How Should You Set Your PPC Budget?

Setting a budget can be tricky if you’ve never done pay per click advertising. It’s a little bit more complicated than saying I don’t want to spend more than $50. There are several factors to think about.

First, in setting your monthly budget, decide how much you can afford to lose and get no sales without going to the poor house. That doesn’t mean you are planning to fail. But you have to plan for the worst case scenario just so that you are prepared. If you budget for $1,000 per month, will that cause you to go out of business if you don’t make it back? Then your budget is too high. If you set it for lower can you reasonably expect enough sales to get a break even on your efforts?

Aside from your monthly budget, you also need set a daily budget. The reason is because you could find yourself meeting your monthly budget in the middle of the month. In that case your ads will stop running until the next month. If you set your monthly budget for $500 and your daily budget for $10 then you will never hit your $500 monthly budget because if you max out your daily budget every day then you will only spend $310 max. So set your daily budget a little higher than your daily average of the monthly budget. That way, if you do hit the daily budget on any given day, you don’t run the risk of running out of month before you run out of money.

If your monthly budget is $500, set your daily budget to $20. That way, if you hit your daily budget every day then your ads will stop running for the month on day 25 instead of day 15.

Another way to budget your ad spend is by running your ads during certain times of day. If you are targeting a particular market segment that you know is online primarily between 5 p.m.-10 p.m. on weekdays and on weekends then make that your time for showing ads. You should still set a daily and monthly budget, but by limiting the time that your ads show you decrease the chances of having a high CTR during times when your target market is not online.