a week into your campaign and think you’re spending too much, you can adjust. But if it sounds too good to be true (like I think I can spend $0.30/click on my health product keyword and make a million bucks), it probably is.

Learn As You Go

Second, since you’re going into this assuming higher CPC than what keyword planner tools show, set your budget so you’re able to learn. Yes, I’m urging you to learn as you launch your PPC campaigns. PPC is not a “set it and forget it” way to grow your business. That type thinking doesn’t understand the very nature of the search auctions, and it will quickly make you another statistic in the PPC horror story fan club. What I’m trying to communicate is that setting a PPC budget is not a black and white decision you make one time then never think about again. When PPC is done right, you’ll be able to scale your account, adjusting your budget so by spending more you make more for your business. To get to that point, though, you have to get in the game. You have to compete, so you need a budget that allows your account to collect data. That data can then be analyzed, and bids adjusted for enhanced performance and increased return for your business.

Testing, Testing

Third (and this could be a blog post on its own), you need to have the mindset that you will test in your account from click 1. If you truly want to get the most out of your PPC budget, confidently knowing your dollars aren’t being wasted, you must be willing to dedicate time and effort to testing, analysis, optimization, rinse and repeat. This is why the thought of “set it and forget it” budgeting doesn’t work. Try it if you like, but if it’s successful, know that’s because of luck. Your budget needs to be a moving plan that’s informed by data and optimizations, allowing your account to grow towards efficient performance. It doesn’t need to be a static, hard and fast rule that is restrictive.

Learn from the Experts

Lastly, and I recommend this with all seriousness, get help! No really, get help when setting a PPC budget. From my experience, many of the bad experiences people and businesses have with PPC occur due to bad decisions. We so quickly go to professionals when it comes to our personal health. Likewise, seek out professional insight and strategy when making decisions that relate to the health of your business. The resources abound (Wordstream Budget Guide, PPC Hero Budget Guide), so there really is no reason to make uninformed decisions. We have a great team dedicated to the success of our clients’ businesses. We’d love to talk about how to set your PPC budget for success from day 1. Setting a PPC budget is vital to the success of an account. Though both easy and difficult, it isn’t impossible. If you are determined to learn and to use the resources available to you, I’m confident you can find success. And we’re here to help. Happy bidding!