Bill Grunau

How to Create a PPC-Paid Internet Ad Budget

How much do you need to spend on PPC (Pay Per Click) advertising to achieve your sales goal? Setting an internet advertising budget is often elusive since there are several variables and metrics to consider in order to determine a budget based on a sales goal and actual performance metrics. Consequently many budgets are arbitrarily set based on what budget is available or most commonly what the company or person is comfortable with and thinks is sufficient. In both cases, the budget has no basis or relationship to actual sales goals or ad performance metrics.

Our PPC budget calculator makes it easy to calculate your ad budget based on either a sales goal or traffic goal. The tool is set up for you to enter data in an interview fashion. Follow the steps below to calculate your ad budget and then click on calculate to see your results.

Sales Goal Traffic Goal
1. Sales Goal 1. Clicks Required
2. ASP (Average Selling Price) 2. CTR (Click Through Rate)
3. Conversion Rate 3. CPM (Cost Per 1,000 Impressions)
4. Estimated CTR
5. Target (CPM)
What’s Required: What’s Required:
1. Impressions required 1. Impressions required
2. Clicks required 2. Ad spend required
3. Total transactions required 3. CPC (Cost Per Click)
4. Ad spend required
5. CPA (Cost Per Acquisition)

You can change your data entries to try different goals and budgets, explanations of the terms are at the bottom of this blog. This tool is set up to calculate a budget for RTB (Real Time Bidding) campaigns which place ads on a CPM (Cost Per 1,000 impressions) basis. You can also use the Sales Goal budget calculator to calculate how many clicks you need for CPC (Cost Per Click) based campaigns by using an average CPM between $1.25 and $1.5 and it will calculate the number of clicks required.

PPC Advertising Budget Calculator (click on image to go to calculator)

PPC ad budget calculator tool

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PPC Advertising Definitions

CPC (Cost Per Click): this is the cost for each click on your ad; (ad spend)/(number of clicks). CPC is used for bidding on Google Search Keyword ads and also used for  bidding on banner ads on both Google and RTB (Real Time Bidding).

CPM (Cost Per 1,000 Impressions): RTB (banner ad display networks) se

CPA (Cost Per Acquisition): this is the average cost per sale or transaction (acquisition); (ad budget)/(expected sales)

Conversion Rate: this is the percentage of visits that result in a transaction or sale; (number of sales)/(number of visits).

Impressions: this is the number of times the ad is displayed.

Ad Spend Budget: this is the total budget to be spent on PPC ads during the period.