How much will you need to spend on Paid Search Engine Marketing

I often receive question like how much will money be required to market a product or service on Google or Bing paid search. Let me try to answer this in very simple form or DIY method.

Please note that all the information is based on historical data and is much generalised interpretation but it is good enough to give you a fair idea of how much you will require to spend.

  1. Find out the most specific keywords your client will search your product or service for e.g. if you have a digital marketing agency, the most specific keyword for you will be ‘digital marketing services’
  2. Decide the geography you want to target. It is ideal and recommended to start with most specific geography and then expand based on ROI or expansion of your business.
  3. Google for ‘AdWords keyword planner tool’ and/or click on this link, Pls note you will need to login using Gmail account. It is Free and easy.
  4. Once you are logged in to AdWords Dashboard, click on Tool and Keyword Planner from the drop down.How much will you need to spend on Paid Search Engine Marketing1
  5. Click on ‘Get Search Volume Data and Trends’How much will you need to spend on Paid Search Engine Marketing2
  6. Add your keyword to the keyword box and select the target Geo/location and click on get search volumeHow much will you need to spend on Paid Search Engine Marketing3
  7. You will get suggestions and projections like followingHow much will you need to spend on Paid Search Engine Marketing4
  8. you have got a suggested bid of Rs. 172. Hence , roughly, each click on your ad will cost you around Rs. 172. ( The actual cost on click may be less, but let us take this as our base figure)

    Let us assume that the conversion rate (click to lead) would be around 10%, very optimistic though, so for every 10 clicks you will get a Lead.                                      Cost of lead = 172 X 10 = Rs. 1720

  9. Further Assume that out of 10 Leads you will get 1  sale i.e. 10 % Sales conversion Rate. Adword spend on one Sale = 1720 X 10 = Rs. 17200
  10. So we can conclude that for every sale you make you will spend Rs. 17,200 on AdWords. This figure will give a fair idea to take the decision.Pls Note, this cost is indicative and depending upon optimisation it can vary.  Most of the time the calculated figure will seem monstrous but we have to take into account the Customer life cycle value, Ticket size of Sale, repeat purchases ( self and referrals) etc. while taking the decision. These factors will lower down the Cost per sale and justify the spend in longer run.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s