02.07.2020 - Paid Media

How to Calculate a Budget for Your First Paid Media Campaign

Paid media is an attractive proposition for start-ups and fledgeling businesses, offering a flexible, scalable way to get your products and services in front of the right customers. But there are lots of things to think about when setting up your first paid media campaign, and budget should be at the top of your list.

Deciding how much to spend on paid media activity is a fine balancing act. Of course, you want your campaign to deliver results and boost performance, but not at the expense of soaring costs and unsustainable ROI.

To help you negotiate the tricky business of assigning a budget to your paid media campaign, we’ve pulled together a simple step-by-step guide to the process. Use the links below to look around.

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Step 1: Setting Goals for Your Paid Media Campaign

The first step to any successful paid media campaign starts with a question: what are you hoping to achieve? Defining clear goals for your paid media strategy is crucial in setting a budget that will deliver results without exceeding available spend.

The great thing about paid media is that it can be scaled up or down in line with your business objectives. If you want to meet targets quickly with an aggressive paid approach, you’ll need a sizeable budget to pursue the most valuable leads and attain key conversion goals. On the flipside, if you’re happy to play the long game, you can scale back spend and ensure a low cost-per-acquisition for any leads and conversions which come as a result of your paid activity.

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Not sure what you want to achieve from your paid media campaign? Take a look at the example business goals and objectives below and decide which fits the direction of your business activity most closely:

  • Generate revenue – do you want to attain a set number of conversions over a specific period? Then generating revenue should be the focus of your paid activity.
  • Maximise ROI – do you want to generate leads and conversions while guaranteeing sound return on investment? A cautious and strategic approach is needed to keep cost-per-acquisition to a minimum.
  • Generate leads – want more customers to sign up to your newsletter, follow you on social media or visit a new product page on your site? Your paid activity should focus on attaining valuable leads.
  • Increase brand awareness – do you want to get your brand in front of your target audience? Ideal for new businesses and start-ups, a focus on brand awareness can help steer your paid media strategy.

These are just a few examples of the kinds of goals and objectives brands look to when setting a budget for their paid activity. Defining goals can be a crucial first step in any successful Paid Media campaign, so think carefully about what you want to achieve before moving to the next step.

Step 2: Keyword Planning and Research

With the goals for your paid media campaign now in the bag, it’s time to think about which terms you’ll need to target to meet them. Keyword research is a topic in itself, so we’ll save the ins and outs of how it’s done for another post. However, to help you make a start, here are some things to think about when coming up with a list of keywords you want to target as part of your paid Media campaign:

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  • Which keywords relate to your business and the products/services you offer?
  • Which keywords are your competitors targeting in their paid activity? (Competitor analysis is a branch of keyword research)
  • Google Keyword Planner remains the go-to tool for finding relevant keywords that you can target on specific campaigns and channels. Just input a term related to your business and the tool will suggest relevant terms and give you an idea of their associated costs.
  • You can also simply add your website’s URL, and Google will turn out some suggested keywords.
  • The keywords you choose will dictate how much spend you’ll require to run the campaign. It’s crucial to strike a balance between affordability and ensuring that you meet key paid strategy objectives.

Building a list of keywords and determining other variables like location targeting are the building blocks of a successful and affordable paid media campaign. Get keyword research right, and the rest will follow.

Step 3: Understanding the Formulas for Paid Media Budgeting

While paid media budgeting isn’t always an exact science, and lots of variables need to be taken into account when assessing performance and spend; there are formulas you can use to calculate how much it will cost to achieve your key campaign objectives.

Begin by figuring out much traffic will be required to achieve your objective. To work this out, lean on your existing analytics and use the following formula:

Required traffic =   Customers needed / Conversion rate

From here, you can use the required traffic figure and average cost-per-click (CPC) to work out the estimated sum required for your paid media budget. This takes the shape of the following formula:

Traffic required X Average CPC = Total budget

You can leverage variants of this formula to calculate other figures, too, such as high and low ranges. Figures like these are important when controlling spend and scaling paid media activity. Here are a couple of formulas for calculating high and low spend points:

Highest traffic required X Highest average CPC = Highest total budget

Lowest traffic required X Lowest average CPC = Lowest total budget

As touched on, calculating paid media budgets isn’t always as simple as inputting averages into a formula. However, if you’re keen to keep a firm grip on your budget or need to report cost ranges to key stakeholders, such formulas give you the means to monitor and assess paid activity.

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Step 4: Working with Your Paid Media Budget in Google Ads Keyword Planner

If you use Google Ads Keyword Planner to build your paid media activity, the platform allows you to set parameters and limits to ensure you stick within the limits of your assigned campaign budget. Below, we offer a simple step-by-step on how to control spend in Keyword Planner:

  1. Navigate to ‘Get search volumes and forecasts’ within the account interface you’re working on.
  2. Enter your keyword list or add it as a .csv file.
  3. After defining location targeting parameters, be sure to enter any ‘Negative Keywords’ you don’t want your ads to target.
  4. Set the max CPC by selecting the edit function below the top ‘Your plan’ message. Make sure this marries up with your total budget by using simple formulas like those detailed above.
  5. Happy to spend more on some keywords than others? Navigate to the individual keyword and select the pencil icon near the ‘Max CPC’ option, before adjusting in line with your campaign objectives.

Key takeaways

And there you have it, a step-by-step guide on how to budget for your first paid media campaign and manage spend in Google Ads Keyword Planner. As a reminder, here are a few key takeaways that will help you when setting up your first paid ads campaign:

  • Define clear goals that marry up with your overall business objectives. What do you want to achieve through your paid media activity?
  • Create a list of relevant keywords that will deliver results for your brand whilst making your campaign financially viable.
  • Familiarise yourself with the formulas for paid media budgeting – they can really help to control spend and ensure consistent ROI.
  • Utilise the features of Google Ads Keyword Planner to keep your budget in check and fine-tune your paid media strategy.

How Often Should You Evaluate Your Paid Budget?

Setting a paid media budget doesn’t mean it’s set in stone. It’s generally advised that you evaluate it every month, especially if your business likes to keep an eye on the pennies. For businesses that have a little more breathing room with their budget, they might be better suited to reviewing it quarterly instead.

A regular review of your paid media budget gives you the chance to make adjustments, eliminate campaigns that aren’t performing and prioritise high-performing paid campaigns that have generated results for you.

You might also decide to evaluate your paid media budget at the end of your campaigns, too. Doing so allows you to identify where you might have allotted too much money to a certain campaign where it might have been better suited to another campaign (with its own business goal). It’ll also let you see whether you aren’t spending enough on a project to hit the targets you want to achieve.

Download Your Marketing Budget Template

Of course, paid media campaigns aren’t the only marketing activity you should be budgeting for. We’ve covered the basics for you in more detail here, as well as what you can do to make sure you’re maximising your ROI (you can check that out here).

And, to help you out even more, we’ve whipped up a downloadable marketing budget template so you can stay in control of your costs and track how much is being spent on what. Interested? You can grab it by filling in your details below.

Managing an efficient, cost-effective paid media campaign can be challenging. That’s why many brands trust us with their spend instead. Our experts use advanced techniques and innovative platforms to optimise your campaigns and guarantee excellent ROI. Head here to learn more about how we can help or call us on 0345 459 0558.