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How to estimate the cost of your PPC campaigns

Portrait photo of company director Pete Fairburn.

Pete Fairburn

Ice lolly

Who is this article for?

  • Business owners

  • Marketing Managers

  • Anyone planning a PPC campaign for their business

Key Takeaways

  • You will throw away budget if you get your keywords wrong

  • More competition means your cost-per-click will be higher

  • Other factors will affect the costs of your PPC campaigns, such as your potential needed improvements to your website, agency costs and your time

  • If you don’t have the time or in-house skills to conduct keyword planning, consider using an agency or investing in training

Estimate the cost of your PPC campaigns

The cost of a PPC campaign can add up quicker than a budget airline flight with a few optional extras... such as a seat... and oxygen... and ending up at the actual place you wanted to go. So it’s best to bear in mind key things which may influence how much your PPC campaigns are likely to cost.

We’ll discuss some ways to mitigate costs in some later articles, but here are the key things you need to bear in mind during the planning phases.

Don't want to read this? Watch our one-minute video version instead:

How much does PPC cost?.

Cost-per-click and keyword choice

Google and Bing Ads run on an auction-based system. That means the more bidders there are, the more expensive each click on your ad(s) will be. This is called the “cost-per-click”, or CPC.

Estimating CPC for a new campaign involves looking at the average costs for your chosen keywords, which can vary wildly depending on how generic or specific they are, and who else is bidding on them.

You need to estimate how many people are likely to actually click on your ads, based on your budget, ad copy and design, and the times at which you are running your ads. Those considerations represent more detail than we want to get into in this article, but suffice to say, accurate estimating can be difficult. However, as your campaign progresses and you accumulate more data, you'll find this process becomes easier for future campaigns.

Your website matters too

There are many, many reasons why you would want to make sure your website is a well-oiled machine in terms of user friendliness. If your site makes it hard for customers to get in touch, make an enquiry, or purchase something (if you are running ecommerce), then you have a problem. You'll need to address any such obstacles before you start any PPC campaign.

Google (and Bing) knows. It knows everything. If you have an Echo Dot, an Android phone or similar, it probably knows what you are having for dinner and what colour socks you are wearing. That’s one of the reasons I don’t wear socks, just to fox Google. Hah.

And Google knows absolutely everything about your website and, more importantly, how your users interact with it. It recognises the metrics and behaviours that point to a good site that is easy to use, and a site that is the user experience equivalent of riding a penny farthing backwards through treacle while wrestling a pig. Covered in bees.

Google wants users to find easy-to-use, helpful websites. So, if your site is one of those, you will likely be rewarded by a lower cost-per-click. Conversely, you are probably going to be penalised with a higher CPC if your site sucks.

So invest in improvements to your site, or even a new site, if you are serious about getting good results from paid search. It’s a no-brainer, because it will result in a positive uplift for all your users, not just those who arrive from PPC campaigns.

PPC Agency Costs

If you have stuck with these articles for this long, may I first applaud you and thank you for taking the time to read this far without lapsing into a coma. It may also be that you feel better equipped for the task at hand and ready to plan your own PPC strategy and campaigns.

Or it may be that you have concluded that you don’t have the time/inclination/tools/skills for this, and you would be better off engaging an agency to manage your PPC activity - or at least the planning and viability phases - allowing you to focus on other parts of your business.

If you have decided to go down the agency route, it should go without saying that agency costs will need to be factored into your budgeting... and they can vary wildly, depending on reputation, approach and results.

Different agencies charge for PPC management in different ways, of which the most common are:

  • Flat monthly fee

  • Percentage of your ad spend with a minimum spend level

  • Contingent based (sometimes known as cost per conversion or cost per acquisition)

  • A blend of the above

It is not uncommon for a new campaign to require a setup fee in addition to a monthly charge, although this is sometimes rolled into the ongoing costs, typically subject to a minimum contract term.

Other options to consider might be commissioning an agency to do the planning and setup process, leaving your internal marketing team to run campaigns. Or find an agency that offers PPC training courses or workshops, to help you develop the skills and techniques needed.

Each method has its pros and cons, but whichever route you take, make sure you factor these fees into your budget planning. Often an experienced agency will more than pay for itself by making sure your ad campaigns run at optimum efficiency.

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