Kyle Sulerud - October 28, 2019What do you have to think about and keep in mind as you do this? What if you don’t have all the business numbers of the business you’re helping, like net profit, revenue, gross sales, cost of goods, etc.?
Begin the process by asking the client or potential client how much they are looking to spend. You need to know if they have the budget that’s worthy of time and effort. In my case, if they say that they only have a budget of $30.00 a month, there isn’t really anything that I can do about it.
I also ask them what their goal or desired outcome is. If the goal of the campaign is to generate leads, I want to know how much they are looking to pay per lead, and how much are they paying for leads from other sources? If they’ve never advertised before and they’ve only done word-of-mouth, they might not know how much they want to pay per lead. Even if that’s the case, I still want to get answers from them.
If they have a budget that I want to work with, then I can look and do some more research to see if that budget is going to be reasonable for them.
At this stage, I don’t need to know their business numbers (net profit, revenue, gross sales, cost of goods, etc.), I just need to know their budget for Google Ads in order to achieve their desired outcome.
Let’s say, they are willing to pay $30.00 per lead. Now, I will go to the Google Keyword Planner, and I’ll look at the words that I’m going to be targeting for this type of business. I’d do this for the specific location that they’re going to be targeting, and I will look at the recommended cost per click that Google is giving me. If Google says that they have to pay $10.00-$15.00 per click, and the client’s goal is to pay $30.00 per lead, that’s a pretty tall order.
While it’s possible to turn 30% of your clicks into a lead or conversion, that doesn’t happen all the time. It’s unlikely to get 50% of your clicks into a lead. So if the estimated cost per click is half of the cost per lead the client is looking for, then we have an issue.
In this case, I need to tell the client that I can’t help them and give them the reason why, or I need to see if there’s any wiggle room. Maybe $30.00 per lead is what they are dreaming about, but if they haven’t done advertising before, they don’t have any idea what they’re looking to pay per lead. Maybe they would be fine paying $100.00 per lead, in which case, $10.00-$15.00 per click would make pretty good sense.
Certain types of traffic is going to convert better than others. For example, if someone is looking for a roof repair as opposed to someone looking for a completely new roof, the roof repair is going to have a higher conversation rate. I need to take all that into account when I’m working out these numbers.
Now if I’ve looked at this, and I’ve looked at the likely cost per click, and the likely conversion rate, and I figured out that we could get conversions for this company for their desired amount, then we’re at a great starting point.
Now the question becomes: “How do we calculate the proper budget?”
For starters, the proper budget doesn’t matter a whole lot. If we figured out that we think we could get leads for $100.00, and that the client is going to be happy with leads for $100.00. Maybe we only spend $100.00 a day, maybe $50.00 a day with the understanding that we are not going to get leads every single day. But over the course of several weeks or months we should see an average cost per lead that’s within the goal. That is a very reasonable starting point.
From there we can assess:
- Are we getting leads for what we thought we’re going to?
- Is the client able to handle these leads?
- Are the leads worse or better that what we’re expecting?
- Do we need to adjust the goal and decide whether to pay more or less per lead?
These are all things we can figure out with a fairly limited budget. But ultimately, the goal is to have the most profitable campaign possible. If we’re getting leads or sales for a profitable amount, and there are more leads available, then you should increase the budget for Google Ads. Once we’re getting predictable results, putting $1.00 in and we’re getting $2.00 out, we want to do that as many times as possible.
Some businesses might want to do this right from the start. They have the ability to start at $1000.00 per day budget. That’s perfectly fine, every business is going to be different in terms of what they are comfortable investing, there is not a set amount I can tell you to start with.
What’s the bottom line?
Start with a comfortable amount. Make sure that it’s going to make the client happy, and just go from there. Over time, you can calculate the business numbers, and that’s how you can tell whether to increase the Google Ads budget or not.