While you do have control over the maximum CPC you pay for each keyword, you will always pay more for highly competitive keywords. Remember that this is a bidding market. The highest bidder wins!

There are a few strategies when choosing a budget for CPC:

Do your detailed keyword research first and get an idea for what your competitors are bidding on and how much it will cost to compete.
Set a budget limit and choose to bid on fewer keywords or run fewer ads.
Determine which keywords you want and create your budget around their CPC.

If you have an idea of the budget you want to spend, you may be better off setting a cap for your CPC and choosing keywords in that range. On the other hand, if you know your budget is flexible, spend more time on keyword research. Then you can choose those with the best potential ROI and set your budget there at the start.

At the end of the day, which SEM metric matters?

Of course, the CPC isn’t everything. Other performance indicators will also affect your Google Ads budget. These important SEM metrics help you measure the performance of your ads over time, so you know whether or not campaigns are meeting your expectations.

Some important KPIs include:

Impressions – Every time your ad is displayed it’s considered an “impression.”
Click-through rates (CTR) – A CTR measures how often your ads are actually clicked.
Conversion rates – This measures actions taken after someone has clicked your ad and landed on your site (did they fill out your form, etc.).
Cost per conversion – This shows you the average amount of money you spend on PPC for every conversion earned.
Average position – Average position is an indication of where your ads fall when they’re triggered and how much traffic each location receives.
Quality score – Quality score is an expression of how reliable your company is at showing relevant content in your ads (low scores pay more).

While all of these KPI metrics are technically important, some may mean more to you and may be more helpful in determining your budget.

Conclusion

Unfortunately, there’s no specific formula on how to determine your paid search budget.

You should base your budget on many variables, such as your current marketing budget, your desired spending amount, your ultimate campaign goals, your chosen keywords, your CPC rates, and your KPI metrics to track progress.

The more time you can spend developing research keywords with better CPC in your industry and narrowing down your KPIs before you create your campaigns, the more successful they will be. Make sure you’re taking the time to watch your campaigns closely, especially if you’re using ECPC. This will allow you to see which campaigns are giving you the best ROI and which ones are wasting your money.

Let’s make your SEM campaign happen. Effectively. Always. Give us a call at 6362 0123 or book an appointment with our consultant to discuss more!

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