by Dylan Downhill

Pay Per Click (PPC) can be used to back up even a thriving organic program. Research shows that around 60% of people click on organic results, leaving 40% in potential business untouched if you don’t run a PPC campaign (percentages vary based on search engine). There is also research showing that both PPC and organic results boost a brand’s awareness which then makes it easier for a client to pick your company rather than some other company that they have never heard of before.

The nice thing about PPC is you can measure the Return On Investment (ROI) so that if it doesn’t pay for itself in conversions you can modify it or cancel it immediately.

To determine a starting budget you need to decide how much a conversion is worth in $ profit, how many sales leads you can handle, your conversion (sales) rate and how many conversions you want.

Number Conversions = sales leads per day x % conversion x 20 days in month

PPC Budget Maximum = $Profit per conversion x Number conversions

PPC Profit = Total Profit from PPC – Total Budget for PPC

Assuming $1000 net profit per conversion, you can handle three sales lead per day and 33% of your sales leads convert into sales. Assuming a 20 day month that gives a net profit of $20,000 per month that can be spent on PPC.

Number of conversions = 3 x 33% x 20 = 20

PPC Budget Maximum = $1,000 x 20 = $20,000

If you then pay $5,000 for one month’s PPC for 60 leads that result in 20 conversions (at 33% converting) you’re running at $15,000 profit on your marketing outlay – 300% ROI.

PPC Profit = $20,000 – $5,000 = $15,000

Your numbers will no doubt be different and you may only be able to get firm numbers after a month or two of running a PPC campaign, especially if your sales cycle is long. Also it takes around one – two months to weed out underperforming keywords and to start tweaking the campaign for the highest ROI.