Course 5 Sec. 7: Budgets

What is the formula for determining your daily budget based on cost-per-click?

(Cost-per-click x clicks per day = Daily budget)

Things to consider when analyzing your past efforts:

-Did my channel meet its goals? -Is this channel driving revenue? -Where are my users the most engaged?

Budget strategy for your goals exercise: Let's say Pete's Pizzeria wants to increase pizza sales. He knows that getting new customers can be broken down into three phases: -Build awareness: Let the world know about his delicious pizzas. -Influence consideration: Encourage customers to explore his site. -Driving action: Have customers call and place an order. The further along his customers are within these three phases, the more likely they'll be to buy one of his scrumptious pizzas! Let's take a look at what you might budget for each phase.

1. Build awareness - Building awareness will require a larger budget due to the longer path to conversion and the scale at which you try to reach people. 2. Influence consideration - Influencing consideration is mid funnel and can be accomplished with a small, medium, and large ad budget. With a medium length path to conversion, a medium to large budget is preferred so you can reach a wider group of people and begin moving them to action. 3. Driving action - Driving action or sales is at the bottom of the marketing funnel where you typically have a small group of your target audience. You can meet all of your action goals with a small, medium, or large daily budget.

Four tips to help determine your daily budget:

1. Calculate based on your monthly budget 2. Calculate based on your average cost-per-click 3. Find your campaign's recommended budget 4. Check your ad delivery method

What are some other common types of marketing that you will need to budget for?

1. Content marketing 2. Social media marketing 3. Email marketing 4. Traditional marketing (newspapers, TV, radio) Remember that search and display ads are just one part of the overall marketing budget. Content marketing platform Percolate surveyed 300 enterprises and found that on average, these enterprises spent 12% of their marketing budgets on search adverting and 13% on display advertising. Budgeting 25% for search and display is a good ballpark figure, but keep in mind that this percentage could vary wildly depending on certain industries, goals, or other budgeting needs.

What is the suggested marketing budget for new and established companies? of

1. New companies (12%-20% of gross revenue spent on marketing): Newer companies (one to five years old) should expect to spend more on marketing because they need to establish themselves; these companies should expect to spend around 12-20% of their gross revenue on marketing. -For example, if a two-year-old company made $100,000 in Q2, they might expect to spend $12,000-$20,000 on marketing. 2. Established companies (6%-12% of gross revenue spent on marketing): Companies that are already established (five years old or more) can spend less on marketing; these companies should expect to spend around 6-12% of their gross revenue on marketing. -For example, if a nine-year-old company made $100,000 in Q2, they might expect to spend $6,000-$12,000 on marketing.

What are the key concepts that ensure your budget will get the biggest bang for your buck?

1. Start with a clear direction. Before you decide on your budget, you need to know what your goal is. You need to know specifically what the money you set aside is going towards. 2. Analyze past efforts. Consider your efforts last year, and figure out what channels succeeded. Why were they successful? How can you grow their success? 3. Research industry trends. Looking at your competitors' websites and marketing strategies is free! Do research on the best strategies for your intended purposes, and beat your competitors where they're lacking. 4. Crunch the numbers. Use a calculator and figure out how much you plan on spending by channel. Usually, a large portion (10-50%) of the marketing budget will go towards digital marketing. 5. Use your budget to make the biggest impact. Pay close attention to what you are spending your budget on, and make sure that money is contributing to significant results. Good marketing is consistent, is high-quality, and appeals directly to your audience.

Which factors might dictate how you allocate money for search and display:

1. Your goal: If for example, your goal is brand awareness, you may decide to spend more money on display ads because display ads can reach a large audience. On the other hand, if your goal is generating leads or sales, you might opt to spend more on search ads; because search ads are viewed when someone has made a search query and are actively searching, chances are these people are more likely to take action and become a lead or make a purchase. 2. Budget restrictions: If you have a tight budget, search ads might be a safer bet because it is easier to measure your efforts. Being able to easily measure the effects of search can help justify the cost. 3. Product or service you sell: If you are trying to sell a visually appealing product, using display ads might be more beneficial than a product that isn't visually appealing. Oftentimes visually appealing products are luxury goods. -For example, a display ad showing perfumes might perform better than a display ad showing toilets for sale. On the other hand, if your product or service is something people look for when they have an urgent need, search ads might be more beneficial. For example, if you are a home repairs service, search ads might be more effective for your business because people are actively searching for help. 4. Sales process: Certain products or services might take quite a lot of convincing before customers buy. In this case, retargeting using display ads can prove useful, as these display ads can serve as reminders. -For example, if you are selling diamond rings that cost thousands of dollars, potential customers might search for and look at several rings and not make a decision right away. Then, a company could use retargeting to remind the customer about a ring they viewed. 5. Other marketing efforts: A company might decide to spend less on search or less on display depending on its other marketing efforts. -For example, a company that has a tight budget and a strong social media presence might opt to invest most of its search and display budget into search ads. The company's justification for doing so could be that because social media and display are both visual formats and have the ability to evoke more emotion than search ads, they are happy to lean heavily on social media, which is cheap, and not spend much on display ads.

Why should you analyze your past efforts, and what should you be looking for while doing so?

Analyzing your past efforts will help you decide if specific channels are worth reinvesting in. Diving into your successes and failures will get you in touch with what your audience is looking for.

Canine Apparel now knows that it can spend $25,000 on search and display. How might the search and display budget be best divided between search and display? 1. Canine Apparel should spend 10% on search and 90% on display. 2. Canine Apparel should spend 25% on search and 25% on display. 3. Canine Apparel should spend 40% on search and 60% on display.

Answer: Canine Apparel should spend 40% on search and 60% on display. Explanation: Canine Apparel should spend a good amount of money on both search and display, so a 60/40 split would be best. Although the company has found display ads very effective, Canine Apparel is an e-commerce company and needs its web page to rank highly on the SERP—this is why it's important to also spend a good portion of the budget on search. Remember also that the company's goal is to generate sales; this goal is well-suited to using search.

Now that you know much Canine Apparel will spend on search and display, you need to decide how you will allocate this money. Read the following information, and then decide how to best split the budget. Canine Apparel is focused on driving sales. Recently, the company has found that retargeting with display ads has proved very effective (must be the pugs in hats). 1. Canine Apparel should spend on both display ads and search ads. 2. Canine Apparel should spend on search ads. 3. Canine Apparel should spend on display ads. 4. Canine Apparel should spend on neither search nor display ads.

Answer: Canine Apparel should spend on both display ads and search ads. Explanation: Canine Apparel should spend on search ads because the company's goal is to generate sales. Because search ads are viewed when someone makes a search query, chances are these people are more likely to make a purchase. Canine Apparel should also use display ads. The company has found using display ads for retargeting effective, so they should continue using display ads for retargeting. It also makes sense to spend on display ads because the products are visually appealing.

True or False: If your goal is brand awareness, it's advisable to have a small budget.

Answer: False False. If your goal is brand awareness, it's advisable to have a larger budget. Building brand awareness requires a good-sized budget because you are trying to reach many people.

Now that you're more familiar with budgets, let's get back to that small business. Their Google Ads account has been running for about a month, and while your client is happy with the results, they've asked you to reduce the budget by 50% and focus on raising awareness of their brand. Does this sound like a good strategy? Choose the best answer from the options below. 1. Yes. It's actually most effective to build brand awareness with a small budget. 2. No. You should never lower your budget with Google Ads or your ads will stop showing entirely. 3. No. If the client wants to drive awareness, they'll need a large budget due to the scale of users they're trying to reach.

Answer: No. If the client wants to drive awareness, they'll need a large budget due to the scale of users they're trying to reach. If the client wants to build awareness, they'll likely need to stick with a higher budget. If they want to focus on a goal like driving action, a smaller budget could help them achieve that goal.

True or False? In addition to calculating a daily budget based on a monthly budget, you can also calculate your budget based on your average cost-per-click.

Answer: True This is true. If your goal is to get a certain number of clicks a day, you can budget accordingly.

Zest Space is a three-year-old company. The company's gross revenue for Q3 was $50,000. -How much should Zest Space spend on marketing?

Because it's a new company, Zest Space should expect to spend around 12-20% on marketing. $7,500 is 15% of $50,000, so this is a good budget choice. $1,000 and $3,000 would be too little, and $15,000 would be too much.

Additional Notes:

Bigger companies will most likely have a monthly marketing budget. This budget might have a shelf life; for example, the money needs to be spent by the end of the fiscal year. However, often the budget is not rigid, and if the money isn't spent that month, it can be spent the following month. Budgets are also at the whim of marketing goals. For example, if the goal is to promote a new product, the marketing budget might not be spent until that product is ready. Once the product is ready, the amount of money to spend on search and display ads might increase. Different campaign goals may result in different budgeting decisions. For example, if a company's goal is to build brand awareness, it will likely have a large budget for this. A small budget for brand awareness might not be very effective because brand awareness is all about reaching a large group of people, which is hard to do with a small budget.

Explain the tip to calculate based on your average cost-per-click:

Calculate based on your average cost-per-click You can choose a daily budget for each campaign based on your advertising goals. For example, let's say your cost-per-click is $0.10 on average, and you'd like around 500 clicks per day. You might budget $50 per day. Using this example, here's how you'd figure out your daily budget: $0.10 x 500 = $50 per day (cost-per-click x clicks per day = Daily budget)

Explain the tip to find your campaign's recommended budget:

Google Ads shows recommended budgets for campaigns that repeatedly meet their daily budget but have the potential to earn more clicks and impressions. You can use these recommendations to estimate how a new budget may improve the visibility of your campaign's ads. The recommendations are based on the following factors: * Recent campaign performance * Current campaign budget * Keyword list * Campaign targeting settings Note: Google Ads won't display a recommended daily budget if you rarely meet your daily budget, or if your campaign has limited data. If you don't see a recommended budget, and you know your ads aren't being shown as often as they could because your budget is limited, you might want to consider raising your budget to an amount that you're comfortable with.

Explain the tip to calculate based on your monthly budget:

If you're used to working with a monthly advertising budget, you can calculate the amount you might budget per day by dividing your monthly budget by 30.4 - the average number of days per month. For example, let's say you normally spend $1,450 per month on advertising. To figure out your daily budget, you'd divide $1,450 by 30.4 and would get a daily budget of $48. Note: Due to changes in traffic, Google Ads allows up to 20% more clicks in a day than the budget specifies. However, in any given month, Google Ads never charges more than the average daily budget amount multiplied by 30.4.

Example: In the last lesson, you figured out that Zest Space should spend $7,500 on marketing for the year. If Zest Space decided to spend 25% of its $7,500 on search and display advertising, that would make an annual marketing budget of $1,875 for search and display.

Let's do the math to figure out the daily budget: 1. Zest Space wants to spend $1,875 on paid ads (search and display) for the year 2. Divide $1,875 by 12 to get a monthly budget of $156.25. 3. Find the average daily spending by dividing $156.25 by 30.4. The result is a daily spending budget of $5.14. In reality, it's unlikely that Zest Space will be running ads every day of the year. Zest Space might choose to run ads only on weekdays, because that's proved to be more effective. Or, the company might only run a campaign several months out of the year, which would mean that it could spend much more that $5.14 a day and still meet its budget.

What do you need to do once you've budgeted for your overall marketing budget?

Once you've decided on your overall marketing budget, you need to consider how much you will spend on search and display advertising. To do this, you need to consider all of your types of marketing.

Imagine you are a marketer for Canine Apparel, an e-commerce dog clothing company. Canine Apparel has an annual marketing budget of $100,000. What amount would you recommend to spend on search and display advertising?

Spending 25% of the marketing budget, or $25,000, on search and display ads would probably be a safe bet for Canine Apparel. Spending $75,000 would mean that there would be very little budget left over for other forms of marketing. Spending $10,000 or less would mean that Canine Apparel isn't investing in search and display as much as it could be.

Imagine you're creating an Google Ads account for a new small business. What's the best strategy to set an initial budget?

Start small and after a couple of weeks, invest more in the areas that drive your business.

Definition: Gross revenue

This is the total amount of money that customers of a company pay for the company's products or services. Companies might talk about their annual gross revenue, or quarterly gross revenue. -For example, a company's gross revenue for Q2 might be $100,000. "Q2" stands for the second quarter, or the second three-month period on a company's financial calendar. Once you know the gross revenue for a set period of time, you can roughly calculate how much you should be spending on marketing.

What is the accelerated delivery method?

This type of deliver method is more like jet fuel - it uses your budget more quickly. Accelerated delivery is ideal for advertisers who want to show results more quickly.

What is the standard delivery method?

This type of delivery method is like a slow-burning candle - it spreads your budget throughout the day.

Canine Apparel's annual search and display budget is $25,000. What will be its average daily spend on ads?

To calculate the average daily spend, divide the annual budget by 12 to get a monthly budget ($25,000 ÷ 12 = $2,083.33). Then divide that number by the average number of days in a month (30.4) to get a daily spend of about $69.

How do you figure our your daily spending?

To figure out your daily spending, you can take your monthly marketing budget and divide it by 30.4, which is the average number of days in the month.

Explain budgeting for search and display campaigns:

When using Google Ads, it's also important to figure out how much you can spend on your campaign daily, because this is how Google makes sure it doesn't go over your budget.

Explain the tip to check your ad delivery method:

When your average daily budget is reached, your ads will typically stop showing for that day. You'll want to consider your campaign's ad delivery method, which determines how quickly your ads are shown and how long your budget lasts during a given day, when setting your daily budget. The "Standard" delivery method is like a slow-burning candle - it spreads your budget throughout the day. The "Accelerated" delivery method is more like jet fuel - it uses your budget more quickly. Accelerated delivery is ideal for advertisers who want to show results more quickly.

Why is it important to start with a clear direction and pick a goal before deciding on your budget?

Without goals, your marketing efforts will be unclear. You need to know what your budget is going to cover.