How to Manage Keyword and PPC Campaigns
Keywords and PPC campaigns, like any type of advertising campaign, need to be monitored carefully to ensure that they are as effective as possible. Of course, you’ll also want to be sure that you’re spending only as much of your advertising budget as you need. But determining those factors requires monitoring activities, spending, and conversions, and man- aging the strategies that you use to improve those factors.
One factor that will influence your PPC campaigns the most is money. Be it in the form of your PPC budget, the amount of money that you need to save, or determining your ROI, you’ll be constantly justifying your PPC campaign with financial values. Tracking those values isn’t difficult, but it can be time-consuming.
What’s more, the competition for keywords and PPC advertisements is quickly becoming more and more rigorous. If you’re not constantly tweaking your PPC campaigns to make them as effective as possible, you’ll be throwing your budget away like empty candy wrappers.
How to do Keyword Budgeting
Part of the allure of PPC advertising is that it appears to be a low-cost alter- Hative to other types of advertising. The attraction is that you can reach more people using less of your advertising budget. The reality could be much dif- ferent, however.
PPC programs are designed to create competition between bidders. You find the perfect keyword, and then you get caught up in a bidding war. Before you know it, you’ve upped your maximum bid-per-click. And to accommodate this, you’ve upped your daily maximum budget. It doesn’t take long for this addiction to lead to one of two possibilities: either your entire advertising budget is completely consumed by your PPC campaign, or, worse, your PPC costs have skyrocketed to the point that your advertising budget is gone and then some.
When the PPC campaign takes over the budget, eventually the campaign will fail. It’s impossible to realize any return on investment when the bids on a keyword skyrocket. And because there is no ROI, your company is likely to cut your PPC campaign completely from its advertising budget, or if you’re an individual, you could end up deep in debt chasing the best keywords.
That’s why it’s essential to start with the budget when designing your PPC campaign. Only with a well-thought-out and strategically planned budget can your PPC campaign be both effective and profitable.
Before you can begin to determine your PPC budget, you must first determine what a goal conver- sion is worth to you. Determining the value of a conversion can be a bit tricky. Note, too, that the value of a conversion is different from the cost per conversion. The value of a conversion is how much you stand to make when one of your PPC ads leads to a conversion.
If you have an e-commerce business, it should be easy for you to determine the value of a conver- sion. It’s equal to the average profit per order. So, if your average profit per order is $5, you can assume that the value of a goal conversion associated with your PPC campaign is $5.
If you’re not running an e-commerce business, determining the value of a conversion might be a lit- tle more difficult. For example, if you’re operating a content site your targeted goal conversion might be a newsletter sign-up. What’s the value of that newsletter sign-up to you? It varies from company to company, but if your newsletter draws advertisers, your advertising income might be what your conversion value is based on. So, as an example, if your monthly newsletter has 10,000 subscribers and your advertising income is $10,000 a month, then a subscriber is worth $1. Therefore, a good value to assign to your goal conversion (which in this case is for a site visitor to sign up for your newsletter) is $1.
With your conversion value determined, you can begin to determine your PPC budget, and it starts with determining how much you want to spend on PPC overall. This amount (whether it’s $50 or $5,000) is your firm limit. Very often, PPC costs can increase over time, so it’s important that you pay particular attention to your maximum spend.
Now, to budget for your different keywords, you need a few additional metrics for each keyword:
■ Average conversion rate
■Goals for number of conversions desired
■ Cost per keyword
To find the average number of conversions, you need to multiply the number of clicks per day by the
percentage of conversions associated with that keyword. And finally, to determine your daily budget for a keyword, multiply the average value of a conversion by the average number of con- versions in a given day. To find the monthly budget, multiply the daily budget by the number of days in the month. The whole equation should look something like this: (The numbers used here are for example purposes and have no corresponding metrics.)
Average Number of Conversions = 15 (clicks per day) x .08 (% conversion rate) = 1.2 (conversions per day)
Daily Keyword Budget = $5 (average conversion value) x 1.2 (conversions per day) = $6 (daily budget)
Monthly Keyword Budget = $6 (daily budget) x 30 (days in the month) = $180 (monthly budget)
One more thing about these equations: The budget illustrated would be your absolute maximum budget because spending that amount would equate to spending all of the profits that you’re mak- ing with your PPC campaign. Obviously, you won’t want to do that. Breaking even is not the point of PPC advertising. Making a profit is. Therefore, it would be more realistic to expect to spend about $3-$5 a day on that one keyword. That would make your keyword budget in a 30-day month $90-$150 each month.
That’s for a single keyword, however. So if you’re bidding on 20 keywords, and you choose to pay the same amount for all those keywords, your overall monthly PPC spend would be $1,800-$3,000 per month. Most small and medium-sized business can’t afford to sink that much money into a PPC program, so you’ve got to find a way to reduce that amount. That’s usually accomplished by begin- ning with a few of the keywords that you’ve defined and then replacing the ones that don’t work with others from the list that you’ve defined.
It’s important to remember, however, that PPC shouldn’t be the only element within your SEO budget. In fact, PPC should equate to only 20 or 30 percent of your total SEO budget. Other SEO efforts should also be ongoing, so that over time your organic keywords and other SEO efforts become as effective as your PPC and other paid marketing campaigns.
IN THIS CHAPTER
Keyword budgeting
Understanding bid management
Tracking keywords and conversions
Reducing pay-per-click costs
Monitoring pay-per-click campaigns
Improving click-through rates
Using PPC to generate profit
The ROI of PPC
