Wednesday, 3 December 2014

PPC Keyword Budgeting: Estimating PPC Keyword Cost and Value

Firstly; before we figure out how you can estimate PPC keyword cost and value; you need to decide whether PPC bid-management automation is for you; or PPC manual bid management is the best.

Secodly; if you need a cost effective budget for your PPC campaigns; you need a list of only relevant keywords to bid on; period. Use one of these great longtail keyword suggestion tools to find a list of most relevant keywords for your PPC advertisements, which will attract only potential buyers to click through your ads and probably take an action depending on your PPC landing pages design.

Most of these keyword suggestion tools provided in the link above; for example Google AdWords, will give you sufficient report such as search volumes and other ad budget requirements for each keyword that you need for your PPC keyword budget estimation such as:

  1. Total Monthly Clicks / Total Daily Click
  2. Estimated Avarage CPC / Cost Per Keyword
  3. Avarage Conversion Rate
Estimating PPC Keyword Cost, Value, and ROI

Before you actually begin to determine a given keyword PPC budget; you need to determine which value of conversion is appropriate for you for that keyword: Note that the value of conversion (the average profit per order) is different from the cost per conversion. The value of conversion is the profit you stand to gain when one of your ads converts; while cost per conversion is what you actually pay when an ad leads to conversion.

On the other hand; you also need to calculate the average number of conversion of each keyword; by multiplying the number of clicks per day by the average conversion rate percentage of that keyword :

With the value of conversion  and the average number of conversion in place for each bidding keywords; only then can you begin to estimate your keyword's daily and monthly PPC budget, and it begins by determining how much money you need to spend on your overall PPC campaign; which always should not be too much, and should equate to 20 or 30 percent of your total SEO budget including organic SEO.

To determine the daily keyword PPC budget for a given keyword; multiply the average value of conversion by the average number of conversions you need per day:
  1. Daily Keyword Budget= (average conversion value) *  (conversion per day)
To determine the monthly keyword PPC budget for a given keyword; multiply the daily budget of that keyword by the number of days in the month:
  1. Monthly Keyword Budget= (daily budget) *  (days in the month)
All these math thing can be so overwhelming some individuals: Alternatively, you can use one of the following PPC calculators which are fast and efficient. You only need to enter relevant values that can be obtained from one of the above linked keyword suggestion tools and hit calculate to get PPC budget estimate, PPC ROI, and PPC ROAS:
  1. Fuel InTeracTive
  2. PPC ROI Calculator
  3. PPC ROAS Calculator