The question I hear more than anything else when we discuss PPC with a new client is “How much should we spend?” It’s an understandable question.
If you don’t know any better, PPC (i.e. “paid search”, “pay per click”, or Google AdWords) may sound like a tool where you put in X amount of dollars to get X number of clicks and traffic in return.
But hopefully you get the right kind of marketing agency to help you change the question of “how much SHOULD I spend” to “how much CAN I spend and maintain a desirable ROI?”
I won’t restate the need for tangible conversion goals or why visits are a bad success metric for PPC. Go back and read those articles if you missed them. They all tie together into forming the strategy that wins. Caught up now? On to today’s topic, then.
Should Versus Could
One lesson each marketing manager needs to learn sooner than later is that there’s no magical dollar amount that promises optimal performance. Even with Pay Per Click. I cannot stress how many times I’ve encountered people who think they only need to spend $2,000 or $3,000 per month on PPC and if they do, they’ll walk away feeling successful.
Let’s get rid of that way of thinking right now.
That strategy is perpetuated by search marketing shops who’ve found a way to sell search marketing to LOTS of people by putting a low price tag on it and setting up campaigns that require minimal man hours ongoing. They can “teach” new clients who’ve never done PPC to think like they want them to, and the cost is so affordable that it’s easy to get the sale. But the whole structure they’re selling is ridiculous. I’ll cover it in depth in another post, but essentially they’re teaching clients to expect that the right way to do PPC is to set a goal of number of clicks, and if the agency can deliver X number of clicks for less than your agreed upon price, they pocket the remainder as a bonus. Seriously.
Why SHOULD doesn’t work
Why would there be an amount of money you SHOULD spend? Why would there be a number floating out there in the universe that an agency can just toss your way and say “X is exactly what you should spend on PPC”? If that were true, then every company could just spend that amount and be successful.
Just imagine an agency aiming to get you the cheapest possible clicks. I can guarantee you that if they succeed at cheap clicks, your paid search traffic is WAY less targeted than it needs to be. The agency can focus on hundreds or thousands of search keywords that don’t produce sales or leads, but can be had for a much smaller price. So you really get nothing EXCEPT the number of clicks you agreed to. That’s it. You get what you pay for.
Why COULD works
When you ask the right questions (i.e. “How much could we spend and make a great profit?”) , you get the right answers. Let’s take a closer look at how this goes. We start by asking the right questions to decide how much to ultimately spend.
- What is your primary goal? (sales, leads, etc)
- What rate of return is your goal?
- What’s in your current budget?
Start with these three questions. If I know that you want to sell Vibram Fivefingers on your site, then I need to know how much more do you need your PPC dollars to earn than you spend. Then I need to know your budget. Start within that budget, but BE PREPARED TO SPEND MORE AS TIME GOES ON. Why? Because if during the monthly process of experimentation and testing we reach your stated goals, you make more money by spending more! You’d be amazed how many people don’t grasp this concept. I know I’m amazed.
If you spend $5,000/month on PPC and it yields $20,000/month, and you profit at least $10,000/month, why would you not increase your spend until you’ve plateaued? Seriously. If more people would get this, they’d be rock stars in their companies. Don’t tell your agency you can’t get budget approve to increase your spend from $5k to $10k when you’re profiting 200% of your spend! That’s insane. Add more budget, see how much more traffic you can get at the same or similar rates of return. Go hog wild.
