As you were learning how to create campaigns, you came across a statement which says that the success of a campaign depends on the budget. Yes, this is one area that entrepreneurs have issues with. Most of them do not know how much money they should allocate to pay-per-click advertising.
Of course, there is no straight answer to it. It all depends on many factors including the projections, the mathematics as well as assumptions you make. Here are some guidelines on determining the budget for your campaigns.
Using a lead generation formula
These are simple formulae designed to help you reach your objective. The most common ones are:
Number of customers =average sales
The number of leads equals to the number of customers divided by the conversion rate.
In equation 1, to get $1milion in revenue, you need about 84 customers so if your team closes one sale after 5 leads it gives 20%. So you need 417 leads to convert 84 customers. If about 5% of the paid advertising traffic fills the form but only for one of them becomes a customer, to get 8333.33 visits we calculate 416/5% conversion rate. To simplify it, you need 8,334 visitors to be able to generate 417 leads. They will result in 84 customers and give you $ 1million.
Note that the paid advertising may only be used if the market tactics you have employed are not achieving the revenue objective. But they should be used to help to boost and supplement other marketing efforts. It assumes that you already have other forms of social media marketing in place. These forms include SEO, social media marketing and email marketing in place.
Watching your competitor
What your competitor is doing is equally important. It can help you determine how much money to allocate to your campaign budget; spy on their paid advertisements by using such software like SEMRush, and SpyFu. Just paste the competitor’s URL into the software, and it will give your competitors Google Adwords activity. The software will also give you the estimated amount your competitor spends on ads. To get the best results, choose to analyze at least 5 competitors. It will help you decide how much money you will allocate to your campaign.
The person to execute the strategy
The person you will hire to implement this strategy may in a way help you determine the budget. They should work hard to measure the effort of what they are doing. They should collect the data you need to do the math and help you determine how much money you need to spend.
— Your Online Convo (@YourOnlineConvo) March 8, 2019