AdWords PPC Cost Estimator: How Much Should You Pay?
How much should you be spending on your PPC campaigns? This is a question that often gets asked, and answering it is by no means straightforward. Although many people search for one definitive AdWords PPC cost estimator tool, in reality no such thing exits. Instead, you must understand the different elements that will impact your pay-per-click advertising. This covers not only the ads themselves, but how long they run, how much you want to get back from them, and the types of traffic that your ads generate.
In this article we’ll examine some of the fundamentals of estimating the cost of PPC marketing. We’ll discuss the mechanics that power Google’s AdWords platform, demystify some often-used acronyms, and discover how to get the most out of your campaigns once they’re live. Finally, we’ll make a case for TEA Software, our powerful threat and engagement analytics tool that can help you save money on your PPC activity.
AdWords PPC Cost Estimator: How Bids Work
In order accurately estimate how much your PPC activity can cost, you must first understand how bids in AdWords actually work. As Google outline on their AdWords page, you will only be charged for ads that receive engagement. This means that only when a customer clicks on an ad will you be charged for it. This works on a per-click basis, and this is what you will determine in AdWords.
AdWords uses a kind of auction system in order to determine which ads appear on a keyword search. It also determines where in the ranking they appear. The placement of your ad and your cost per click (covered in more detail shortly) are determined by your advertisements’ Ad Rank. There are two factors that impact your Ad Rank: the amount of your maximum bid and your ad’s Quality Score. We’ve spoken in other articles about Quality Score, but essentially it’s a measure of the relevance of your ad, how many people engage with it, and the quality of the content that supports it. We’ll explore these details in more detail over the coming sections.
AdWords PPC Cost Estimator: Choosing Your Keywords
The keywords you will bid on will be the main drivers of your PPC cost. Depending on how competitive they are, and how many other businesses are bidding on them will drive the price. If you’re in a particularly saturated market, you may find that longer but more specific keywords are cheaper and easier to rank for.
Google’s AdWords keyword planner is incredibly useful for determining the types of keywords you should target, as well as their costs. There are also other tools available that can help you determine the kinds of keywords that your competitors are working on. With these sources, you should be able to determine a list of keywords that you wish to target. From here, you must decide which are worth targeting initially and identifying how much you should bid on them. Don’t forget that this process will take some refining. Certain keywords may not convert well for your business, whereas others may surprise you. Your budget doesn’t necessarily have to be fixed when it comes to the specifics of what you’re bidding on and designating money too.
AdWords PPC Cost Estimator: Working Out Your CPC
CPC refers to the cost per click of your adverts. As we mentioned in an above point, there are multiple factors that will affect the CPC of your ads. When you’re advertising on the AdWords platform, your cost per click will always be equal to or less than the maximum bid you have placed on a particular keyword. There is a very specific equation to calculate your final cost per click:
Competitor Ad Rank/Your Quality Score + 0.01 = actual cost per click
This works because of the auction system mentioned previously; your actual cost per click is influenced both by your own and your closest competitor's ad rank, maximum bid, and Quality Score. Across all industries, the current average CPC is around $2. Of course this varies greatly depending on the sector you’re in. Your average CPC can be calculated once you’re ads are live. It's the average amount you have paid for all the clicks you’ve accrued, so cost divided by clicks. Both your actual cost per click and your average cost per click are important metrics to understand when estimating your PPC costs.
AdWords PPC Cost Estimator: Working Out Your CPA
Another important cost to consider when estimating your PPC budget is the CPA. This metric is your cost per action, and represents how much your business pays in order to attain a conversion. In terms of PPC, you must take into account your sales, operating costs, and margin, in order to determine how much you want to pay per conversion. To calculate this number, you can divide your total costs by total conversions for a given period. Expanding on this further, your cost is the number of clicks you get multiplied by your CPC. Cost per action can also be determined by dividing CPC by conversion rate. This means your CPA multiplied by conversion rate will give you your CPC.
Although these numbers and terms may seem daunting, having an understanding of how they work is crucial to running a cost-effective campaign. If you have an idea in mind of how much your ideal CPC and CPA are, you can plan your PPC activity accordingly. Certain keywords will be more feasible than others, and your budget will be applied differently when these numbers are considered.
AdWords PPC Cost Estimator: Setting Your Budget
Now that you have both your keywords and how much you’re willing to pay per click, you can start to specify how much your overall budget is for a particular campaign. Bear in mind that this can be flexible, and should be approached with caution at first. Until you can gather some metrics on how particular keywords are going to perform, it’s always best to have a lower daily budget than you actually anticipate using. This gives you the chance to find out what works, and what doesn’t.
Your budget should be reflective of the goals you hope to achieve. If your goal is to drive x amount of sales over x amount of time, you have to consider your CPA and conversion rate. A data-driven approach is essential when it comes to setting your budget. In terms of how long your ads a live for, again consider your past experience. Alternatively, if you don't have such experience, try a soft launch to determine uptake. From this you can calculate how long you should run PPC activity on particular keywords for.
AdWords PPC Cost Estimator: Analyzing Your Data
We’ve touched on this already, but the only way to get the best return on your investment is to carefully analyze your campaigns once they launch. No matter what the initial data on search volume and competition suggests, you can’t tell how an ad will perform until it’s live. Because of this, you’ll want to keep a close and regular eye on your reporting. This will allow you to find opportunities to refine your ads and make the most of your ad spend.
It’s not just the ads themselves you’ll want to monitor. Traffic sources and site performance play an important role in securing your business new customers. You’ll want to know the types of people clicking on your ads, whether or not it’s legitimate traffic, and how they engage with your website when they arrive. That’s where TEA Software can help.
AdWords PPC Cost Estimator: Choose TEA Software
TEA Software gives you in-depth analytics on how your PPC campaigns are performing, and how customers interact with your website. It can identify and block threats such as clickfraud, and deliver an automated bidding system that out-performs Google’s own.
PPC Analytics
TEA helps you to eliminate the guess work from your campaigns. It allows you to understand if and how your whole campaign is performing. You can monitor the health of each individual campaign to see how many real visitors have found your website. TEA also gives insight into how many fake visitors have tried to click through. This means you can identify clickfraud activity and get a refund for Google if it’s cost you money.
Engagement Scores
The granular analytics that TEA provides means that you can determine how customers are engaging with your campaigns and your website. The powerful algorithms that TEA is based on can identify trends in both your customers and your website. This means you can discover actionable improvements to help increase your conversion rate.
A Complete Analytics Pacakge
TEA has everything you need to run a successful eCommerce website. That’s why innovative companies such as Shopping Cart Elite use TEA as part of their eCommerce platform. It delivers useful insights across a broad range of areas, from different marketing campaigns, to search, to key site metrics. Choose TEA today and improve your online marketing experience.