The PPC Budgeting Playbook
Produced by Hanapin Marketing
We all budget differently. Whether it’s using an app, checkbook, or our own brain, we all do it. However, there are some ways to budget that are more effective than others. Some of the most effective ways involve utilizing many different methods for budgeting. The same rules apply to PPC budgeting. However, as a leading PPC agency who have a record of optimizing our clients’ accounts by 250%, we have a few suggestions on how to budget better.
Your Budgeting Strategy
Of course when it comes to budgeting, you want to first look at the overall goals of the account. What kind of business is your clients’? How does your AdWords account supplement that business? Find out the goal of your AdWords account by listing out the marketing channels you are already using. Is your goal to support existing efforts or to displace them? This will give you a good idea of the kind of spending you should be doing.
Next, you want to think about where you competitors are spending. Use Keyword Planner or SEMRush to get an idea of where your competitors are putting their budget in AdWords. If you are new to AdWords, then this is probably a good idea of where you should be putting your spend. From here, develop strategies to unseat their ads from the SERP and find better and cheaper keywords.
Then, go in and see how much the CPC’s for the keywords you are bidding on are. It may be time to rethink your keyword choice. For example, keywords that indicate urgency or familiarity are more likely to convert than ones that don’t. Also, branded keywords convey more intent than a competitor keyword. Your keywords will be more valuable if they are specific and unique to your brand.
Your CPA shouldn’t automatically be your most important KPI. You should look more in-depth into your account to make sure you find the best KPI to focus on. However, if CPA is the most important, make sure you set a goal grounded in logic.
So how can we optimize our budgeting strategy?
After you’re done thinking about overall strategy, we suggest you think more in-depth about your budget. Keep in mind these account-specific questions to tailor your budgeting strategy to each different client:
- Is my client’s business one whose clicks fluctuate daily, weekly, or monthly?
- Is my budgeting taking into consideration the times my target audience is more likely to spend?
Our next sections will give advice on how to optimize your clients budgeting strategy by taking into account these two questions.
The best tool to help you budget your AdWords accounts is utilizing Excel Solver to calculate and record your budgets for your accounts. In order to do this, its best to start by looking at your data from the previous year. You can look at this data by downloading the campaigns from the previous year with Clicks, Impressions, Conversions, Cost, Revenue, and IS. Once you have done this, follow these steps to organize the data:
- Add a few columns and then use text-to-columns to segment the categories listed within the campaign.
- Add “max cost” column (if we wanted to completely max out on the spend on a campaign, what would this number look like?) → Use Cost/IS.
- Add “allocated spend” column. Fill this column with zeros all the way down (the solver will be adjusting this for us).
- Repeat step 3 for “Allocated Revenue,” “CPC,” “Conv Rate,” “Clicks,” and “AOV.”
- Add totals of each of the allocated columns.
Next, you want to set up budgets based on location. In order to do this, you must add columns with SumIf calculations to find allocated spend per location. Look at the potential spend available per location by using the formula:
=SUMIF ($A$4:$A$33, “United States”, $J$4:$J$33)
You can use Solver to hit ROAS goals and for monthly budgeting and adjusting. It is a fairly simple tool to use once you’ve set up the appropriate sheets with your data from the previous year.
Once you hit solve, the results should tell you what your yearly or quarterly budgets and goals will look like according to the previous year (or quarters statistics at the campaign, location, or account level).
Seasonal budgeting is the first layer of strategy to add to your list. The goal of seasonal budgeting is to budget according to the previous year’s performance. You can do this by setting up a table in Solver similar to the previous sections in this whitepaper. When setting up Solver, include monthly information by adding a monthly column. This monthly column can help Solver to adjust budgets campaigns to adjusts budgets at the campaign level per each month.
Day of Week Budgeting
In order to see where your budget is pacing in Excel we use this formula:
=(Current Spend/Amount of Days)*Total Days in the Month
In some cases, monthly budgeting works. However, this monthly budgeting formula does not always account for the fluctuating amounts of clicks received by day of the week or any recent changes to the account that could affect the spend levels. Because of this, you cannot treat each day of the week the same when budgeting. This is why we suggest budgeting by day of the week.
You can utilize an Excel sheet in order to set up day of the week budgeting. The projection sheet should show the average spend per weekday while taking into account the amount of days that have passed and the days remaining in the week. Here are the formulas for each day of the week:
- Sunday – E3/D3
- Monday – E4/D4
- Tuesday – E5/D5
- Wednesday – E6/D6
- Thursday – E7/D7
- Friday – E8/D8
- Saturday – E9/D9
For MTD Spend formula:
And the EOM Projection formula is:
Dayparting vs. Day of Week
Your day of the week budgeting strategy shouldn’t be replacing your dayparting strategy. Instead, these two should be working together to get the best bang for your buck.
Dayparting’s main job is to raise or lower bids for specific hours of the day when ads are showing. Its unique function allows us to improve ad position and CTR during the times of the day that are the most productive, and/or reduce impressions and CPCs for times that generate fewer or less profitable results. Dayparting should be used as a leverage tool for ad schedules and bid modifiers.
In contrast, day of the week budgeting should be used as a leveraging tool for campaign daily budgets. Day of the week budgeting should be used to increase or decrease budgets on specified days of the week for certain campaigns. We love day of the week budgeting because it allows us to maximize spend efficiency by aligning daily budgets with the value of traffic for each day of the week.
Day of the Week Budgeting + Non-PPC KPI’s
Trying to combine day of the week budgeting with non-PPC performance data can be tricky. Here is a step by step breakdown of how to do this:
- Download campaign report segmented by time and then day of the week.
- Combine PPC and non-PPC data into a single sheet (make sure “Day of the Week” column spans both sets).
- Pivot your data into a Day of the Week table showing impressions, clicks, and costs.
- Add whatever non-PPC conversion metric you’ve chosen.
- Calculate the Avg. CPC, Cost/Visit, Visit/Click columns
- Subtract the Avg. Visit/Click from the current day’s Visit/Click to get our Budget Adjustment for each day of the week (use the formula =(Daily Visit/Click – Avg. Visit/Click).
- Multiply 1+ Budget Adjustment by our total spend goal (the sum of campaign daily budgets for the given segment) to get the New Daily Budget.
- Find the percentage change between each day’s “New Daily Budget” and its predecessors (use formula formula = (Today’s New Daily Budget – Yesterday’s New Daily Budget)/Yesterday’s New Daily Budget).
The last step should be calculated for each day of the week. Also, you should adjust budgets manually on the day of implementation. To do this, substitute, “Today’s Current Budget” for “Yesterday’s New Daily Budget” in the formula. These steps should allow you to make day-to-day adjustments quite smoothly from week-to-week.
In your budgeting campaigns you should be utilizing a combination of dayparting, day of the week, and seasonal budgeting to optimize your clients’ accounts. Like we said before, the best way to budget effectively is to use a hodge-podge of all the methods. Test these strategies out, and then implement them in ways that work best for you and your client. However, don’t forget to start by looking at the bigger picture. Look at your client’s business first, then build your budgeting around what works best for their particular needs.