Search marketing pays off in multiple ways, from boosting sales and market share to enhancing the impact of your other marketing investments. Which is why setting aside ample budget to achieve your goals is critical to your success. Establishing your budget is dependent upon many factors, such as your vertical, keyword competition, the time of year and overall goals. It’s also dependent upon your other marketing investments and where search marketing fits into the mix.

So where do you start? Here are four questions to ask yourself when setting your budget.

1. What is your marketing goal?

Always start with your business goal in mind. Are you launching a new product or trying to boost sales of an existing product? Are you trying to build brand awareness? Whatever the goal, make sure you have a crystal-clear idea of what you’re trying to accomplish, since everything you do needs to propel this goal forward.

For example, if you’re trying to drive traffic to your website, you’ll need to know how many clicks you’re getting each month and how many more you’ll need to meet your goal. In this case, you can reverse-engineer a starting budget. Simply multiply the desired monthly clicks by the cost per click (CPC) to determine your monthly budget. For instance, if you want 1,000 clicks per month and the CPC is $1.50, then your monthly budget is $1,500.

On the other hand, if you have a monthly sales target but you don’t know how many clicks you need, you’ll need to base your budget on estimates for average cost per sale and conversion rates. Be as flexible as you can. If your campaigns are returning at a highly profitable rate, increasing budget will quickly result in greater return.

2. How does paid search fit into your overall marketing strategy?

Paid search is an important part of the modern marketing mix. But what percentage of your overall marketing budget should you devote to it? The best starting point is to understand the marketing attribution — which marketing channels are driving results.

Attribution is not always a straightforward process, as oftentimes multiple marketing channels play a role in closing a sale. In a study with Pepperjam, Bing Ads served as the first touchpoint. In 28% of the sales, Bing closed the sale. But in 22% of the sales, the closer was an affiliate channel and 17% of the time the sale was closed through organic search. While 72% of the time other channels closed the sale, search still played a role as the introducer.

It’s also important to note that the role of paid search also enhances the effectiveness of other channels by bridging gaps in the customer decision journey. For example, Marin Software found that customers who clicked both search and social ads were not only more likely to buy, they were more likely to spend more. Likewise, this Big Game study found that search volume spikes for up to 72 hours from when a TV commercial is aired.

3. What are your constraints?

Budget restriction is the number-one obstacle for small businesses trying to market themselves online. Pay-per-click (PPC) is a way to “buy visits,” and when done properly, it can be cost effective. Since advertisers only pay when users click on your ads, paid search ad setup is free.

That said, advertisers still need to set aside budget for ad spend. Understanding what the average cost-per-click (CPC) is for a given vertical helps you define a monthly ad budget. Step one when beginning a new PPC campaign is understand what budgetary constraints your business has for the channel. Try using this keyword planner to get a better understanding of what your CPC will be. Then identify the number of website visits you hope to get through PPC. This simple formula will help you set a monthly budget: (estimated CPC) x (website sessions) = Cost.

4. What is the time of year?

Take time to review the history of ad performance and previous budgets to get a better idea of how much you should allocate. This is especially important if you’re advertising during a peak retail season, such as the holidays, when you’ll be competing more heavily with other brands.

While there’s no magic formula for building your budget, asking these questions can get you off to a good start. For more information, be sure to check out the full ebook, The growth marketer’s guide to search.

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