How To Set a PPC Budget For a New Product

What if you're launching a new campaign and you don't have any data for your KPI's? How do you set your budget?

Google AdWords suggest the bids and a daily budget, but these are just their guesses. They have no idea of your average order value (AOV), close rate (CR), or your business model. Ignore their numbers.

To set the initial advertising budget for PPC, you'll need to calculate your CPL, as follows:

1. Estimate the number of sales you expect to make in one month. Use the minimum number of sales that you'll need to stay in business.
2. Guess at your close rate. For every 100 leads, how many will you convert into customers? Ten percent is fairly conservative. After a few months in business, you'll get better at selling.
3. Use your close rate to estimate how many leads you'll need to be able to make the minimum number of sales.
4. Calculate your target CPL. Talk with a few people with experience, make best guesses, and be conservative.
5. Multiply the number of leads by the target CPL. That's how much you'll have to spend per month to buy the leads you need.
6. Divide the monthly budget by 30 days to get the daily budget for Google AdWords.

For example, you want to sell 100 Koi per month. You have a 50% close rate, so you'll need 200 leads to sell 100 Koi. If the target CPL is $10 and you need 200 leads, you'll need to spend $2000 per month in marketing. Divide by 30 days to get the daily budget ($2000/30 days=$66 per day).

Watch you campaigns every workday. Yes, take weekends off. You need a break from all these numbers. Besides, you'll find from analytics that there are few buyers on weekends anyway. Try different ads and delete the ones that don't work. Keep your ad group's average CPL within your target CPL. It takes about four to six weeks to optimize a PPC campaign, so the numbers will fluctuate. The CPC will drop, so the number of clicks will increase. This means you'll get more leads. You'll get better at selling koi, so your close rate will improve. When your PPC account has reached optimal levels, you can recalculate your numbers. You'll know the actual CPC, conversion rates, and cost-per-conversion.

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