A guide to effective PPC projections

“We want to hit {goal}. What should we expect to spend?”

Whether in-house or at an agency, if you’ve been in PPC account management, odds are you’ve been asked some version of that question at least once. 

And for some, there’s a tendency to want to spit out a ballpark figure with little context or calculation.

For a few reasons, that approach could get you into trouble.

This article will give you a better way to answer that question – and keep expectations in check at the same time. Learn:

• How to communicate your spend projections and next steps.
• How to align on KPIs for the projections.
• Variables to consider.
• References to employ.

How to communicate your spend projections

Before we get into the nitty-gritty, remember: this is an exercise in estimates, and whether you’re delivering your projections to a client or a leadership team in charge of budget, you need to convey that.

Another good thing to remember is the possible range of motivators for the question itself.

• A CMO may report overall budget projections to a CFO or board of directors.
• A founder may include the estimate in a pitch deck for VC funding.
• A client point of contact may simply be assessing viability and options of a mandate handed down from management.

For this reason, the best first step in building a projection is to ask who you deliver the projections for and how the inquiring party plans to use them. 

The answer will tell you a lot about what you need to deliver – and if the question comes from outside the marketing team, benchmarks like CVR, CTR, and CPC might be too granular to reference when a higher-level outlook would have more of an impact.

How to align on KPIs

Often, there’s a straight line between understanding how the inquiring party will use the projections and deciding which KPI should be the focus. 

Occasionally, a little digging will get you to a different way of answering the question.

Suppose a client asks, “How much will it cost per month to rank in the top spot in Google?” 

It might take a few follow-up questions to determine if they’re intent on:

• Outranking a competitor for a head term.
• Protecting their brand queries in perpetuity.
• Simply trying to increase brand awareness and/or impressions in general, not necessarily on Google alone.

Ultimately, you may end up with the same goal KPI you started with, but often it takes some preliminary work to nail down the most accurate one. 

In this example, the KPI could be anything from brand search impressions to website traffic to impression share of brand terms.

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Variables to consider

Once you lock in your KPI(s), you’ve got an anchor for your projections.

We recently had a good, specific request from a client to give them spend projections for driving three quantities of leads: 1,000, 5,000 and 10,000. 

Their goal was to get a ballpark budget figure for each so they could make a pitch to the brand’s CEO for more budget.

We began with our anchor KPI: lead volume. 

From there, for each lead volume target, we identified variable metrics:

• Spend
• Clicks
• Cost per click
• Conversion rate

The formulas we ultimately needed to solve to answer the client were: 

• Leads / CVR = Clicks
• Clicks * CPC = Spend

We started with leads as a known quantity. Calculating and/or researching the other three metrics (variables) came next.

References to employ

Ideally, you’d have old campaigns for the client or brand to use for benchmarking. 

But even if you’re doing projections for a new campaign, you might be able to pull from account history.

For instance, let’s say the same client had only run brand campaigns for lead gen, and they wanted to know how much spend it would take to hit their lead targets in non-brand campaigns. 

We would take a few brands in similar verticals and with similar brand maturity (in this case, high-growth SaaS) and calculate the ratio of non-brand to brand CVR (let’s say non-brand CVR was typically 25% lower than brand CVR). 

We would apply the same ratio to the old brand campaigns’ CVR and get our estimated CVR.

Since we’re talking about Google, we’d get CPC estimates from Google Keyword Planner, Semrush, or other tools. 

You also need to factor in anything specific to the client. For instance, CVR for homepage visits, featured landing pages, and webpages you might re-use, all of which you should be able to find in Google Analytics.

We now have the estimates needed to fill in the formulas above. (And you’re welcome to use the calculator sheet we work with at my agency.)

In this example, our projections would look like this:

• 1,000 leads – $30,000 – $50,000
  • CVR = 10%
  • Clicks = Leads / CVR
  • CPC = $3-$5
  • Spend = Clicks * CPC

• 5,000 leads – $150,000 – $250,000
  • CVR = 10%
  • Clicks = Leads / CVR
  • CPC = $3-$5
  • Spend = Clicks * CPC

• 10,000 leads – $300,000 – $500,000
  • CVR = 10%
  • Clicks = Leads / CVR
  • CPC = $3-$5
  • Spend = Clicks * CPC

If this seems a little simplistic (it’s hard to achieve 10x scale without losing efficiency), it is. 

Advanced math, like calculating diminishing returns, isn’t necessary if all parties agree that you’re looking for a high-level ballpark figure. 

(If a client sees these numbers and asks for more precision, calculating diminishing returns and/or suggesting channel diversification to increase scale efficiently are considerations to include.)

Getting alignment on your PPC projections

Projections done well are a valuable service you can provide to your clients or leadership. 

Like any other service, alignment of expectations and output is a big component of the perceived value. 

A blend of artful communication, audience understanding, and strategic math – qualities that happen to define a great marketer – is key to nailing the delivery.