Joel Bondorowsky — How to Justify the Budget You Need for New Campaigns
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These slides were presented during the SEMrush webinar "Advanced PPC #5: How to Justify the Budget You Need for New Campaigns". You can watch the video or read the transcript here >>> https://www.semrush.com/webinars/advanced-ppc-5-how-to-justify-the-budget-you-need-for-new-campaigns/
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Joel Bondorowsky — How to Justify the Budget You Need for New Campaigns
- 2. The Problem Profitable PPC Campaigns cost time and money The person giving you this money is nervous The amount you need is hard to define (thus increasing their anxiety)
- 3. So what’s this Money For? Stats to Optimize Campaigns so that you consistently Return More than you Spend. Campaign Optimization is Traffic you buy brings the Stats Success comes from using the Stats for Campaign Optimization Ads Targeting Proper Bids Improving the Sales Funnel
- 4. Grew up in Orlando Florida Was one of Google AdWords first 300 users Somehow ended up living in the North of Brazil for 6 years Moved to Israel in 2009 Fell in love with PPC while working at Wix.com Briefly Worked at SimilarWeb Founded Quality Score late 2012 About Me Launch
- 6. What are they? Data Load for Campaign Optimization Data Cost Growth VS Risk
- 7. Data Load How Heavy is your Targeting? Traffic Keywords Fewer Stats Fewer StatsFewer Stats Fewer StatsFewer Stats
- 9. Growth x Risk Larger Budget • More Statics • Greater Risk • Faster Growth
- 10. Growth x Risk Smaller Budget • Less Statics • Lower Risk • Slower Growth
- 11. Your Starting Budget Budget = ¼ R Data Lead = L Data Cost = C Risk Factor = R ( L + C )
- 13. Stages of a PPC Campaign
- 14. The Stages Understand how far you are from the Goal Gage how quickly you can close the gap Optimize towards 100% ROI Scale campaigns to maximum potential Optimize for Profit
- 15. Benchmark Period
- 16. Benchmark Period 10% of Budget Benchmark CPC`s Benchmark CVR ROI ROI = (Sales Value) x CVR________________ CPC
- 17. What it looks like $2000 spend ROI = (Sales Value) x CVR________________ CPC 0.06% = ($100)________________ $5 Bottom Line -$1,880 x 0.3 $100 Sale Value CVR = 0.3% Learn Essential Metrics such as: CPC = $5
- 20. Optimization Period Conversion Rates Campaign Targeting Funnel Conversion Optimization Cost per Clicks Better Ads Though A/B Testing Better Campaign Targeting
- 21. Optimization Period Example Week 2 Week 3Week 1Benchmark Week 4 ROICVR CPC Week 5 Profit $2000 $2000 $2000 $2000 $2000 $4.50 $4.00 $2.00 $2.00 $2.00 0.5% 0.7% 1% 1.5% 2% 11% 17% 50% 75% 100% $5.00 0.3% 6% -$1,880 -$1,778 -$1,650 -$1,000 -$500 $0 Spend $2000
- 22. Growth Period
- 23. Growth Period Grow PPC Campaigns to Maximum Potential with Nutural ROI
- 24. Growth Period Example Week 6 ROI SpendCPC Profit $2.00 $4k $0 $10k $2.5 $20k $2.60 $20k $2.20 Week 7 Week 8 Week 9 $0 $0 $0 Optimization (Week 5) $2k $2.00 100% $0 CVR 2% 2% 2.5% 2.2% 2.6%
- 25. Profit Period
- 26. Profit Period Find your Optimal ROI Lower Bids Lower CPA (Cost Per Acquisition) ROI Sales Volume will Drop Lower CPC + Profits will Increase Profit drops Optimal ROI is found when
- 27. Profit Period Example Week 11 ROI ProfitCPC Week 12 Week 13 Week 14Week 10 $0 $2.60 100% Revenue 20k Week 15 $720 $2.50 104% 18k $2,7k $2.20 118% 15k $4,5k $1.80 144% 10k $4,7k $1.60 162% 7,5k $3,6k $1.50 173% 5k Growth (Week 9) $3k $1.40 186% 3.5k
- 29. Ask for the right starting by understanding the dynamics of the factors Data Load Data Cost Risk Factor Conclusion Reduce Risk Anxiety by setting expectations through the campaign life cycle Benchmark Period Growth Period Profit Period
Editor's Notes
- Success comes from using the stats for campaing optimization. campaing optimization is: ads, targetting proper bidsbids improving the sales funnel
- If your budget is $20,000 you should set aside 10% of it, $2000 as your benchmark period. Let’s assume for this example, that the value of a sale is $100. Using this $2,000, we will understand the essential metrics that determine your ROI which are CVR and CPC . For this example, they are 0.3% and $5.00 Next we will plug them into the formula to determine ROI from these metrics. (click, show the formula) Sales value, we already said is $100 (show sales value) Then, if we multiply it by our conversrate which is .3% and divide it by the CPC we’ve gotten, which is $5, we’ll calculate our ROI which is only 6% Bottom Line You loose $1880
- Improve Conversion Rates (CVR) Campaign Targeting Funnel Conversion Optimization Cost per clicks Better Ads through A/B testing Better Campaing Trgetting
- For the benchark period, we spent $2000, found that our CVR was .3% with $5 clicks which produced a 6% Roi. We lost $1880 to understand where our stats fell. Then we entered the optimization period which lasted another 5 weeks. Week is just an example. The more aggressive your budget, the less time needed. Could be days. The first week, we improved our CVR to .5%, lowered CPCs to $4.50 which produced an 11.1% ROI and lost $1178. For week’s 2 through 4 we continued to optimize. ROI increased weeky b week. Finally on week 5, value per click finaly met cost per click and we were ROI nutural.
- Grow PPC campaigns to maximum potential with natural ROI
- Start with Optimization Pierod Slide – Animate to growth Period which shows last week of Optimization After weeks of optimization and thousands of dollars lost, we reached an important milestone. We managed to optimize our campaings to where our ROI is 100%. (#show week 5) Now that our campaigns are no longer a financial drain, we can uncap our budgets and grow. For the first week of the growth period we manage to spend #$4000 (show spend with the same #conversion rate and cost per #click as the previous week. Because ROI stays at 100%, our sales volume increases along with spend. The Second and Third weeks show continue growth in spend. #(show Week 2 and 3 columns, all lines bu CVR and CPCs) However, there is a changing trend. #CPC’s go up, along with #conversion rates. The reason is simple. Expensive clicks are not your enemy. The opposite. IF you’re campaings are optimized for the right traffic, the clicks that tare the most expensive will be the most valuble ones. Now that we’re realizing that, we’re optimizing for it. Finally, when week four comes along, we find htat we aren’t able to grow anymore with these campaings the way they are. Our campaings have neared their max potential. It is at this point, with the right adjustments we can move on to the profit phase where we will maximize our returns from this investment.
- Now that our campaign and sales funnel is well optimized, the way to increase ROI is by # gradually cutting bids which will lead to lower cost per clicks. Thus we will achieve # lower CPA’s. …. #ROI will go up, and so will # profit. However, #sales volume will start to drop so as will revenue. Eventually, #profits will start to decrease. When you reach that point, you’ve found your #optimal ROI for maximum profit.
- Now I will show you an example. #The last week of the growth period found us at #100% ROI at a large scale. We managed to both spend and earn $20,000. #First week of the profit period we lowered bids to where our average# cost per click drops from $2.60 to $2.50. Because CVR remains static, our #ROI and profits start to go up. Consequently, our ad spend goes down, as does our #revenue which drops at a slowed rate. We manage to make #$720 in this period. The same trend continues. Proffit rises to $2727 for the second week and #$4,444 for the third. On the fourth week we find ourselves earning about $4,700 from $12,188 in ad spend at an ROI of 162%. So we continue to cut bids. On the fifth week we find ourselves at #173% ROI, but something else happened. #Profit goes down! Why, because our salves volume dropped too low. (show entire graph) So we have found our #optimal (make an optimal ROI label. Roi which is the point where Profit starts go drop even though ROI goes up.
- Q&A and discussion