Fed up with throwing money down the drain on PPC campaigns that don’t convert?
It’s a common frustration among business owners. You’re spending thousands of dollars every month on Google Ads and Facebook campaigns. But the returns? Hit or miss.
The truth is,
Many businesses have no clue how to manage their PPC budget.
As a result, their ad dollars get wasted on low-performing keywords. Or their campaigns underperform due to underfunding.
But did you know that with the right budget management strategy, you can double or triple your ROI on PPC campaigns?
In fact, businesses make $2 for every $1 spent on PPC campaigns when managed strategically.
What’s not to love?
In this guide, we’re breaking down the ultimate checklist for successful PPC budget management. We’ll cover:
- PPC Budget basics
- How To Set Your Initial Budget
- Budget allocation strategies
- Tracking and measuring performance
- Common PPC budget mistakes
- Budget management best practices
So if you want to stop overspending (or underspending) on your PPC ads…Keep reading.
PPC Budget Basics
OK, so let’s first get the PPC budget basics out of the way.
PPC budgeting isn’t brain surgery. But it does require a solid understanding of what you’re actually paying for.
Your PPC budget covers a few key things:
- Bid amounts: what you pay per click on your ad
- Duration: how long you want your funds to last
- Platforms: costs can vary across Google, Bing, Facebook, etc.
- Testing: budgets for A/B testing and optimization
Many businesses even hire external PPC agency services to help them manage and optimize their PPC campaigns to squeeze out every last click. These services often utilize specialized skills like strategic ad extensions to increase ad visibility and CTR, which can dramatically increase your PPC success without increasing your overall budget.
But here’s the one thing most people don’t get…
Your budget should never be a static number.
You need to continuously adjust it based on performance, seasonality, market conditions, etc.
Ok, let’s dive into how to set your initial budget.
How To Set Your Initial Budget
So you’re finally ready to put a budget on those PPC campaigns.
But how much should you spend?
The first step is understanding your business goals.
Want to increase brand awareness? Need to generate leads? Drive direct sales?
The exact budget amount and allocation will vary based on your objective.
Generally speaking, brand awareness campaigns require more budget spread across large audiences. Direct sales campaigns can be more targeted with higher bids on specific keywords.
Here’s a simple framework to get you started:
Calculate your average order value (AOV). Let’s say it’s $2,000.
Next, determine your target customer acquisition cost (CAC). This is how much you’re willing to spend to acquire a customer. Most businesses aim for 10-20% of revenue.
Ok, so you’d be willing to spend $200-400 to acquire a customer.
Now it’s just a math problem.
If your conversion rate is 5%, then you need 20 clicks to convert 1 customer. If each click costs $10, that’s $200 per customer. Perfect!
Smart Allocation Strategies That Work
Here’s the secret sauce to smart PPC budget management…
It’s all about allocation.
The mistake most businesses make is allocating their budget evenly across all campaigns. That’s a big mistake.
Instead, you should be allocating based on performance. Your highest performing campaigns should get 40-60% of your total budget. Experimental campaigns get 20-30%. Niche platforms get 10-20%.
But don’t stop there.
You also need to consider allocating based on the customer journey:
- 20-30% for top of funnel campaigns
- 20-30% for middle of funnel campaigns
- 50-60% for bottom of funnel campaigns
Bottom of funnel campaigns should get the lion’s share. Why? These are people searching for your exact product or service. They’re already in buy mode. That’s where the real conversions happen.
Another trick? Reserve 10-20% of your total budget for testing. This gives you wiggle room to experiment with new keywords, ad copy, platforms, etc without jeopardizing your main campaigns.
Tracking Performance To Maximize ROI
OK, you’ve set a budget. Great. Now how do you manage it?
The key is tracking the right metrics to know if your budget is actually working hard for you.
The essential metrics to track include:
- CPC (cost per click)
- CTR (click-through rate)
- Conversion rate
- CPA (cost per acquisition)
- ROAS (return on ad spend)
ROAS is probably the most critical metric here. This tells you how much revenue you generate for every dollar spent on PPC. The ideal ROAS varies by industry. But generally speaking, you want at least 4:1.
How do you improve ROAS? By continually optimizing your campaigns. Review your search terms reports each week. Add negative keywords to filter out irrelevant traffic. This alone can often reduce wasted spend by 30-40%.
Also track your impression share. If you’re losing impression share due to budget constraints, that’s an indication that you might want to increase your spend on that high-performing campaign. Bid more and lose less.
Common Budget Mistakes To Avoid
OK, don’t make my mistakes.
Here are the biggest PPC budget blunders I see entrepreneurs make.
Mistake #1: Set it and forget it.
PPC campaigns are not set it and forget it. The market is constantly changing. Your competition is always adjusting. Review your campaigns at least once a week and be ready to adjust your budget accordingly.
Mistake #2: Mobile last.
Mobile devices make up more than 50% of PPC clicks these days. If your campaigns are not optimized for mobile, you’re throwing half your budget away. Your mobile pages need to load quickly!
Mistake #3: No automation.
All the major PPC platforms offer automated rules to help you manage your budget. Set up rules to automatically pause low-performing keywords. Create alerts if your campaign exceeds certain thresholds. Don’t reinvent the wheel.
Mistake #4: Bid against yourself.
Too many campaigns targeting the same keywords is just a recipe for bidding against yourself. This is wasteful. Consolidate similar campaigns. Utilize portfolio bidding strategies to manage multiple campaigns with shared budgets.
Mistake #5: Spread too thin.
There’s a temptation to want to test every platform out there. But that just means you’re not putting enough budget behind any single platform to truly be successful. Pick 1-2 platforms. Master them. Then expand.
Planning For Growth And Seasonality
Oh, and one last thing I see most businesses forget…
Your PPC budget should scale with your business.
Fact: 62% of marketers plan to increase their PPC budgets this year. They know it’s an investment, not an expense.
But here’s the thing, growth should be strategic and gradual. Don’t just randomly double your budget one month. Algorithms can’t keep up with sudden spikes in budget and you’ll just be burning money.
Try increasing your budgets by 10-20% per month. This allows algorithms to adjust without overspending on inefficient scaling.
Seasonality is also a huge factor in PPC budget management. Most businesses have predictable peaks and valleys throughout the year.
Your budget should follow these seasonal trends.
Look at your historical data and identify your peak seasons. Allocate a larger budget during those high-performing periods. Start increasing your budget 2-3 weeks before big shopping events like Black Friday.
Wrapping Up
PPC budget management is not rocket science. But it does take strategy, attention to detail, and continual optimization.
Start by setting clear goals for your PPC campaigns.
Allocate your budget based on performance and customer journey.
Track the right metrics. Don’t fall into the common PPC budget mistakes.
And most importantly, remember that PPC budgeting is an investment. When managed right, you should see measurable ROI from your campaigns that fuels your business growth.
Key takeaways:
- Set initial budgets based on business goals and historical performance
- Top performing campaigns get 50-60% of the budget. Testing campaigns get 10-20%.
- Reserve 10-20% of budget for experimentation and optimization
- Track ROAS as your primary performance metric
- Review and optimize weekly based on performance metrics
- Scale budgets gradually and strategically based on seasonality and growth trends
The businesses killing it with PPC are not outspending you.
They’re outsmarting you.
Apply these PPC budget management tips and get on track to achieving better ROI and sustainable growth from your PPC campaigns.
