If you’re thinking of investing in a pay-per-click campaign, you may be wondering about your returns on investment (ROI) and whether it would be worth spending your hard earned money on. It’s not unreasonable to say that PPC is one of the most effective tools available today for generating leads. However, whether your campaign is successful or not depends on various factors.
The hard truth is that there is no average price for PPC campaigns. The actual cost will depend on what you want to achieve. Budgets can run from a few dollars to hundreds of thousands of dollars.
Cost per click
Cost-per-click refers to the amount of money you will pay every time someone clicks on your ad. This figure is determined by a variety of factors including the keyword’s competitiveness, the platform you have chosen to advertise on, your target audience and the industry you’re in.
In 2016, the average cost per click was $2.14. However, this may not be the best figure for you. The best way to fix a good cost per click for your campaign is by determining how much you want as a return on your investment (ROI).
What is your target ROI?
A good ROI is one that leaves you with a comfortable profit margin. You therefore need to determine what you earn in an average sale. If for example you earn $200 on average in a single sale, you may not mind spending up to $20 on highly competitive keywords that will draw in potential customers.
A revenue-to-ad ratio of 5:1 is a good place to begin when determining just how much you should spend on your ads.
Target cost per click
If you intend to advertise on a search engines such as Google, it is important to note that your industry will have a major role to play in the cost-per-click. This is because the cost for a keyword is determined by auction. Advertisers who bid more for a keyword will have their ads placed higher on the page than those who bid lower. If your bid is too low, you may not even appear on the page. You may be listed in the newsfeed.
Advertisers are willing to pay more when advertising expensive products and services. This is because the ROI will be much higher even for a single click out of 100 that turns into a sale. You will therefore also need to factor in your conversion rate.