How Much Does PPC Cost?
A Comprehensive Guide to PPC Pricing for Business Website Owners
If you’re a business website owner looking to generate more income through digital marketing, you’ve probably heard about Pay-Per-Click (PPC) advertising. But, with so many factors influencing PPC pricing, it can be challenging to figure out how much you should pay for this popular marketing strategy. From recent data collected in 2022, companies allocate a budget ranging from £200 to over £20,000 per month for PPC management, with average direct PPC expenses approximately £1.20 per click and £2.00 per 1000 impressions.
Continue reading to discover more about the expenses associated with pay-per-click (PPC) advertising!
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How much does PPC cost?
When it comes to PPC costs, there’s no one-size-fits-all solution. Your investment hinges on aspects tailored to your business, such as your company’s size, niche, game plan, and choice of ad platform. Brands can pour anywhere between £200 and a whopping £20k+ (or even higher) per month into their PPC management. This covers everything from ad budgets to essential PPC tools and services.
But that’s just one side of the coin. Excluding PPC management, you’ll typically find businesses shelling out an average of £1.20 for each click and a cool £2.00 for every 1000 impressions. So, when you crunch the numbers, it’s clear that the world of PPC is as diverse as it is dynamic.
Metric | Average UK Cost |
---|---|
Cost per click (CPC): | £1.20 / click |
Cost-per-thousand impressions (CPM): | £2.00 / 1000 impressions |
Remarketing: | £0.24 – £1.20 / click |
PPC Management: Tools | £30 – £2000 / month |
PPC Management: Services | £200 – £20,000 / month or 12%+ of ad spend / month |
PPC Management: Ad spend | £500 – £1+ million / month |
“PPC can be a highly effective marketing channel when managed correctly. The key is to stay informed about the latest trends and best practices to ensure you’re getting the most out of your advertising budget.”
Source: Neil Patel, Co-Founder of Crazy Egg and Kissmetrics
Factors Affecting PPC Pricing
PPC costs are influenced by several factors, including:
- Keyword competition: Popular keywords with high search volumes often have more competition, driving up the bid prices. Conversely, long-tail keywords with lower search volumes typically have less competition and lower costs.
- Quality Score: Google Ads uses a Quality Score to determine your ad’s relevance, landing page experience, and click-through rate (CTR). A higher Quality Score can lead to lower costs and better ad positions.
- Ad format: Different ad formats, such as text ads, display ads, and video ads, can have varying costs.
- Targeting: The more specific your targeting, the higher the potential cost. Factors like geographical location, demographics, and interests can all impact your PPC costs.
- Industry: PPC costs can vary significantly depending on your industry. For example, highly competitive industries like legal services and insurance often have higher costs per click (CPC) than less competitive sectors.
“Paid search is a great way to generate a quick burst of traffic and revenue, but you need to make sure you’re paying the right price to maintain profitability.”
Source: Wordstream
Common PPC Pricing Models
There are several pricing models for PPC advertising, including:
- Cost per click (CPC): In this model, you pay each time someone clicks on your ad. CPC pricing is common for search engine advertising like Google Ads and Bing Ads.
- Cost per impression (CPM): With CPM pricing, you pay a set amount for every 1,000 times your ad is shown (impressions). This model is more common for display advertising and social media advertising.
- Cost per acquisition (CPA): CPA pricing is performance-based, meaning you pay only when a specific action, such as a sale or lead, is completed. This model is popular for affiliate marketing and some social media advertising platforms.
- Monthly retainer: When working with a PPC agency, you may be charged a monthly retainer fee. This fee typically covers ppc management, campaign setup, optimisation, and reporting.
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How to Determine Your PPC Budget
To set a PPC budget that meets your goals and maximises ROI, consider the following steps:
- Define your goals: Clearly outline your objectives, such as increasing website traffic, generating leads, or boosting sales.
- Calculate your Customer Lifetime Value (CLV): Understanding your CLV will help you determine how much you can afford to spend on acquiring a new customer.
- Estimate your conversion rate: Based on historical data or industry benchmarks, estimate the percentage of clicks that will result in a conversion (e.g., a sale, lead, or signup).
- Set a target cost per acquisition (CPA): Use your CLV and desired profit margin to calculate a target CPA. This figure will help you determine how much you can spend on each conversion.
- Allocate budget across campaigns: Distribute your budget across different PPC campaigns, taking into account factors like target audience, objectives, and expected ROI.
How to Optimise Your PPC Campaigns
To get the most value from your PPC spend, consider implementing these ppc optimisation strategies:
- Improve your Quality Score: Focus on improving ad relevance, landing page experience, and click-through rate to achieve a higher Quality Score and lower costs.
- Conduct keyword research: Identify high-performing, relevant keywords with low competition to target in your PPC campaigns.
- Use negative keywords: Exclude irrelevant search terms that can trigger your ads and lead to wasted spend.
- Implement ad extensions: Ad extensions, such as site links, callouts, and structured snippets, can improve your ad’s visibility and click-through rate.
- Test ad copy and landing pages: Regularly test different ad copy and landing page variations to identify the best-performing combinations.
- Optimize bids and budgets: Continuously monitor and adjust your bids and budgets to maximise campaign performance and ROI.
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Final Thoughts
Understanding PPC pricing is crucial for business website owners looking to generate more income through digital marketing. By considering factors like keyword competition, Quality Score, and ad formats, you can better estimate your PPC costs and develop a budget that maximises ROI. Remember to optimise your campaigns regularly, as doing so will help you achieve the best results for your advertising spend.
Contact us today to speak with a our head of digital marketing and receive a bespoke quotation. We are looking forward to help you grow your business via PPC advertising.
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