arieng - 11:51 pm on Jul 16, 2007 (gmt 0)

Most big corporations map out percentage-based marketing budgets (i.e., x% of gross profit). I've seen budgets that range from 20-35% of GP, depending on the industry and how aggressively they're marketing.

With AdWords, it is so easy to attribute revenues to marketing dollars that it seems silly to arbitrarily set a budget like this. Barring any cash flow problems, I will continually invest in my AdWords budget until the marginal gross profit equals zero. In other words, the cost of an additional dollar of ad spend will bring in just enough revenue to cover the cost of delivering the product to the customer.