PPC Initial Budget For Full Optimization

November 4, 2008

Configuring an account correctly is a very delicate process & may vary between different markets & countries. First of all you must calculate the initial spend required in order to accumulate a minimal amount of statistics in order to optimize your campaign to a profitable point (The first month is the most crucial part of every PPC campaign & it is when the bulk of optimization is done) This will be your PPC Test Budget. In order to calculate the amount of money needed to reach full optimization you must follow these steps:

  • Find your top 50 most searched keywords in your account by sticking your Master Keyword List in the Google Traffic Estimator and sorting by clicks/day to evaluate the average CPC & potential amount of clicks/day of your top 100 keywords .
  • Calculate the average value of your goal/conversion/lead/sale.
  • Try to estimate what your conversion % will be, the average conversion rate for leads is 8%, the average conversion rate for sales under $100 is about 2% and for sales over $100 is 1% (These are rough estimates to help you calculate your initial budget to reach full optimization).
  • Fill in the following formula with the stats you have:
(Conversion % / 100) X Avg CPC X 50 (keywords) = The initial budget you must spend in order to fully test your top 50 keywords and optimize them to achieve profitability

Explanation of formula:
  • (Conversion rate / 100) - represents the min clicks you must receive in order to get a conversion in order to determine if it was a success or not.
  • Avg CPC - is the estimation of how much every click will cost you.
  • 50 (keywords) - you will be creating an estimation for the top 50 most searched keywords in your MKL.
If you didn't understand something feel free to comment and ask us... =)

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