Google's and Overture's PPC programs are difficult to budget. You can spend as much as your risk tolerance, business model, and conversion rate allow. Prices for individual keywords are set in an open-auction model. They rise and fall with the ebb and flow of competition.
There are two schools of thought on how to set a PPC budget. The direct marketing strategy is to set a testing budget, then run a test to determine CPC thresholds by keyword and conversion...
or view the problem in terms of brands understanding the value of a click. "How do you know how much a click is really worth?" asked Gary. "I was talking with [a beverage client] about search engine marketing, and they're doing pure branding. They're happy to do it, but what is that click worth to them? It's difficult because you have to start getting to a place where you understand what intent is worth."
By using these tools, you can investigate keywords and bid prices -- on Overture, at least. It's a bit more difficult to look up Google bid prices. Determine an average CPC rate across several dozen keywords and multiply by your desired traffic based on your conversion rate and ROI. Imperfect, but you will arrive at a number.
Expert PPC search advertising campaign management performed by an experienced SEM firm is typically billed as a service fee of 10 to 15 percent of the campaign spend. Consider this cost when building your budget.
For a Google budget, multiply the Overture number by at least one and a half to account for Google's higher traffic volume.
Overture's ROI calculator may be of some value in determining bid threshold. In reality, some keywords convert at higher rates than others. These numbers will change as you execute your campaign.
Tools:
Overture- Search Term Suggestion Tool
Overture ROI Calculator
Overture - View Bids
Google Adwords: Keyword Suggestions
CTR - Webopedia.com: "click-through rate"
posted by Jen @ 4:15 PM
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