How Much to Budget for Search?

Paid Search Budgeting

Quite often, we get asked questions like “How much should i spend per month on paid search?” – This one is a fantastic question, however, there is really only one person who can answer that and that is you!

Some things to consider when developing a budget for your paid search campaign:

  1. Determine some solid campaign goals. These can be branding, traffic, conversions or whatever other metric you find is most relevant to your business.
  2. How much each click is going to cost you – Do some keyword research, try to get an idea of what each click is going to cost you.
  3. Workout how many clicks you need to make a difference to your bottom line and at what point you make a profit. I would recommend analyzing your current conversion data and starting with that to workout your ROI.

Now that you have some basic figures around what goals you need to hit to make you profitable, you should be able to work backwards and then workout how much money you can spend on your paid search campaign.

If you are running a CPA based campaign and you are making profit directly from the clicks, then its an easy argument to say that your budget should be unlimited. The more clicks, the more profit. Simple, so as long as you keep hitting your average conversion goals and your CPC stays within your target range, let it spend!

If you are after click volume and your revenue is based on lets say page views through an advertising network, the equation isn’t much different. Take your average CPM and work backwards, taking into account things such as the average number of times each user returns to the site etc to see how much you can afford to pay per click and still remain profitable.

The tough decision with budgets comes on purely brand based campaigns as the flow on effect from this is sometimes hard to directly attribute to paid search. So i guess, without knowing specifics about the brand, the tracking or anything else this is more of a “What can i afford to spend” kind of dilemma where you bite the bullet and allocate X$ per month and then re-evaluate.

This isn’t intended to be an in depth article about defining budgets, simply some thoughts around ways of allocating budgets and getting clients thinking about some more fundamental questions which factor into their search budget allocation.

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