You have to consider paying an investment an investment, since there is a risk to gain and a risk to lose. If you know what you are doing or hire someone who knows what they are doing, then the risk to gain is substantially higher than the risk to lose. Still, you have to know what you can afford to invest and set your budget before you even get started with PPC.
Basic Financial Restraints
Most people have limits on what they can afford to spend on PPC simply because they have a budget they have to keep. This means you have to first determine what you can afford to invest on PPC in terms of your total marketing budget for this business venture. If you are throwing everything you have for online marketing into PPC, then this is simply a matter of determining what your overall budget is.
If you are using PPC as well as some other paid sources of advertising, then you will have to consider the overall budget then keep reading to determine how much of that overall marketing budget you can afford to throw at your PPC campaigns. From there you can break it down to how much should be sent on different keywords for maximum benefits in the end.
Never invest your mortgage money on PPC. This is not an online casino. There are no guarantees that your efforts will lead to sales.
Understanding Conversion Rates
Occasionally, your data analysis should help you come to a figure known as your conversion rate. This is basically the number of clicks you need to come through to your site in order to result in a sale. This is not a strict formula where you can count on making a sale every time a certain number of people give you a click. This is just an analysis figure that basically says "in general, your site delivers one sale for every twenty clicks received."
Once you know the conversion rate for your website, you know about how many clicks you need to pay for in order to get a sale. Again, it does not work like clockwork, but it gives you something to go off when determining how many bids you need to pay for to get the sales you want.
This is important because you can figure out what it would cost at different bid rates to get those clicks. You can then determine if you can afford to tackle specific keywords right now or not. If bid prices are high for a particular keyword, you simply may be unable to get the clicks you need within your limited budget. In that case you may target some less competitive keywords to get started then tackle those higher priced bids when you start making sales on your website.
Putting it All Together
You should never just blindly start bidding on keywords. PPC is a great way to get instant exposure for your website and bring in some sales while organic SEO builds steam, but you can also lose money if you do not know exactly what you are doing. It is important to consistently track the results and make changes to your PPC campaign as needed. Never go beyond what you can afford in your budget, even if that means you have to start out slower than you would like.