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What Methods Do You Use to Create a Budget for New Adwords Clients?

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# 1
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The problem with trying to create a viable budget for a new Adwords client is that the tools provided like Keyword Planner and Display Planner are that the estimates given are just that, estimates. In addition, while these tools are helpful, they can't take into account upcoming trends or releases. So I put it to the more experienced Adwords users, how do you go about making a potential budget for your new Adwords clients?

 

Some responses I have seen/read/received:

 

-Just start them at $1000

-Take a sampling of keywords and average their Suggested Bids together

-Take most expensive keyword and multiply by 30 (days)

 

I find that most of these examples are not founded in logic or in a quantifiable method. New Adwords managers need to know how to propose proper budgets for their potential clients.  All suggestions/formulas/methods would be appreciated!

4 Expert replyverified_user

Re: What Methods Do You Use to Create a Budget for New Adwords Clients

Top Contributor
# 2
Top Contributor

Hi Morgan,

 

There is some level of "guess work" involved for sure...it becomes a bit easier the more you try and actually have real life experience to back up your previous budget projections.

 

How about taking a look at your estimates in the keyword planner while using specific budgets and bids? From there, you can estimate CTR to give you an idea of how many visitors you're likely to see. From the visitor count, apply a conversion rate. The big question I try to answer is this, if we spend X in a day and generate Y clicks, can we also get Z conversions so the effort is profitable. From there you basically work the math until it makes sense. 

 

Sure this sounds like rainbows and leprechauns but it's a general idea that may be helpful.

 

Also, there is a good rundown of a similar process in this article by @ScottyD here: https://www.en.adwords-community.com/t5/User-Articles/How-to-Figure-Out-Your-Starting-Budget/ba-p/39...

 

Hope this helps! 

 

-Tommy

Tommy Sands, AdWords Top Contributor | Community Profile | Twitter | Philly Marketing Labs
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Re: What Methods Do You Use to Create a Budget for New Adwords Clients

Top Contributor
# 3
Top Contributor

Hello Morgan;

This is a nice question

The approach I  take is, first, conducting  / running some keywords research (with the help of the client), check - using the keywords planner - what are the most competitive keywords which most likely will be used in the campaign, and  use their average (historical) bids (reported on the keyword planner) as a basis  to calculate  a monthly budget.

Moshe, AdWords Top Contributor , Twitter | Linkedin | Community Profile | Ad-Globe
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Re: What Methods Do You Use to Create a Budget for New Adwords Clients

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# 4
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For my idea after 30 days past I will extract all keyword from Google Adword then take a look with keyword most converted and then put them with a new Max CPC and also create new budget lower than before. And for each keyword we don't have any converted from 30 days I will paused even they can get impression much 100 or more. This is my idea what you think >

Re: What Methods Do You Use to Create a Budget for New Adwords Clients

Top Contributor
# 5
Top Contributor

Hi Morgan,

 

Although the methods you've quoted have no quantifiable logic, unfortunately that's due to the nature of AdWords.  Although the Keyword planner can give you ideas about search volume and CPCs, it's really impossible to get any kind of accurate predictions because so many factors are involved in these two metrics.  The planner may give you an idea of the CPC and volume of a Keyword for the UK, but that could be quite different from what you'll end up paying for a targeted region 80 miles around Manchester.  Actual costs are also influenced by your own individual Account and website; your costs will be dependent upon how many clicks you receive for a given number of impressions and this is largely influenced by the Ad creative you write.  The actual CPC you pay will be strongly influenced by your Quality Score - someone could be paying around twice as much for a Keyword with a Quality Score of 5/10 as another advertiser who's QS is 10/10 - and Quality Score is influenced by many factors unique to your website.

 

So, the "pick a figure" approach does have logic behind it, because only by actually running your Ads can you see the real costs you're going to be dealing with.

 

Getting to the stage of having a good idea of real costs doesn't necessarily take that long though.  The very first impression any Keyword receives will tell you it's average position (which will inform you whether the CPC needs to rise or fall) and how many impressions you receive in a single day will give you a good idea of popularity.  After a week or so, assuming you receive regular impressions and clicks, you should be seeing your "real" Quality Score and may be able to view metrics related to Search Impression share, and bid/budget recommendations appearing in the interface.

 

So really all you need to do - and the approach that I take - is work out a sufficient budget for the first week or two that'll give you the information you need to make a more logical and explainable estimate, sort of like a pre-wash or a warm-up lap.

 

With a direct sales site and proper ecommerce tracking your budget should, of course, be driven by profitability.  If the Account returns a positive net profit then in theory the budget should be unlimited, if the Account is not returning a net profit, and cannot be made to do so through tuning, then you really shouldn't be spending any money at all.  So the question of budget only really arises for the initial tuning stages (which admittedly could take several months) and/or where the income from advertising is difficult or impossible to quantify.

 

Personally, I try to aim for 10 clicks per day, per Keyword, for a two week period as my "warm-up" estimate and make sure the client knows that this is an experimental period where the "real" budget estimate will be available after that warm-up.

 

Jon

AdWords Top Contributor Google+ Profile | Partner Profile | AdWords Audits

Re: What Methods Do You Use to Create a Budget for New Adwords Clients

[ Edited ]
Rising Star
# 6
Rising Star

Hi Morgan,

You have some really great advice from experts here. I would just like to say that you need to understand while you can use the Keyword Planner to get a good estimate for spends, you need to add in another 20-30% buffer on the total spends when you are proposing the budget to your client.

This is basically because, Keyword Planner only gives us an estimate of the data we can look forward to and due to the fact that AdWords tends to spend close to 20- 30% more when your campaign starts. If you do not consider this factor before starting the campaigns, you may see a limit on your overall reach.

I have always proposed budgets using this method and it has helped me with enough room to test my themes out and also impart visibility to them.

 

To give you a more detailed answer to your query on budget estimation. Here is a reply I had given to a similar topic on the forum:

 

Let me help you on this. First you need to gather CPC, impression, Clicks data from the Keyword planner for all your keywords that you are going to be working with. Once you have this list, you need to calculate the total spends estimated for all the keywords. This as you know can be done by multiplying your clicks with the avg cpc's you get from the planner i.e. Clicks * Avg. CPC. = Total Spends (per keyword).

Once you have total spends for all your keywords, you just need to add the total spends for all the keywords at the bottom to get the total cost of running all of the keywords you want to run your account with.

This will give you an estimated monthly budget for your themes, you can add another 20 - 30 % to the number to get a more rounded and secure budget ( to make up for any unforeseen circumstances with spends). You can give this estimate as a proposed budget to the client and for the Daily spends, you just need to divide this budget with 30.4 ( This is how Google proposes you calculate your daily spends).

The number derived from this, will give you your estimated daily budget.

Hope this Helps!

Cheers!

Shashank

Cheers,
Shashank Singh, AdWords Rising Star |
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