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B2C PPC: Going Beyond the Acronyms for Better Budgeting

Pay-per-click (PPC) is a smart go-to marketing strategy for many B2C businesses, especially ecommerce businesses. However, with more competition entering the scene, PPC costs are climbing. This competition means it’s even harder for businesses to score quality PPC clicks.

As PPC advertisers, we want to ensure our paid search campaigns are worth the investment. Return on investment (ROI) is the best–and hardest–way for you to prove PPC improves your bottom line.

The most successful campaigns with high ROI start with one thing: smart budgeting.

The Challenges of PPC

PPC is pretty straightforward on its face: users click on your ad, find an item they like, and make a purchase.

Unfortunately for many ecommerce companies, reality isn’t so simple.

B2C businesses are often in a competitive, if not saturated, market where it’s tough to stand out. There are a few big players in the industry which spend a lot of money on their digital marketing campaigns in an effort to crowd out the competition. Unless you’ve got some brand recognition, it’s hard to make effective use of your marketing dollars. How do you know where to spend your money when it comes to paid search advertising?

PPC can’t work in a vacuum. We need to have full insight into sales and revenue to make the most of a business’ PPC budget. But when the market is competitive and you have limited resources, it’s difficult to know what’s effective for the bottom line and what’s not.

How to Optimize Your PPC Budget

Although PPC has special challenges, you don’t need to spend money blindly waiting for something to stick. Use these smart strategies to leverage your campaigns’ budgets for actual results.

Do The Math

The most important part to budgeting wisely is understanding your existing conversion metrics and setting a realistic goal around what you want your PPC campaigns to do. Start with your existing transaction and revenue volume:

  • How many transactions do you typically get in a month from your PPC account?
  • What’s your average value per transaction?
  • What’s your existing conversion rate?

Having concrete answers to these questions are vital. Then, you can move onto your existing cost metrics:

  • What are you spending per month right now?
  • What’s your current cost per transaction?
  • What’s your current Return on Ad Spend (ROAS)?

Finally, ask yourself:

  • How much do I want to spend per month on paid search advertising?
  • How much revenue do I want to get out of that ad spend?

If you can answer all of these questions, you’re off to a great start in budgeting wisely for better results.

Here’s an example – let’s say you own a small ecommerce business and know the following:

  • As is, you typically get 50 transactions out of your PPC account per month
  • Your average value per transaction is $75
  • Your existing conversion rate is 3.0%
  • You’re spending $3,000 per month right now
  • Your current average cost per transaction is $60
  • Your current ROAS is 125%

Let’s say you want to keep your budget static at $3,000 per month but you want to earn a better ROAS. If your average value per transaction will likely stay the same (e.g. you’re not introducing any new deals or products), then you’re going to need to find some way to get your average cost per transaction down (resulting in more than 50 transactions off of $3,000 spent) in order to reach that goal.

So, how would you do that? That brings us to the next strategy.

Map PPC Campaigns to the Funnel

All companies have a sales funnel. B2C sales is fairly straightforward, but you’ll still want to map your PPC efforts to different stages of the business’ sales funnel.

Separate your non-branded keywords into two categories: problem-aware and solution-aware. In a typical funnel, regardless of industry, problem-aware terms are higher up the funnel than solution-aware terms. This means that solution-aware queries often provide better, more profitable leads.

For example, if you run a plumbing service, you must recognize the different intent behind a problem-aware query like “how to fix a leaky faucet” and a solution-aware query like “local plumbing company.” The former doesn’t necessarily mean a user is looking for a plumbing company (maybe they’re a DIYer), while the latter definitely does. Typically, that solution-aware query is going to provide leads at higher rates and lower costs.

I recommend this process for two reasons: increased ad relevance and smarter bidding.

Increased Ad Relevance

Customers in the awareness and interest stages will want to see different content. However, many PPC strategists use similar ad copy and targeting for all stages of the B2C funnel.

By mapping your PPC to the client’s funnel stages, you’re less likely to squander the budget on irrelevant ads. You’ll be able to write hyper-relevant copy targeting customers based on where they are in the funnel. You can even use re-targeting once they’re inside the funnel, showing certain users more personalized content to increase conversions

Smarter Bidding

A click during the awareness stage won’t be as valuable as a click in the consideration phase.

When you map your campaigns to the B2C funnel, you may end up spending more per click on low-funnel keywords, but those clicks will matter more. You can set your budget to bid higher on clicks that are more likely to convert. While the higher cost per click may initially dissuade some spending-averse advertisers, the higher potential ROAS ultimately makes this tactic an attractive one.

How? Let’s take a look back at our example.

So, you want to decrease your average cost per transaction from $60, meaning you’ll get more revenue from the same monthly budget. Here’s your current spend breakout by campaign type according to the sales funnel:

Campaign TypeSpend AmountNumber of TransactionsAvg. Cost per TransactionRevenueROAS

People searching for my brand name are already aware of my business and are buying from me at much more favorable rates. Other keywords are more competitive so those campaigns don’t break-even. But can you get a better ROAS with these existing campaigns?

Let’s say you’re not quite maxed out on your branded search terms and can spend up to $600 on those without cost per conversion or conversion rate being affected. That leaves you $2,400 to spend. What if you dedicate all of that budget to various solution-aware campaigns that are currently not reaching full impression share levels due to low budget? All else being equal, here’s what would happen:

Campaign TypeSpend AmountNumber of TransactionsAvg. Cost per TransactionRevenueROAS

Now, your new total transaction volume is up to 60 out of the same $3,000 budget. Your total average cost per transaction has decreased to $50 and your total revenue volume has improved to $4,500 (150% ROAS).

The Bottom Line

So, budgeting is understandably a big concern for PPC accounts. With these smart budgeting tactics, you can leverage your existing data and find opportunities to spend your total monthly budget more effectively.

Your end result will be a far more efficient PPC account and more profit in the long run.

Ryan Moothart is a PPC Architect at Portent, a Clearlink Digital Agency. He has over eight years of hands-on PPC experience, including large-scale ecommerce, international B2B lead gen, and everything in between.