How much does PPC advertising cost? Learn more here!
So you’ve heard about pay-per-click (PPC) advertising but have some questions.
You want to know, not only how much your campaign will cost, but what kind of return on investment (ROI) your organization can expect.
Like most digital marketing tactics, PPC is always evolving so the answers to these two commonly-asked questions will vary. At Farotech, we believe in educating our clients so they know more about marketing and what strategies will work best for them. Read on to gain an in-depth understanding of the driving factors impacting the cost of any PPC campaign.
Factors Impacting PPC Cost
While Google Ads is a particularly valuable ad platform due to its enormous search traffic, you shouldn’t have to spend a fortune to build a successful Google Ads campaign. While some keywords can cost as low as $0.05 per click, more expensive keywords in Google Ads and Bing Ads can cost as much as $50 or more per click.
Most companies see an average cost-per-click of $1 to $2 on the search network. The amount required to see success with Google Ads is largely dependent on the following factors:
- Quality Score
This is a holistic rating from Google based on the quality and relevance of your keywords and PPC ads. This rating will determine your cost-per-click (CPC) and be multiplied by your maximum bid to establish your ad rank in the ad auction process. Bottom line: advertisers with better Quality Scores get more ad clicks at lower costs.
- Keyword Relevance
It’s vital to generate relevant PPC keyword lists and groups. In addition, Keyword Relevance is a score that allows the marketer to focus first on the keywords that mean the most to his/her bottom line. Keyword Relevance is a score generated by Google Ads.
- Landing Page Quality
Optimized landing pages with relevant content and a clear call-to-action (CTA) are key ingredients to an impactful PPC campaign. It’s also important to design your landing page for specific search queries your audience may be using.
The level of competition in PPC advertising can vary greatly across different industries. A good rule of thumb is the higher the lifetime value of your potential customer, the higher your cost-per-click will likely be. Among the most expensive industries are:
- Insurance & Financial
- Retailers & Merchandise
- Travel & Tourism
- Ad Groups
By grouping your ads using keywords, you can utilize keywords with lower CPC values and avoid the high cost of more common and competitive keywords. For instance, advertising for the keyword “desserts” may have a high cost-per-click while utilizing an ad group of “cakes,” “pies,” and “cookies” could be a more effective strategy. The Google Ad Groups direct link can be found here
What Is Your Expected Pay-Per-Click ROI?
With traditional marketing, it can be hard to track exactly how much money you need, and once it’s spent, sometimes you’re not really sure where it all went. PPC management, on the other hand, allows you to easily manage your marketing budget because you only pay when a user takes a measurable step: clicks. Simplified and tangible ROI.
Commonly, a Chief Marketing Officer (CMO) or Director of Marketing is required to develop an ROI metric, providing a “dollars to donuts” investment analysis. A simple way to measure your ROI is to use the following exercise:
- If your business needs to develop $1 million of additional revenue, and you believe 50% of that revenue will come from PPC advertising, then $500,000 of additional revenue is your target.
- If your average dollar sale (ADS) is $10,000 for each new sale from your PPC advertising, you’d need to get 50 sales to reach your revenue goal.
- If an average click-through rate (CTR) is 3.25% for this keyword group, you’d need approximately 1570 clicks.
- At a 4.0% conversion rate, you’d need around 38,000 clicks to the website or landing page.
- If the CPC (cost-per-click) is $3.00, to get 38,000 you’d need to spend $114,000 over 12 months time driving that target revenue.
Running this exercise with a trusted marketing partner can help you determine how much PPC advertising costs and whether or not spending $114,000 to get $500,000 of revenue is an ROI worth pursuing. Keep in mind the close percentages of your salespeople as well as the length of your sales cycle. These crucial metrics all make significant impacts on your return!
When measuring your ROI for your new PPC advertising, also consider the additional costs for your building and developing PPC advertising:
- Keyword research and analysis
- Landing page development and optimization
- Ad copy and A/B testing (if necessary)
- PPC management costs
If you would like to know more about how much PPC will cost, and the ROI you can expect, sign up now for a complimentary consultation, check out our infographic, PPC Advertising: Your Top Five Questions Answered, or download our eBook, What Is a PPC Campaign? 6 Simple Steps to Success.