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How much does PPC Cost?

How Much Does PPC Cost? (And How It Can Grow Your Business)

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(Last Updated On: March 20, 2018)

There’s a lot of confusion surrounding PPC – and much debate about whether it’s an advertising avenue that’s worth pursuing. Many people ask the question… How much does PPC Cost? But it’s important to realize the importance of this advertising channel when implementing correctly, as it can lead to high return on investment!

You might be thinking after all, if you have a great SEO campaign that’s helping you to rank highly for keywords that your customers are searching for, what’s the point in paying for another campaign – just to appear in ads at the top of the search results page?

The fact is though, that PPC – or pay-per-click, can be a valuable marketing tool, that that can work alongside and complement your SEO campaign. After all, the goal of SEO and PPC is the same – to help you to rank higher for relevant keywords that potential customers are looking for – they just go about achieving this in different ways.

While SEO is more of a long-term strategy that you can use to steadily improve your rankings, PPC comes in handy for a number of things that are difficult to do with SEO. Let’s look at some of those things now, and see how you can use a PPC campaign to grow your business.


What is Pay Per Click?

One of the most popular forms of Pay Per Click (PPC) is search engine advertising. With PPC search engine advertising, you’re essentially buying – or bidding on keywords that your potential customers are likely to search for. This means that when someone types those keywords into Google, or whichever search engine you’re targeting, your company’s website will appear at the top of the results. If someone clicks on your website, you’ll pay for the click, and gain the traffic.

Sixty-four percent of high commercial intent keyword searches, that is – people who are looking to buy, click on sponsored results. Compare this to 35 percent who click on organic, unpaid results. Investing in PPC to give your company a prominent place in search results is often more than worth the expense.

While PPC can feel like “cheating”, since you’re essentially buying instant results – as opposed to SEO, where you earn those spots, the fact is that in some cases, SEO alone just isn’t enough.

You can also see more on PPC with Google’s own How Pay-Per-Click (PPC) Advertising Works.

Let’s deep dive into a common question “how much does PPC cost?” and answers some other questions that are related.

Rather listen?


How much does PPC cost?

How to calculate your PPC budget

Planning costs for Pay Per Click (PPC) can be mysterious if you don’t know how to go about it. Your PPC campaign budget and success are determined by a lot of factors and those factors are interrelated.

One decision that is critical in PPC is term selection. It is important to bid on terms that are very relevant to your business. For instance, if you are providing a location specific service in the US you’ll want to keep your campaign targeted to the region.

Everyone wants their PPC budget to be large enough to make a profit. But it is important to have a budget set in order to test how much you can return from every dollar you put into Pay Per Click advertising.

It is crucial to have this budget ready before you start creating your PPC strategy. Your budget may change over time, so it is essential to understand why it matters to set a budget. Fortunately, this doesn’t have to be difficult as many people may think.

How do I set up an estimated PPC budget?

Many people dread about determining their Pay Per Click budget number because there are several ways to get to the rough estimate. Whichever way you use to determine your PPC budget, the ultimate goal is to perfect your budget. Your initial budget has to be a robust estimate.

In the end, a PPC agency can perfect the budget for you, but having your own idea of your Pay Per Click budget before speaking with an agency will help you a lot.

Your leads (your potential customer who takes the desired campaign action) are of course one of the most important thing to consider when planning your budget. You will need to figure out the characteristics of your lead like:

  • Visitor frequency
  • Target cost per lead
  • Lead quality
  • Geographic location
  • Buying cycle

If you don’t know what your target lead looks like, you can start by answering these questions:

  • How much can I afford?
  • How do I place value on the lead?
  • How does my current conversion rate look?
  • How many lead do I want to generate through PPC advertising?
  • Here’s a list for even more questions to consider

What do you need to make smart decisions concerning your PPC budget? Let’s check it out.

How much do you need to get started?

Once your marketing team is able to answer the questions, it should be easy to do the basic calculation to figure out a budget. Check the example below.

Find how many Pay Per Click (PPC) leads you need.

For instance, 150 clients from a 30% close rate, do the math: 150/0.030 = 5,000 PPC leads.

Here is how you can determine your budget; multiply the number of leads by goal cost per lead: your 5,000 leads x $7 CPL (Cost Per Lead) = $35,000.

You should know that the value of your lead depends on several factors such as bounce rate, interaction, geography, etc. Using negative keywords can help you control the quality of your leads and help you achieve a higher close rate.

Here is another example:

The traffic you require to meet your goal is equal to the customers needed/conversion rate. If you need 200 customers and you are converting at a low rate conversion of say 2%, that is 200 customers/2% = 10,000 i.e.,. you need 10,000 in traffic to meet your goal of 200 customers.

If you have a higher conversion rate of say 3.5%, it will be 200 customers/.035 = 5,714, i.e., You’ll need 5,714 in traffic to meet your goal of 200 customers.

Calculator Simpsons


Here’s a graph showing the search conversion rate distributions and their average cost per click by industry.

Industry Benchmark PPC Adwords - WordStream

This will help you address the “How much does PPC Cost?” question in your industry.

Research the CPC cost estimate

CPC = Cost Per Click. Now that you know how much traffic you need to reach your goal let’s calculate the cost. There are two places you can gather information about CPC (Cost Per Click) estimates.

The best place to start is your current PPC account if you have one. If you have historical data on your PPC account, check what you have paid in the past. This is where you need to audit your account to get the best result.

If you have never run a PPC campaign in the past, or your new goals are different from the past, the Keyword Planner is where you need to go to find your PPC estimates.

Log into your AdWords account and click on Keyword Planner. Check the image below:

PPC Keyword Planner

When you are using this tool, remember that actual CPCs can be entirely different than what you may see in Keyword Planner, and can be affected positively or negatively because of Quality Score, geography, average position, device type, among other factors.

Look at the image below

Keyword Planner Ideas - How much does ppc cost?

From the picture above, the CPC range should be between $2.22 and $7.00. So let’s calculate based on the data above.

High traffic required x highest average CPC = highest total budget

Ie. 10,000 x $7 = $70,000 or

Lowest traffic required x lowest average CPC = lowest total budget

Ie. 5,714 x $2.22 = $17,760.

So for the keyword above, we can set the budget based on advertising goal to acquire 200 customers between $70,000 and $17,760.

When you are planning your PPC budget, there are other things you need to understand, they include:

  • Impressions: An impression is counted each time your ad pops up on a search result page or on another website. So each time the ad you placed is shown on a page, it is counted as one impression. You can check Google definition of impression here.
  • Cost Per Click: CPC is the short form of Cost Per Click, and it is the actual price you pay for each click in your PPC marketing campaign. A click on one of your PPC text ads means a visit or interaction with your company’s service offering or product.

Each click in your PPC campaign represents the attention your ad gained from a person searching for what you offer. In another word, you are buying attention. That is why you need to note two things; the type of attention you are after and how much you are paying for it.


How to Calculate Cost Per Click?

The AdWord formula for CPC is Competitor Ad Rank/Your Quality Score + (.01) = Actual CPC. Google pay per click cost varies, but the average cost per click across all industries is about $2.

  • CTR: CTR means Click Through Rate. This is the metric that measures the clicks advertiser received on the ad per number of impressions.To achieve success in PPC, you need to achieve a high click-through rate, because it affects your Quality Score and the amount you pay each time your ad is clicked.
  • Clicks: Click occurs when someone clicks your ad, such as the blue headline of your text ad. AdWord will count such as a click. Check Google definition here.
  • CPM: CPM is the short form of Cost Per Thousand impression. It is the marketing term used to denote the price of 1000 advertisement impressions on a webpage. So if the ad publisher charges $3.00 CPM, it means an advertiser will pay $3.00 for every 1000 impressions of its ad.

Understanding the above terms will help you plan your budget and launch a successful campaign.


To learn more about PPC click and download the guide below!

PPC Guide

PPC Mistakes to Avoid

It can be challenging when you want to create a profitable PPC campaign, and that’s why it requires excellent planning to run it successfully.

Because we are all humans, we are bound to make mistakes, but making wrong decisions while you are setting up your PPC campaign can be costly. That is why you need to avoid the following mistakes that can cost you a lot.

Here are 6 common PPC Campaign mistakes:

1. Lack of PPC basic knowledge

Before you start any PPC campaign, it is necessary to have basic knowledge of it. Sadly, some Pay Per Click managers overlook the fundamentals and jump straight into it, assuming the can do it on the basis of trial and error.

That’s why it is important to understand the basic keywords, landing page, audience targeting, ad copy, and bid adjustment and that’s just a few tactics amongst others!

2.  Using Broad Match Keywords

It is important to use keywords correctly, so you need to avoid the mistake of using broad match keywords for your PPC campaign.

Broad match keywords will only bring irrelevant searches that will lead to waste of money. For instance, if you are selling only formal shoes and you set keyword like “formal shoes,” your ad may be showing up for searches like “when should I wear formal shoes?” which may not bring you any profit.

Here’s a list of different keyword matching options.

3. Not using negative keywords

Negative keywords are essential to get the right traffic. This is a common mistake people make while setting up their ad campaign. Negative keywords will help you improve the performance of your campaign and prevent your ad from showing up for irrelevant searches.

For instance, if you sell only laptops and not desktop computers, adding “desktop computer” as your negative keyword will prevent your ad from showing up for desktop computers.

4. Irrelevant landing page

Your landing page is crucial to your campaign success. Ensure you repeat whatever you state in your ad on your landing page because that was what brought the visitor in the first place.

The mistake many beginners make is that their ad usually lands on their homepage. The homepage is just an introductory page while landing page is for conversion. Sending all traffic to only one landing page is also bad. You should design a landing page for one purpose.

Pay Per Click Marketing

5 Not improving the Quality Score

Quality Score is the metric in PPC that reports historical performance and relevance of your keywords, landing pages and ads with respect to the search query. If your Quality Score is low, your campaign cost will be high, and your impression share will be low.

6. Weak ad copy

Ad copy is vital to the success of your campaign. Even if you target the right keywords and appropriate audience, your ad copy can make or break your PPC campaign.

So ensure your ad copy is great.

Adwords Ad Copy Tips:

  • Write based on the objective of the search, solve their problem!
  • Highlight your UVP Unique Value Proposition, let them know why you are the best choice
  • Include your keywords in the copy, they will be bolded by Google
  • It’s important to look at your URL as a conversion factor, place relevant keywords in it.
  • Add a call to action, it will increase your CTR and help tell the searcher what’s in it for them

Here is an example of an ad that appears when I searched “new cars”

PPC AD example - PPC Campaign AD


When To Use PPC

Let’s look a few situations where a PPC campaign is an ideal marketing solution, and see what this form of advertising can do for your company.

Target Keywords That You Need to Rank Higher for Quickly

PPC is great when time is of the essence. For some situations such as seasonal promotions, events, or things that are happening in the media, you may want to rank highly for an unusual or one-time keyword. With SEO, the timeframe to start ranking highly for a keyword would end up being too long, but with PPC you can start getting traffic right away.

Ultimately you can use PPC for events, services or marketing product with an expiration date as it can deliver the amount of traffic you need.

Use It for Keywords You Can’t Rank Organically For

Sometimes there will be keywords that you just won’t be able to rank highly for organically. Often these keywords will be extremely valuable, popular words or phrases that could drastically increase your relevant traffic. For instance, if you’re trying to rank for “men’s running shoes,” you probably won’t ever be able to rank higher than say – Nike, but with a PPC campaign, you’ll be able to secure a number one spot for the keywords of your choosing. This gives you the chance to rank alongside big companies with huge advertising budgets.

Test Out Keywords to Which Ones are Performing Best

PPC is also a great way to gain insight into keywords and see which ones are performing best. Running ad campaigns around selected keywords can show you which ones have the highest search volume, and the best conversion rates.

Directly Target Customers

Gone are the days of one-size-fits-all advertising campaigns. With PPC, you have the ability to directly target your customer audience –and adjust your ad wording by user intent and location. PPC can drive traffic to your landing pages and create a more effective integrated marketing campaign.

When your website is not designed for SEO

Some websites are just not designed for SEO. For instance, a squeeze page is not the type of page you update with content so that Google can favor it for a glance. You can generate traffic for a website like this through PPC.


Final Thoughts

PPC is a great way to grow your company. It’s a major channel for digital marketing and online marketing.

Keep in mind that not only does the cost include a campaign through Google AdWords – or Google and Facebook for the Premium Package option; it also includes strategy and management. That’s important to consider as you look to setup your PPC efforts.

Your PPC campaign must include landing pages in order to maximize your conversion rates on each of the keyword topics that are being targeted. Each search result should match a landing page with the corresponding offer, don’t just send traffic to a homepage.

Companies of all sizes are using PPC to increase traffic and sales. And PPC, especially search ads, help with your organic search rankings and conversions. So PPC is great to use along with your SEO efforts.

A PPC campaign has a cost, but it has positive ROI for companies that use it effectively. So now when you ask yourself how much does PPC cost? You’ll be able to start looking at it as more of an investment for company growth than an expenditure.

 

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About the Author Kemar Lawrence

Entrepreneur | Business & Marketing Strategist | Co-Founder @goldminddigital. I am a business & marketing strategist. I bring more than 6 years of experience to projects I take on with a track record of success. I help entrepreneurs win at business.

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