Monthly Ad Spend
Normally we recommend our clients to start with a minimum of $1,000 for ad spend per month.
Cost Per Click
The average CPC (Cost Per Click) varies by industry but usually ranges between $2-$8. You can use the Google Keyword Planner to help you estimate your CPC for search ads.
What is the percentage of clicks that will convert into a lead? (i.e. form lead, purchase, call)
Average Customer Value
This is the average amount a customer normally spends with you. On average, how much is a single customer worth?
What is your lead to customer close rate? (i.e. if you have 100 leads and you close 20 deals, the percentage will be 20%.)
ROI of Your Ads Explained
We suggest you do not take the ROI results literally. Its purpose is to provide you with a benchmark of what to expect when your ads go live. Nobody can predict the live auction and thousands of variables that happen in your market and PPC. Our calculator gives an intelligent estimation of what to expect based on your input.
How do you figure out your average CPC? You can do it in 2 ways.
First, if you are already running Google Ads, head to your campaign and look back to at least 3 months of campaign data. You will see the average CPC that you have been paying to Google. The second option is if you do not have an ad account. Create one with Google Ads. Once done, go inside the dashboard and click “Tools” then “Keyword Planner”. Type in the main keywords that you want to show up for. You will see a table of the keywords and their average CPCs to rank on top of Page 1. Use them as a starting point.
If you are selling products and services with a wide price range, you may have issues calculating your average order value.
In this case, you may do 2 things. First, you can group them up into a few price categories and then do the calculation above. Second, assuming you will send them into separate campaigns, you should see the ROI for each campaign instead. The second method is to do a rough calculation of the average order value. The point of the ROI calculator is to give users an estimation of what they should expect to see from the results of their marketing efforts.
There is never a right amount that you should spend. Due to the nature of the platform, you should at least spend a minimum of $1,000/month on Google Ads. The next thing is the industry you are in. Certain industries cost more per click than other industries. Usually, it is because their average customer is more valuable. Consult a PPC professional to get an estimate on how much you should spend on Google Ads. Don’t spend what you are not comfortable with!
The actual cost per click is made up of many different components. Your keyword quality score, the competitiveness of your market, any ad rank thresholds to clear, and of course, your Max CPC. The ones directly within your control are your ads’ relevancy and quality, your landing page experience, and your bids.
Having your ads managed by a competent professional or ad agency is another way of getting lower CPCs over time.
Using an ROI calculator like the one we have built will help you estimate what to expect from your marketing expenditure. The last thing a client needs is a shock over something unforeseen. This ROI Calculator helps prevent that.
It also ensures that you do not miscalculate a metric as important as ROI. With so many numbers involved, it is easy to miscalculate, and if you do, you will end up with a misjudged ROI and a misled ad campaign. When you use an ROI calculator, it will do the calculation for you before you spend any dollar on ads.