Budgeting is one of the most important components of pay-per-click (PPC) account management.
They are a direct reflection of a campaign’s priorities and are the bridge that ties strategy and tactical execution together. Without well-thought-out budgets, a PPC program can never reach its full potential.
This article discusses how to think through the budgeting process to ensure priorities are met and goals are reached.
One of the best analogies between budgeting and strategy is an automobile.
Think of strategy as the vehicle and budgeting as the fuel that runs the automobile.
Without a vehicle in place, there’s nowhere to insert the gasoline. This is the way that I think about the relationship between strategy and budgeting: Without a proper strategy in place, there is no mechanism for determining where to invest money allocated to PPC
So, how do we create an effective PPC strategy?
Once goals and priorities are set, then it’s time to create the PPC strategy. Use these four steps to build your strategic plan:
So, how do we get started building budgets? Here are some factors to consider when creating budgets and deciding how to invest in them.
When building budgets, you’ll want to invest in “tried and true” channels like AdWords and Bing. I typically invest 70 percent of a PPC budget in those channels that have proven to contribute significantly to one of my goals.
I then invest 20 percent of the budget in what I call “safe bets.” These are channels I have not invested in before, but, based on overall advertiser feedback, are considered reliable sources.
Finally, I keep about 10 percent of the budget available for experimenting and testing. It’s important to push the envelope a bit and find new sources of traffic. However, until these sources prove themselves to be reliable contributors, I minimize risk by limiting the amount of budget I invest into less proven campaigns.
There are numerous PPC budget creation methods. For instance, an account I manage requires quarterly budgets vs. budgets for the entire year. Here is an example of one:
To create this budget, we analyzed the percentage spend increase month over month (MoM) from the prior year. For instance, we learned there was a 20 percent increase in spending from December 2016 to January 2017. As a result, we took December 2017’s spends and applied the previous year’s percentage increase to set the budget.
The assumption was made that if growth was 20 percent the previous year, the budget could then grow another 20 percent. This method of budget creation has been successful in setting budgets that drive consistent year-over-year (YoY) growth.
Budgets reflect your PPC program’s goals, vision and strategy. The instinct as a PPC professional is to jump right into an account and start building and optimizing campaigns. However, focusing on budgets first ensures you have the proper amount of funding required to reach goals and fulfill priorities.
Focusing on where to allocate budgets, whether in existing or new campaigns, is important in helping to focus efforts. Going through the budgeting process will help focus all your efforts and bring clarity to your program.
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