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 PERSONAL 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.

But you first need a plan. It’s not as difficult as you might think, and we’ll start with several shortcuts that simplify the process. But it can be tricky, so we’ll also consider some obstacles that can get in the way.

What’s Easy About 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 use when setting a PPC budget. Each tool takes the historical search data from the respective search engine for a given keyword or set of keywords and displays 3 basic types of data for budget planning purposes:

  • Keyword volume (the # of searches for that keyword[s]), usually shown by month
  • Level of competition for that keyword
  • Suggested bid

Though the last figure (suggested bid) is the only one stated in dollar value, both volume and competition will also have an impact on your PPC budget.

Various Industry Benchmarks

Given the rise in PPC marketing and wealth of data that has accompanied its popularity, you can find insights into performance and costs for your specific business vertical or industry. Some can be specific to a certain platform like Wordstream’s AdWords Benchmarks, or they can be more wide-ranging. 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 that 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.

This near-instataneous availability 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.

What’s Difficult About Setting a PPC Budget

While the simple tools mentioned above are helpful, they can’t make decisions for you. In fact, if you don’t use these 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 because 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 a CPC (cost-per-click) for sure and what’s to be expected until you start bidding in the keyword auctions.

Industry Benchmarks Aren’t Your 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 Your 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 that having such direct access to those things can tempt you make poorly informed decisions. 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 make hasty decisions 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, you have to allow enough time 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, you now understand a little bit more about both the ease and potential pitfalls of setting a PPC budget. There are reasons why some companies have been wildly successful with PPC marketing, while 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, you’re better off assuming higher cost-per-click. 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 if I think I can spend $0.30/click on my health product keyword — a notoriously difficult market — 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 in a way that will allow you 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 of thinking doesn’t understand the very nature of the search auctions, and it will quickly land you in the PPC horror story fan club.

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 that 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. Only after analyzing the data can you adjust bids to enhance performance and increase 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 optimization, 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. In 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 also 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.

Happy bidding!