What should my budget be?

When it comes to digital advertising and pay-per-click, we get this question a lot. Like ALL THE TIME.

While it's a simple enough question, the answer is less straight forward. The answer is...well...it depends. Every campaign and industry is different — especially when it comes to PPC. Cost-per-click (CPC) is dictated by demand (both from searchers and advertisers) so industries like insurance, consumer goods, and legal (amongst others) are hyper-competitive causing huge costs-per-click. In others, you may not have much competition and can benefit from lower costs (though likely to a smaller audience as well). There are a few things to consider when determining your ad budget:

The number of leads/customers you are trying to generate

The sheer volume of leads and/or customers that you're trying to generate from your campaigns will have a large impact on what your budget should be. If you're just dipping a toe in and testing the waters, you can likely get away with a small starting budget. If you have aggressive goals to hit, you will likely need to throw some more funds at your campaigns.

Competition

Depending on your industry, your keywords, where you're advertising, and who else is advertising for the same keywords, you may have a lot of flexibility or need to spend more just to be seen. Competition and demand drive a lot when it comes to PPC. The more competition there is, the higher your budget needs to be to keep up.

Average CPC for your target keywords

As you're doing your keyword research, it's important to evaluate the average cost-per-click for each of your keywords. A good rule of thumb is that your campaign should be able to support at least five clicks of your most expensive keyword each day. So if you're in the health insurance industry and looking at a bunch of $20+ CPCs, either you need to have a minimum daily budget of $100+/day or you need to revise your keyword list to accommodate a lower budget.

Timeframe available to optimize

One of the biggest reasons for a larger budget is to generate good data faster. The more funds you allocate to your campaigns, the faster you will have actionable data that can be optimized in order to create better and better campaigns. Lower budget campaigns take significantly longer to optimize and always run a larger risk of optimizing on statistically insignificant or inaccurate data.

So while there is no one answer to "what should my budget be?" when it comes to digital advertising and pay-per-click, by reviewing these pieces, you can begin to put together a good starting budget. Remember, your budget can always be adjusted later on. In general, however, we never recommend a budget lower than $1,000 per month per platform that you're advertising on.

Just getting started with advertising? Learn more about our approach to digital advertising, the different platforms, and the strategy to be successful!