Make Money Online MARKETING Online Marketing Budget Estimation – How To Calculate It

Online Marketing Budget Estimation – How To Calculate It

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Episode 47 of #DigitalBrunch: How Do You Calculate Your Online Marketing Budget?

#OnlineMarketing #DigitalMarketing #eCommerce

– Number of Clicks = Number of Searches x CTR 
– Budget = Number of Clicks x CPC = Number of Searches x CTR x CPC
– Number of Conversions = Number of Clicks x Conversion Rate
– COCA = Budget / Number of Conversions 
– Number of Clicks = Total Universe x CTR  

A question that I get asked a lot is how do you calculate your online marketing budget and we’ve done a previous video about it. If you haven’t seen it yet I suggest you see if first and then check out this video. And by the way don’t forget to subscribe to the Digital Brunch Youtube channel because we always bring up to date information, practical information and we take your suggestions into account and we try to turn them into future videos, future trainings and so on. So I was telling you that I get this question a lot and I wanted to show you practically how do you calculate your online marketing budget and how do you see what conversions, transactions, leads you could expect from it. Of course it’s not a real-life estimation and it is usually a small difference between what you estimate and expect and what you get in the end. But the more you practice, the better you get at it and the better your estimation is, the closer you will get to this estimation. The easiest way to start this is from the search campaigns. You can for example go to Keyword Planner, to the Keyword Planner in Google Ads and what you will see there is the volume of searches for a certain keyword and the average cost per click for that keyword for a certain location for a certain period of time. Let’s say that for example you want to do a campaign for flower bouquets. You go to Keyword Planner and you see that for example for flower or for a certain type of flower but let’s go for something very simple you see that you get 1000 searches per month and the average CPC (Cost per click) is for example 1 USD. The most common mistake that people do when they want to calculate the budget that they need is to simply multiply the number of monthly searches with the average CPC. This is common mistake but don’t forget that this is a mistake because it would mean that you simply expect all people that search on average during a month for flower bouquests you expect them to click on you. Don’t forget that the average CTR for Google Ads campaigns is 7% so for 1000 searches you will probably get (if you multiply these 2) somewhere around 70 clicks. If you want to know the budget that you need in order to capture all the searches that month with an average CTR it would be 70 clicks multiplied by 1 USD and that will be 70 USD. If you want to be closer with this estimation if you have some Google Ads history in your account instead of this CTR you could get your average CTR in your account. For example usually in the Google Search Ads that I do the CTR is somewhere around 20% (because we are doing very rellevant campaigns but yeah it can be done for search). Then you should multiply 20% with 1000 searches and you will get 200 clicks per month. If you also take into account that your average conversion rate is  for example 1% then from these 70 clicks what you could expect during one month would be somewhere less than a conversion, so it would be 70 clicks multipled by the conversion rate and in this case it would mean less than 1 conversion per month. If we would have 200 clicks and we would multiply it with the conversion rate in our account which is 1% then we would get (the conversion rate multiply by 200 clicks) and we would get 2 conversions. If I want to see whether this is worth it for me so I invested – how much did I invest – 200 USD (was the budget) so the cost per customer acquisition was 200/2 transactions so it was 100 USD the COCA (Customer of Customer Acquisition). Of course it’s most important to measure your historical data, to have your exact conversion rate in your account because of course it could be even higher than 1% or it could be lower. 1% is the market average in this part of Eastern Europe where I work but for example in the US it’s 2.5%. So of course it matters even more. So this is how you calculate your Google Ads budget and you can see how much you will spend for a visitor and whether it is worth it and so on.

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