Think you don’t have the budget for PPC? Think again. Play your cards right and you can achieve amazing results with a minimal budget. In fact, truly focused and highly measured pay-per-click campaigns can be one of the most effective ways to spend a tight budget.
How much does a client cost you?
The first consideration is how much your average customer is worth to you, either for an initial sale or the lifetime value of the typical customer. Then you’ll need to determine how much you’re willing to pay to acquire each of those customers, leaving you with your desired profit margin.
For example, if your typical customer spends about $500 over their lifetime, in their first year, or whatever time period you’ve chosen to define, and you spend $100 to acquire that customer, you’re left with a profit margin of $400, less other costs, such as operating costs and materials. To simplify the calculation, you can start with your average profit per customer, if you have that data.
Once you’ve calculated those values and determined how much you’re willing to spend per customer acquisition, you can start planning your PPC campaign.
Conversion rates are a key metric
Then your conversion rate comes into play. No business has a 100% conversion rate, or if it does, you must have an epic sales and marketing team, so you need to consider both the leads you receive that don’t convert and those that do. Let’s say that, on average, you convert one lead out of every 10 you receive. If you’re spending $100 per customer, that leaves you $10 to spend per lead.
Of course, if you’re looking at your early results and find that your conversion rates are much lower than expected, you’ll need to recalculate your cost per lead or reconfigure your campaigns to increase your conversion rate to where you want it to be. needs it to be.
That’s the beauty behind PPC: You can calculate all of this down to the dollar, and you have a pretty good idea of what you’ll need to spend to acquire a certain number of businesses, and therefore what your ROI will be. The alternative? You could spend thousands of dollars, for example, on a radio ad campaign and have far less data to determine how effective your creative is or your true conversion rates.
Targeting produces exceptional ROI
Beyond great measurability, PPC offers much more precise targeting capabilities than many advertising mediums. Consider the example of the radio. You can target an audience based on the primary demographic a particular station reaches, but you can’t force certain listeners to tune out and reduce the amount you’re spending by eliminating a sub-segment of the potential audience.
But with pay per click, you can use negative keywords to weed out a subset of searchers who are likely to have a different intent and precise targeting methods to really reach the ideal customer. It’s not hard to see how these capabilities result in smarter spending and higher return per dollar spent.
Seasonal Approaches and Buying Cycles
Even if your budget is extremely limited, you can use this calculation to determine a spending amount for a short-term promotion. If you sell patriotic party supplies, for example, you can run a PPC campaign in the weeks leading up to Memorial Day, the 4th of July, and even Labor Day. Similarly, a company that makes custom Christmas decorations might run a campaign only in November and December, or whatever lead time makes sense for their customers’ typical sales cycle.
Additionally, you can use adjusted PPC targeting to reach customers at a specific point in the buying cycle. By bidding on keywords that indicate customers are ready to make a purchase, rather than in the early research phase of the buying cycle, you can often increase your conversion rates by reaching customers at the moment they are ready to make a purchase.
Targeting Options for PPC Smart Spending
Best practices for PPC generally apply across the board, but there are some helpful tips that are especially beneficial if you’re working on a small budget.
• Don’t run too many campaigns. In fact, if you’re on an extremely tight budget, you may want just one campaign or a few highly focused campaigns. In either case, running too many campaigns at once just means you’re spreading your budget too far and you may not see the results you want. It’s better to focus your efforts on a few key areas than to try to spread your budget among dozens of potentially less profitable campaigns.
• Observe and eliminate slow performance. Monitoring your campaign analytics is even more crucial for low-budget campaigns. Careful monitoring allows you to quickly identify keywords that aren’t working and remove them from your campaign, shifting your investment to the best performing ones to increase conversion rates and ROI. Similarly, if your landing pages are getting mediocre results, you can jump in with a few alternate iterations and run some A/B tests to improve performance.
• Stay away from broad keyword match. Broad keyword matching is useful for branding campaigns and marketers with large budgets. But when your budget is tight, you can’t afford to waste ad dollars on vaguely relevant terms. Stick to the exact match and you’ll get better results.
• Use geographic targeting to your advantage. Even if your business is service-based, you may have better brand recognition in certain areas. Geo-targeting on your most profitable locations can drive better results in a shorter period of time.
• Identify and use negative keywords. There are variations on almost every keyword that essentially disqualifies a searcher from the target audience. Using exact match helps prevent this kind of problem in the first place. But if you use broad match, identifying negative keywords means you won’t be paying for clicks that rarely, if ever, convert.
Don’t let a small budget determine you from PPC. By making smart decisions and using all the features of Google AdWords, you can create well-targeted campaigns that guarantee positive ROI.