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How to estimate AdWords/Overture costs for boss?

4:39 pm on Apr 22, 2003 (gmt 0)

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joined:Apr 21, 2003
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Hi everyone,

I've just joined this board and am brand new at this SEO thing. I've been in marketing for 6 years, however, I was just hired into a position that requires some immediate tactics to drive more leads to our web site.

After examining the WebTrends files for our site, I found that the top referring search engines are Google and Yahoo.
So, I recommended to my boss that we buy AdWords on Google and Sponsored Listings on Overture. She agreed and wants me to come back with a proposed budget and ad recommendations on Friday.

My problem with this is that, with the PPC pricing, how does one estimate costs for this? I haven't been given a budget yet, and I don't know what kind of budget is reasonable. It sounds like you don't really know until you get into the process, but my boss wants an estimate up front.

Any suggestions?


5:33 pm on Apr 22, 2003 (gmt 0)

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Your CTR (click thru rate) for PPC (pay per click) programs will be determined ultimately by the nature of your campaigns. Factors that affect this are:

>Relevancy of ads vs. searchers intententions
>Your keyword focus- broad or narrow (dozens of keywords or a few).
>How you contruct you ads - title/ description etc.
>Your position- are you 1st or 5th (major impact)
>How much competition is there for your keyword purchase and how savvy are they with the above.
>Your industry

What you need to do with your boss is run some numbers, tell her the above, and then tell her you will watch it closely- reminding her it is not how much you spend it is how much you make - ROI---after all that is what this is about.

For Overture - Use the search term suggestion tool to determine aggregate searches per month. Say 1000 take a CTR of between 15% (this can be argued based on the above factors- it is relatively safe though. You do not want to underestimate and be surprised. Understand though that you can see CTR is the 30%+ range on Overture as well as the 2-3% range) The 15% presumes you are a top 3 bidder which is essential to for maximizing the Overture system. 1000 x 15% = 150 clicks then look at you bid say 20 cents. 150 x .20 = $30 per month for that keyword phrase. REMEMBER BE CONSERVATIVE AT FIRST AND MONITOR ON A DAILY BASIS.

For ADwords, CTRs tend to be lower, yet search volume is higher. ADwords has an estimator tool in the setup process that figures out the above for you. (WHEN IT WORKS - in my experience, it is not that often). If it is giving you strange data, use the above equation to extrapolate the appropriate monthly costs. Remember likely lower CTR higher search volume. Also you can set daily spending limits on ADwords to protect yourself - for example set a daily limit at $5 per campaign and your ads will stop being served at that limit.

Track you PPC ads thru an action, understand where your return is and tweak as necessary. Tell you boss this is about test and measure, but if you are given flexibility you will find your sweet spot and with it ROI. good luck.

6:10 pm on Apr 22, 2003 (gmt 0)

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joined:Apr 21, 2003
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Thanks so much for the great advice! I've written these down and will explain to my boss when I meet with her on Friday.