Setting a PPC budget for your B2B organization is the first step in a successful advertising.
Knowing how much of your marketing budget to spend on PPC advertising (with Google Ads, Bing Ads, etc.) is pretty much an exact science. I’m hedging with “pretty much” because the ad platforms operate as an auction and not as a straight up inputs for outputs model so there is a little wiggle room involved.
When you’re evaluating your B2B ppc budget you’ll be starting at one of two points. Point 1 is if you’ve already been running ads and you have historical data to work with. Point 2 is if you’re starting from scratch.
Jump to Point 1: I already run PPC ads and want to double check my budget.
Jump to Point 2: I’m starting from scratch and want to set a PPC budget.
Setting or double checking a PPC budget with historical campaign data
This is Point 1- you’re already running ads and you’d like to either reset or double check your PPC budget.
Because so much of B2B PPC advertising happens on Google, the examples given will look through that lens. So, start by logging in to Google Ads, click the Reports button, select predefined Reports > Time > Year.
Then, add a new column to your report for Search Lost IS (Budget). If your ad campaigns are regularly managed and optimized, analyzing this information will yield the percentage of time your ads were not shown due to insufficient budget. Check out this Google Ads help article if you’re not familiar with the metric.
The outcome of your Lost Impression Shares (Budget) reporting and analysis will give one of the following outcomes:
- The percentages in the Search Lost IS (Budget) column are zero / low
- The percentages in this column are significant: 20% – 25% or greater
Assuming your campaigns are well optimized, the zero / very low number outcome means that you will be unable to spend additional budget because you are already meeting demand for your keywords. If your IS Lost metric is somewhere between 10-20% you may consider increasing your budget proportionally to capture the demand you’re not currently addressing.
If the report yields significant percentages of lost impression share and your campaigns are otherwise optimized increasing your spend will more than likely increase the number of new leads you capture.
It’s been caveated several times but increasing spend into campaigns that are not optimized is not the best course of action. Do this only if you’re certain you’re already maximizing results at your current spend.
How to set a B2B PPC budget from scratch
Setting a PPC budget from scratch requires slightly more effort than modulating an existing budget but it’s not tough by any means.
To start, sign up or log in for a Google Ads account and navigate to the Keyword Planner which you’ll find in the Tools and Settings menu under “Planning.” You need to create a list of keywords and their associated costs as the first step in your PPC budgeting exercise.
From the Keyword Planning menu, you can either use the “Discover new keywords wizard” to help identify on which terms you want ads to run or, if you already have a list of keywords, you can select “Get search volume and forecasts” to generate the cost data you need by pasting in your list of keywords. Once complete, you’ll have an output like this:
Couple of notes on the above:
- You can change your targeting from “United States” to the geography you want to target. Your geo targeting will change the estimated costs.
- You should have more than 1 keyword in your plan. For ease of the example, we’re just using “accounting software.”
How to Calculate your PPC Budget with Forecast Data
Now, it’s time for a little math OR you can click to see how to use Google’s forecast tool and avoid the math. You need to calculate the following values to establish a solid budget:
- Required Traffic = Quantity New Customers to Hit Your Goal / Conversion Rate
(Notes: for Quantity New Customers to Hit Your Goal, be thinking in terms of average contract value. The average conversion rate will vary based on industry but for B2B organizations I like to use 2.65% as a conservative estimate.)
Next, you’ll need to pair your Required Traffic number with high and low average Cost per Click which yields your estimated spend.
Total your “Top of page bid (low range)” and divide by the number of keywords to establish an average. Do the same for “Top of page bid (high range).” Then calculate the following:
- Required Traffic x Average of Top of Page bid (low range)
- Required Traffic x Average of Top of Page bid (high range)
This generates both a high/low range for your budget. In general, I would gravitate towards the higher number. You can always elect to not spend budget if there is a different use for it and it’s a little tougher to go back and ask for more money mid-cycle.
Use Google’s Forecast Tool to Establish a PPC Budget
If math isn’t your strong suit, you can also use Google’s Forecast tool to establish a PPC budget. You will need to go through the Keyword Planner wizard and create a Plan. Once you do, you’re able to modulate the different variables to establish your PPC budget. Keep in mind that the forecast tool is giving you a monthly budget. You’d simply need to multiply by 12 for an annual estimate spend.
Wrapping up how to set a B2B PPC budget
That’s all there is to it! Whether you’re basing your PPC budget off of historical performance or starting from scratch, these processes will allow you to set a PPC budget with ease.
