How to Use Our Google PPC Investment Decision Calculator
Have you ever been faced with the tough question of how much you should spend on Google Adwords. We get asked that question all the time, and decided to build a calculator to help you quickly compute the answer.
Understanding the Inputs
Determining the maximum amount to invest in Google Adwords is crucial for optimizing your advertising efforts. To calculate this, you need to consider several inputs.
- Annual Sales Target: First, your annual sales target plays a significant role in determining your needed investment. A realistic target is essential, and analyzing past sales data can help you set a goal that aligns with your business objectives.
- Average Order Value: Understanding your average order value and the number of clicks it takes to make a sale is crucial. By calculating these metrics, you can estimate the potential revenue generated from your Google ad campaigns.
- Cost Per Click: Cost per click is another input that allows you to determine the maximum amount to invest. By considering the cost per click, you can evaluate the profitability of your campaigns and adjust your investment accordingly. By analyzing these inputs, you can make informed decisions about your Google Adwords investment, maximizing your chances of achieving your sales target and optimizing your return on investment (ROI).
Determining Your Required Investment
- Daily Budget: One of the key reasons you need to know your annual sale revenue target is so you have the information required to set your daily ad spend budget.
- ROI: Advanced ecommerce advertisers can use the integration between their ecommerce system and Google Analytics to set bids based on profitability. This is called value based bidding, and is a key strategy employed to meet and exceed ROI goals
Step-by-Step Guide to Inputting Your Data
Maximize the potential of our calculator by following these simple instructions.
Setting Your Annual Sales Target
While our calculator uses an average order value for a single, composite product, your company will probably have multiple products, and service lines. We recommend you perform this calculation for each of them independently, at least initially.
- Set Realistic Sales Targets: While it is tempting to say you will be able to close every deal, realistically, you don't have unlimited capacity. The only exception to this is the case of purely digital products, such as music, software and ebooks.
- Set Rules to Meet Goals: One of the more powerful of Google Ads is the ability to make automatic bid adjustments based on hitting defined goals. Be careful though, when you get an automated message about it making an automated bid or budget decision, always check on it.
Understanding Average Order Value and Clicks to Sale
Topics to explore: Calculating average order value, Determining the number of clicks it takes to make a sale
- Average Order Value: For the purposes of high-level planning, our calculator is designed to use your AOV. But the calculation can just as easily be used to calculate this investment number for every product or service, using actual value. But your challenge will be to incorporate discounts and rebates.
- Number of Clicks: This information by necessity comes after you've launched your campaigns. Specifically, you need to have made at least 30 sales to determine how many clicks it actually takes for you to make a sale. This is available within Google Adwords Analytics.
Analyzing the Results: Making Strategic Decisions
Although we are Inbound Marketing experts, meaning our goal is to bring traffic to your site via organic traffic, many companies need faster results. That's why the Hubspot Ads Add-On is such a powerful tool for making informed Google Adwords investment decisions.
Most clients start with an annual plan based on a target sales revenue. As Google's AI learns what works for your business, it often is able to far exceed your lead generation and sales expectation.
When this situation arises, it is time to decide whether you can afford to invest more, especially with regards to inventory availability or service delivery capability.
Interpreting the Investment Amount
This calculator is designed with the assumption of using paid advertising to drive 100% of your sales. The focus is to achieve the highest possible ROI, while meeting your sales revenue target. When using it to decide upon investment figures, it is entirely possible to decide to spend more and make more, or conversely, to settle for a lower ROI by spending more competitively within the highly competitive Google Ads market.
Utilizing Expected ROI on Google Adspend
An investment in Google Ads should be viewed as any other investment you're company might make. You may or may not higher ROI opportunities. But this is one of the ones where you will have the clearest visibility in your ROI, in near real-time.
Case Study: Realizing Success through the Calculator
As it happens, this tool was built in response to a real-world ecommerce business in which we were handling their Google Ad-Spend.
Case Study Background and Goals
We actually handled all of this clients digital marketing and sales needs, which made getting the Google Ad-Spend critical to both him and us. It was a challenge arriving at an agreed upon annual sales target as the manufacturing was handled in China, and the transit times varied widely.
This is where it pays to have a responsive advertising system. You don't want to be spending money on Google Ads when you don't have product available. Because the client was 100% on Shopify and Hubspot, as well as a variety of systems that all worked together essentially as a mini ERP, we were able to dial in the Google Ads to hit those profitability targets.
Calculating the Investment and Analyzing the ROI
It is never a good idea to run this type of calculation just once. Google Ads is not a set it and forget exercise. That's why we recommend rerunning it at least monthly. Any longer than that, and you may not really be taking into account the real business environment. Any shorter, and your spend will show up as spikey. Neither situation contributes to achieving optimal Google Ads ROI.
Tips and Tricks to Enhance Your Google PPC Campaign
Unlock the full potential of your advertising efforts with these expert tips and tricks
Optimizing Your Target Sales and Order Value
There are several key, proven strategies to boosting your AOV.
- Sales: Retail is tough. But people love to shop. They love a deal even more. Your ideal setup with regards to sales and discounts is to have a system that feeds these discounts through to your Google Merchant Center Account and ultimately, to your Google Shopping Ads.
- Bundling: One of our favorite strategies for boosting the AOV of clients is using bundles. Bundles can be simple and complex. But they do require a special add-on application to implement.
Pro-Tip: The most powerful one integrates with Amazon - Subscriptions: Just about every type of product or service can make use of subscriptions.. While they do require special applications to implement and they have special considerations as far inventory management, they definitely should be in your bag-of-tricks.
Maximizing Clicks to Sale and Reducing Cost per Click
Topics to explore: Techniques to improve click-through rates, Lowering cost per click through optimization techniques
There will always be pressure to drive down your cost per click and to improve click-through rates.
- User Intent: One of the surest ways to increase your Click-Through Rates while driving down your Cost Per Click is to understand User Intent.
- Quality: Google provides a quality rating you need to make use of. Higher quality can, theoretically, result in lower Cost-Per-Click and increase your Click-Through Rates. You can find both of these numbers in Google Ads reporting. However, improving the numbers can involve many activities outside of Ads.
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