JUser: :_load: Unable to load user with ID: 643

Determining Your AdWords Budget

Determining Your AdWords Budget

The appropriate budget for your AdWords campaign is a complex decision. It must not be so high that it overexposes your product to the point where you are no longer able to generate profits for your services. It must also not be so low that your exposure to potential prospects is limited. Thus, striking the right balance is key. There are a variety of factors that can help you gauge the appropriate price.

First is to examine Account Conversion Performance. This is based on the historical data within your own AdWords account. You might notice that as your Search Impression Share Increases, your click through rate, and corresponding conversion rate, increases. This is the general tendency for AdWords accounts. Thus, you might want to aim for around 80% Search Impression Share for your budget.

In this example, you can use the formula of Required Spending equal to the Current Search Impression Share / Current Spent, multiplied by the ideal search impression share.

The second strategy is to monitor competitor spending activity, and gauge appropriately. It is good to spend an amount that is greater than they do, in order to get additional prospects for your organization.

This also requires a bit of data -- ideally a month's worth of campaign background. This will give you sufficient data for the keywords you use to get auction insights. To find this data, go to the Keywords section of your page and choose Details > Auction Insights > All. You will see here your impression share for your particular offering, as well as the values for your competitors who are using the same keywords.

You can use this data to help set your AdWords expenses, by finding out what helps attain a 100% impression rate for your keywords. The following formula can help:

Impression Share Max = Current Campaign Budget / Current Campaign Impression Share

Take your competitors impression share and multiply it with your required budget in order to achieve 100% impression share. This will give you a sense of what your competitors are spending, and if you have a similar budget.

A third strategy is to take steps that take into account an anticipation of the demand months ahead, by examining the months beforehand. There are two main methods for doing so.

The first is Google Trends tool, found at http://google.com/trends. This will give you an aggregated view of the search demand for your offering. Identify the peaks and troughs, and scale accordingly to the demand. The second thing you can do is to examine your keyword data along historical lines. Find the various spikes in the clicks and impressions to adjust your allocation appropriately.

While these strategies are increasingly complex and precise, they will allow you to stay on top of the AdWords race, allowing the best exposure at the greatest savings for the offering you are bringing to the world.

On: 19 Jan 2015