Makin’ it Rain in SEM: A Better Approach to Budget-Setting

No one enjoys the mundane task of setting a budget. Seriously. Take a moment to think back to the last time you sought to manage your finances. Did you say to yourself: “Oh happy day! I’ve earned the chance to crunch numbers and make sure that I have enough money this month!” I’m willing to bet my own budget that you didn’t say that as you probably fail to find satisfaction in such a chore. Despite the downpour of dollar-induced depression it causes, we all need at least some form of a budget. This provides a guide for how much of our hard-earned dough we can spend on life’s essentials – shelter, transportation, food, clothing (I say this one is optional; society does not), etc. – as well as those things we truly need, like happy-hour drinks, Netflix subscriptions, vacations and burritos.

In an eerily similar light, the mighty budget carries an even heavier burden for most small-business (SMB) owners and managers. Whether for general operations, payroll, inventory/operations, and/or marketing expenses, a budget helps to ensure that a firm turns a profit, or at least stays afloat and does not end up sinking into the depths of the failure toilet. Likewise, opting to enhance your business’s online presence, as well as your overall sales/leads, via Search Engine Marketing (SEM) or Pay-Per-Click (PPC) Advertising, will require you to set an Ad Spend budget. Luckily for most companies, especially SMBs, teaming up with an experienced search agency (cough, cough, TargetClick) can help you decide just how much money you should allocate towards SEM in Google and Bing. And, if it’s worth a damn, an agency may also create and manage a campaign for you that provides a positive return on your investment (see above coughing fit for a company that can do this).

Let’s say you have in fact teamed up with a stellar SEM agency. The first question you will want answered – an inquisition that I receive more often than the rate at which I receive date invitations from the ladies – is probably: “How much money should I spend on PPC this month?”

AS - SEM Budget MemeUnfortunately, if your request is accompanied with close to zero insight about your company, your current online/offline marketing efforts and your SEM expectations, the answer you receive will most likely take on some variation of the elusive phrase, “that depends.” Just like you wouldn’t close your eyes and “make it rain” with your personal budget, you should not opt to blindly spend money on search advertising either. Doing so is not only a bad business decision, but it is also unethical for your agency to implement such a campaign. Speaking on behalf of your best interests, as well as the sanity of PPC professionals everywhere, here are a few questions that you should ask yourself and answer before requesting an SEM budget recommendation:

1) What are your overriding goals for the SEM Campaign? Would you like to see more sales from your e-commerce website? Is a boost in leads and phone calls that’s on your mind? What about a jump in foot traffic to your brick-and-mortar store – does that sound nice? Alternatively, do you wish to drive interested users to your website, with the expectation that they will engage with your brand on a more meaningful level? Or, perhaps you’d like to attack the gigantic gorilla goal: all of the above? Simply put, each of the previously mentioned objectives, as well as any others you may hope to accomplish, will likely require different Ad Spend amounts. For example, merely directing traffic to your site will come a lot cheaper than generating hard sales. Rest assured that the “all of the above” answer to my initial question will require the largest budget of all. By outlining your goals for an SEM campaign, you will find yourself one step closer to attaining an apt target Ad Spend for achieving those ends.

2) What industry and/or sub-industry do you operate in? In other words, what type(s) of good(s)/service(s) do you sell/promote? Because search volume and competitiveness differs by products and product categories, the costs associated with specific keywords and ad types will vary as well. For instance, an e-tailer pushing belly button rings will most certainly require a different budget than a local car dealership. Such disparities are also seen within industries as a car dealer focusing solely on new inventory may end up spending more money than the chop-shop owner down the street famous for used “bargain buggies.” Consider what you would like to sell/promote via SEM, as well as what tactics your competitors may have already implemented. From there, you and your agency can make a much more educated decision about a monthly campaign budget.

3) Where is your business/operation located? Where do the users in which you would like to target reside? Geographic areas vary by population and other demographic factors, as well as market needs/wants, interests/trends and competitiveness. Consequently, different locations will retain dissimilar SEM costs. Similarly, targeting a small 5-10 mile radius around your business will carry a lower price tag than an attempt at advertising to an entire Designated Market Area, state and/or region. Don’t believe me? Think about the last time you placed a television and/or radio media buy. Did you broadcast your message to the entire state within which you operate? When it comes to geographic targeting, follow this trusty rule of thumb: the larger and more diverse the area at which you’d like to focus on, the deeper the pockets you better have.

AS - make it rain semWhether you like it or not, the chore of budget-setting is here to stay, especially when the time comes to plan and implement an SEM campaign for your business. However, rather than shirking at the task and throwing your money around like an ape at a “gentleman’s” club, opt for the smart approach to spending money on search advertising. Take a hard look at your Online Marketing goals/objectives, know your industry and choose a specific geographic location to target with your Campaign. Considering these simple, yet often overlooked, factors will not only help you set an adequate SEM budget capable of boosting your monthly profits, it will also ensure that you have enough money left over to celebrate your success with drinks at happy-hour and a tasty burrito.

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