How Much Do I need to put into AdWords?

The answer to the above is really quite simple:

Results = time/money

First we need to set up the time frame you’re looking to achieve your results in and what is realistic.

There is one simple concept to understand when it comes to time frame, and that there is only ever at one point a finite number of people searching for one thing. Jennifer Lawrence was the most googled person last year, but I am sure there are people who have never looked her up online.

This applies to your business; there is and will be only a number of people who are looking for you. That number may be quite large, but it is still an overall restriction.

How big is your captive audience? Let’s use this as an example. How many people are looking for AdWords?

In the past twelve months on average, there have been ~40,500 searches each month for ‘AdWords’ which means as a maximum we can only ever show our ads around 1300 times a day.  We now need to work backward towards your end goal.

Again on our hypothetical ads, we have written excellent ads achieving a Click-Through-Rate (CTR) of 10%. This would mean we can get 130 clicks per day. This is great, but before you put your feet up and declare ‘job done’, how are you going to pay for all these clicks?

In comes your budget. For simplicity your average Cost-Per-Click (CPC) is $2. To get every one of these 130 clicks, you will need to have a daily budget of $260. What if you only have been given $50 a day to spend? Simple, you can get 25 clicks, meaning you will miss 95 clicks per day or 73% of potential traffic.

This statistic does show up in your current campaign:

This will show you how many impressions (flow on effect – clicks). Depending how you allocate your budget, your ads might run out of budget quickly or frequently be down during the day. In this case it’s best to check their status using keyword diagnosis.

You have a few solutions to the key problem of finite budget:

• Spend more – not always feasible.

• Wait longer – more on this in a second

• Do more with your current clicks – Look at optimising your website, to ensure every person who lands on your webpage is performing a convertible action e.g. emailing for a quote, calling your business or buying a product from you.

The second part to the first equation was time. To best illustrate, if your website has a stable conversion rate of 10%, that means if you get 25 clicks to your page a day, you can expect five conversions every two days. Let’s say our conversion is someone requesting a quote, so in this case, every two days there are five quotes received.

Our business starts to grow, and we make some wise investments that increase our daily capacity. So we need more work, which requires more quotes. Our goal would be now seven quotes per two days. Doing the backwards math, this requires 35 clicks per day. Which means our budget needs to be $70 dollars a day to allow for it.

There needs to be a good business case study done in order for us to look at the increase of AdWords spend from $50-70 to get one extra quote a day. But for now, hopefully the above will suffice. Remember, if you would like to discuss the above in more detail, simply contact your Client Manager on 1300 859 600 or visit our website here.