How much do you need to spend to get results from your pay-per-click campaigns? There are a few different methods for setting a pay-per-click budget based on your goals, your overall marketing budget, and how competitive your market is.
Generally, you need to start by determining how much of your marketing strategy is going to be pay per click, what key performance indicators (KPIs) you are aiming to meet, the cost of your keywords, and how much is needed to beat the competition.
Paid Ads as Part of Your Overall Marketing
Paid ads alone will not create the sustainable traffic you'll need for long-term success, so they should only be a part of a well-rounded property management marketing strategy.
If you've already developed a property management marketing budget and are just starting paid ads, you may have to reallocate some expenses. If you are budgeting now, then the following factors will help you create a PPC budget and determine how much of your overall marketing expenses should be allocated to paid ads.
What KPIs Matter—and How Can I Achieve Them?
Most people are concerned with cost per acquisition (CPA) overall, but that isn't the only thing to track. There are property management marketing metrics that help you refine your ads strategy so you can get a better CPA, such as:
- Impressions: Are people even seeing your ads?
- Clicks: Are people sing your ad—but not clicking?
- Click-Through Rate (CTR).
With these optimized, the next step is analyzing money-based KPIs such as cost-per-click (CPC) and cost per acquisition (CPA). These metrics let you know if people are interested in your ad, and then whether that interest is converting to paying customers.
Google does not have a set cost-per-click for keywords, but you can determine the average cost-per-click by taking total cost and number of clicks and averaging them out. The formula goes something like this:
Average CPC = (Total Cost)/(Total Clicks)
Google Ads lets you set a maximum cost-per-click (the most you are willing to pay for a click). From there, Google will place your ad to get the best results from your price point. Your CPC and CPA should be less than the lifetime value of a customer, or you are losing money by using paid ads.
How Much Do My Keywords Cost?
To learn this, you're going to need to create a Google Ads account and then enter your keywords into the Keyword Planner tool. Google will let you know how much the going rate is for these terms as well as related terms so you can pick a good mix of keywords that will get you the traffic you need at a price you can afford.
How Can I Beat the Competition?
What competitors do you see when you are searching for your keywords and your brand? Beating out your top competitors on keywords can help direct traffic your way when it was going to them before. Additionally, look for places where they are not spending that could drive traffic for cost-effective keywords.
Using this information, it is time to pick your keywords and document the average CPC; ultimately, this is the foundation for your Google Ads budget.
How Much Do I Spend Using This Information to Get Results?
Time to do some math! First, determine the customer lifetime value of a new client. Next, determine the amount of new business you need to bring in to meet your goals. If a new client has a customer lifetime value of $1,000 and you need to meet a goal of $15,000 in new sales, you'll need to close 15 deals.
Next, you need to know your conversion rate for new leads and closing rates for your sales team. If you convert 10% of your website traffic to leads, and your sales team converts 10% of leads to new business (your closing rate), you can then work out how much extra traffic you need to provide the number of leads you will need to acquire 15 more clients.
Let's call conversion rate "CR," new business needed "NB," and closing rate "CLR" for our formula.
PPC Budget = [(NB/CLR)/(CR*CPC)]
Using our numbers and assuming an arbitrary $5 CPC, that is:
PPC Budget = [(15/.1)/(.1*5)]
PPC Budget = [(150)/(.1*5)]
PPC Budget = [(150)/(.5)]
PPC Budget = 300
To meet your goal of 15 new customers, you should aim to spend around $300 on well-optimized ads—but remember, these are just arbitrary numbers. Actual conversion rates are generally around 2% for property management—not 10%—and your closing rate isn't something we can predict at all. Your closing rate is entirely dependent on the quality of leads your sales team is receiving—and how effective they are at conversion.
Running a paid ads campaign as a beginner also means you probably won't end up with best-case scenario results from the start. It takes time to learn how to use Google Ads well—which is why there are people whose entire career focus is maintaining paid ads.
If you need help with your paid ads and inbound marketing budget, Geekly Media can help! We run paid ad campaigns for our clients who are looking to supplement their traffic while their inbound marketing is picking up steam. If you'd like to learn more about how to put Google Ads to work for you, download our definitive guide to paid ads! You won't even have to work it into your marketing budget; our guide is absolutely free!