Have you ever wondered how much money you should spend on online advertising, like Google ads? Well, we can help you figure that out, and it’s not as simple as guessing.
Imagine you have a goal, like getting a lot of people to visit your website or buy something. You want to know how much money you should spend to make that happen. This is a common question for people who manage online ads.
But here’s the thing: guessing a random number without thinking can cause problems. That’s why we have a better way to help you answer that question and manage your expectations.
Here’s what you’ll learn:
- How to explain your spending estimates.
- How to decide what’s most important to measure.
- Things to think about when making your estimates.
- Where to find information to help you.
Explaining Your Spending Estimates:
Before we start, remember that we’re making educated guesses, not exact numbers. Whether you’re telling a client or your boss how much money you need, you should let them know it’s an estimate.
Also, think about why someone is asking this question. Are they planning a budget, looking for investors, or just checking if something is possible? Knowing this helps you give a better answer.
Deciding What’s Most Important to Measure:
Sometimes, the way you answer the question depends on what the person asking wants to achieve. For example, if someone asks, “How much should we spend to be at the top of Google’s search results?” you might need to ask more questions to understand their goals.
They might want to beat a competitor, protect their brand, or just get more people to know about their brand. Each goal might need a different way to measure success. So, it’s important to figure out what’s most important.
Things to Think About:
Once you know what’s important, you can start estimating. Let’s say you want to get a certain number of people to do something on your website. To estimate this, you need to consider:
- How much you’ll spend
- How many people will click on your ad
- How much each click costs
- How many of those people will actually do what you want
You’ll need to use some math to find these numbers. But don’t worry, it’s not too hard.
Where to Find Information:
Ideally, you’d look at past advertising campaigns to help you estimate. But even if you don’t have that, you can use information from similar businesses. You can also find some data from Google and other tools.
Now, let’s see an example of how this works:
Suppose you want 1,000 people to visit your website. Based on your calculations, it might cost you between $30,000 and $50,000 to achieve that.
Here’s how you get these numbers:
- You know that 10% of the people who visit your site will do what you want (CVR = 10%).
- So, to get 1,000 people to do what you want, you need 10,000 people to click on your ad (Clicks = 1,000 / 0.10).
- The cost for each click might be between $3 and $5 (CPC = $3-$5).
- So, your spending could be between $30,000 and $50,000 (Spend = Clicks * CPC).
It might seem a bit simple, but it works well for estimating the basics. If you need more accurate numbers, you can use fancier math or try different advertising methods.
In the end, giving good estimates is important because it helps everyone plan better and understand what to expect from their advertising. So, make sure to communicate well and use the right information to make your estimates.