I encourage you to look at your online advertising costs as an investment – you definitely get a return on your investment when you make informed online advertising expenditures.
Conversely, if you try out online advertising without knowing what you are doing, you are just throwing money away.
Estimating online advertising costs is done on a client by client basis because it is dependent upon several factors, including what type of advertising – such as display advertising vs search advertising.
Here are a few factors:
- the micro market of the keywords you are targeting
- your overall budget
- the geographic areas you want to reach
- the advertising platform (Google Adwords, Bing ads, Facebook, etc.)
- existing competitors in your market
- and more
You can see it is a very refined method of making sure your costs are reasonable for your situation.
With Pay Per Click advertising, it is auction style. You bid on how much you are willing to pay for leads.
I’m usually asked at this point, “what a click will cost”. Click costs are based on a lot of factors, so while I can estimate it, I just don’t know the exact cost of a particular click on a particular search phrase until we get into the bidding process.
The approach to bidding is proactive. I take you through a quick tutorial, that looks something like the following example, on what you need to take into account when setting your budget for online advertising in the pay per click model.
For an example, if a business pays an employee $20 an hour and it takes them one hour to complete a job, and you charge $50 to the client, and you want to make $20 off of the job, we aim to spend less than $10 in advertising to get the work.
You pay $20 for the employee, $10 for the advertising, and get $50. So $20 profit.
So, if a click costs $2, and we estimate it takes 5 clicks on average to get a user to bite, the cost to acquire the work is $10. This tells us we can’t go over an average click cost of $2 in order to meet your profit goals.
Or, and this is where a professional Adwords manager can be valuable, you need to increase the rate at which you convince clickers to buy… maybe every 3rd click.
Some things I will help you to take into account when determining click bids:
- Labor cost
- Manufacture cost
- Acquisition cost
- Repeat customers vs one-off sales
Advertising is about averaging out your costs to acquire clients/sales. In collaboration with you, I’ll make sure your advertising cost is within your allotted budget.
Therefore, even though you don’t know exactly what an individual click costs when setting up your campaign, together we can evaluate click costs and make adjustments.
The fact is, you need to be in online advertising if you want to cover all your possible advertising avenues, and we simply turn off the ad phrases that are costing more than you want to spend, and focus on the ones that are within your optimal price.
Then, as business picks up from the lower cost ads hitting their mark, we add in the more expensive ones with smaller profit margins. As long as some return on investment (ROI) is present, it is worth doing.
You Have Control Over Expenditure Levels
One of the nice features of internet advertising is that you can set a maximum daily expenditure.
Remember, it costs money to make money!
You will have these advertising costs:
- Keyword research
- Advertising account setup
- Monthly management
- Monthly click fees when someone clicks your ad
You may have these costs as well, depending on your situation:
- Web site analysis
- Web site optimization
- Web site expansion (ie creating landing pages)
- Ongoing keyword research
- Alternative Placement research for additional platforms
For as little as $100 per month over the course of the first year, you can see if it is for you — and it only gets better over time.
At a minimum, you will have $300 in startup costs, which includes one hour of keyword research, account setup, and first month management for a small (maybe ten-phrase) campaign.
More likely your small business will have a slightly larger campaign and somewhere between $500 and $2,000 setup fees plus click fees (which are impossible to say until I know what industry you are in, and what your goals are; but remember, we set maximum daily expenditures on that).
Ask me about eligibility for Google new account discounts and non-profit discounts.
If your advertising budget is small, I suggest starting with a Bing Advertising account for Bing advertising because the cost per click is generally much less than comparable phrases on Google Adwords due to the greater popularity of Google.
What is the Range of Click Costs?
Click fees are competitive bids, so in depends on what industry you are in, what geographic market you are in, and how well you have done with click-throughs in the past.
They can range from about $1 a click to over $100 (most businesses, except for lawyers, don’t pay anywhere near $100). The tighter you stick to an exact descriptive phrase, the less expensive clicks are, comparatively to broad keywords.
Generally, the higher the profit prospects for the product or service, the higher the click cost due to risk reward theory. But not always.
What About Display Advertising?
Display network advertising, often called banner advertising, is similar in many regards to pay per click advertising. The main differences being:
- clicks cost much less because you are not dealing with people who are searching for your services, you are putting ads in front of likely-interested parties, and
- you can choose to pay per thousand impressions vs per click
Therefore you set budgets based more on how much you are willing to spend per month, vs per click. Over time I will be able to determine what is a good expenditure and what is a not working as well, and shift budget towards the good and away from less effective channels.
What Should My Monthly Ad Budget Be?
Again, this varies by several factors, like what industry you are in, how much your competitors are in the space, and the search phrases you are after. But most of all it depends on how much money you want to make.
If you have one key phrase, in a non-competitive environment, you may only need to spend a couple hundred dollars to beat your competition – but that doesn’t mean you will get every client out there if you don’t allocate enough click budget!
Also, the more search phrases you add, the more you will add to your budget. Or you may choose to stay laser focused on a few great terms if you have good return on investment for those phrases. The thing to keep in mind is to allocate enough initially to get a good feel for your market – we suggest at least $600 per month for most industries, but you can still be successful with a lesser amount.
Online Advertising Payment Policies
I set you up with your own ad accounts, and you “invite” me, through that account, to be your PPC management consultant for the account. Therefore, the actual click through costs are billed to your credit card via the entity you are advertising with (Google, Microsoft, Facebook, etc.)
My fees are based on hourly charges and you are invoiced at the end of each month, either a set fee, or variable, depending on our agreement. Payment is due within 20 days of the invoice. Generally, my services pay for themselves in saved click fees (not to mention all the new business you will be getting).
Do It Yourself Option
Although I highly recommend having a PPC expert work with your campaigns because I can save you LOTS of money with my expertise, for those of you who insist upon doing it yourself, you will need at least basic training.
One on One Google Adwords Training is available.
I can also train you on the Microsoft Bing Ads system, which is similar to Google Adwords.
Call 303-750-6114 or 970-422-2218 now to get a better estimate of your costs for online advertising.
Interested in a review of your existing ad campaign? I offer that too
I can do a brief review for obvious flaws for free. More thorough reviews, and optional reports are priced based on estimates after I see the size of your ad campaigns.