to make effective PPC projections

What should we expect to spend? What can we expect to pay?

You’ve probably been asked this question, whether you were in-house, or working at an agency.

Some people are prone to give a rough estimate without any context or calculation.

This approach can get you in trouble for a number of reasons.

This article will help you answer this question in a more accurate way, while also keeping your expectations in check. Learn:

• What to do next after you communicate your spending projections?
• How to align KPIs with projections.
• Considerations for variables
• Refers to employment.

How to communicate your spending projections

You need to make it clear that this is a budgeting exercise, whether you are presenting your estimates to a client, or to the leadership team responsible for budgeting.

Remember to consider the range of possible motives for the question.

• A CMO can report on overall budget projections either to the CFO or Board of Directors.
• The estimate can be included in a pitch for VC financing.
• Client point of contact could be simply assessing the viability and options for a management mandate.

To begin, you should ask the person who will be receiving the projections what they plan to do with them.

If the question is coming from someone outside of the marketing department, then benchmarks such as CVR, CTR and CPC may be too specific to use when a more general outlook might have a greater impact.

How to align KPIs

It’s often a straight-line between understanding the way the party asking for the projections will use them and choosing which KPI to focus on.

Sometimes, digging a bit deeper will lead you to another way of answering a question.

Imagine a client asking, “How much does it cost to be ranked in the first spot on Google each month?”

You may need to ask a few questions in order to find out if the person is serious about:

• Outranking your competitor in a head-term.
• Brand queries are protected for all time.
• You can also increase your brand’s awareness or impressions by focusing on other platforms, such as Facebook and Twitter.

You may achieve the same KPI as you began, but it often takes some preliminary research to find the most accurate.

The KPI in this case could be anything, from website traffic to brand search impressions.

Consider the following variables

You can anchor your projections once you have determined your key performance indicators.

Recently, we received a specific request from a customer to provide them with projected spends for generating three different quantities of leads. These were 1,000, 5,000, and 10,000.

They wanted to know a rough budget for each brand so that they could pitch the CEO of that brand for more money.

Lead volume was our first KPI.

We identified variables for each target lead volume:

• Spending on the Internet
• Clicks
• Cost per click
• Conversion Rate

We needed to solve the following formulas to provide a solution to our client:

• Leads = CVR
• Clicks * CPC = spend

Leads were a known quantity. The next step was to calculate and/or research the other metrics (variables).

Referring to employment

Idealy, the brand or client would have previous campaigns to benchmark.

You can still use account history to make projections, even if it’s a new campaign.

If, for example, the same client only ran brand campaigns to generate leads, they would like to know what it would cost to reach their target in non-brand campaigns.

We would then take a handful of brands with similar verticals, and similar brand maturity levels (in this instance high-growth SaaS), and calculate the ratio between non-brand and brand CVR. (Let’s say that non-brand CVR is typically 25% less than brand CVR.

The CVR of the old campaigns would be multiplied by the same ratio and we’d get an estimated CVR.

We’ll get CPC estimates for Google Keyword Planner, Semrush or other tools since we’re discussing Google.

It is also important to consider any client-specific information. Google Analytics should show you the CVR of homepage visits, landing pages that are featured, and any webpages that you may re-use.

You can now fill in the formulas. You’re welcome use the Calculator Sheet that we use at my agency.

As an example, we can see that our projections look like:

• 
  1000 leads – $30 – $50
  
  • CVR = 10%
  • CVR = Clicks = Leads
  • CPC = $3 – $5
  • Spend = CPC * Clicks

• 
  5,000 Leads – $150,000 to $250,000
  
  • CVR = 10%
  • Clicks = Leads/CVR
  • CPC = $3 – $5
  • Spend = CPC * Clicks

• 
  10 leads – 300,000 to $500,000.
  
  • CVR = 10%
  • Clicks = Leads/CVR
  • CPC = $3 – $5
  • Spend = CPC * Clicks

This is a very simple solution (it is difficult to scale up 10x without losing efficiency).

If you and your partner agree on a ballpark number, advanced math is not necessary.

If a client asks for greater precision after seeing these numbers, you can suggest channel diversification or calculate diminishing returns to achieve scale.

Aligning your PPC projections

You can offer your clients and leaders a valuable service by providing well-done projections.

As with any service, the alignment of expectations and outcomes is a major component of perceived value.

To nail the delivery, you need a blend of artful communications, audience understanding and strategic math. These are qualities that define a great marketing professional.

The article A guide for effective PPC projections first appeared on Search Engine Land.