Some of the most common questions our digital marketing experts hear from prospects and clients are “how much should I spend on Facebook ads?” or “how much should I spend on Google Ads?” or simply even “what should my digital advertising budget be?”
While the intent is good, and the underlying spending constraints need to be addressed before you can start running a successful digital advertising campaign, asking for a budget recommendation this way can cause a lot of confusion on both the client-side and the agency-side because the client and the agency don’t have the same information.
This is the basis for what we call the PPC Budget Recommendation Predicament. To better understand this predicament that surely every client and advertiser has encountered, we think it’s important to discuss:
- What Is A PPC Budget Recommendation?
- What Is The PPC Budget Recommendation Predicament?
- The Client Perspective
- The Agency Perspective
- How Most Advertising Agencies Create Budget Recommendations
- The Limitations Of A PPC Budget Recommendation
- A Better Way To Get PPC Budget Recommendations
What Is A PPC Budget Recommendation?
Simply put, a PPC budget recommendation is an estimated amount a client or advertiser should spend on their marketing campaigns to achieve their desired results. It is usually provided by a digital marketing partner and offers a glimpse or snapshot into what dollar amount will yield the best results for the business. PPC budget recommendations are usually based on things like:
- Marketing Objective
- Historical Performance
- Past Spending Levels
- Competition
- Industry, Niche, or Vertical
- Seasonality and Future Trends
- Targeted Locations
- Advertising Channels
Additionally, PPC budget recommendations are usually asked for when the client is planning or working with a new partner. PPC budgets help clients to control costs and help agencies to know how much (and how quickly) to spend throughout the month.
However, in our experience, asking for a budget recommendation can lead to what we call the PPC Budget Recommendation Predicament.
What is the PPC Budget Recommendation Predicament?
When it comes to digital marketing, the PPC Budget Recommendation Predicament is the disconnect between the information that the client has that the agency needs and the information that the agency has that the client needs.
Imagine this scenario: You, the client, are about to start working with a new advertising partner so you ask them for a budget recommendation. You ask something like “what is a good PPC budget recommendation?” The agency then does its research and comes back with a recommended monthly budget of $5,000. Maybe you can’t afford that much per month or maybe you wanted to spend $15,000 per month. Either way, the response the agency gave you didn’t meet your expectations and all you’re left with is a number that does not really help you.
In this scenario, the client asks for a PPC budget recommendation because they are trying to determine how much to spend on digital marketing while also controlling business expenses. To satisfy the client’s request, the ad agency has to figure out how to provide a realistic budget recommendation that the client will be comfortable with.
In many cases, the agency simply doesn’t know the scale of growth the client is trying to achieve or they have less information about the client’s business and financial situation than the client does themselves. Without additional information, the agency is essentially “flying blind” or throwing darts at random and hoping something sticks with the client.
In order to reconnect clients and agencies and close the information gap, let’s take a look at both the client and agency perspectives to identify how to remedy the PPC budget recommendation predicament.
The Client Perspective
When a business chooses to have someone manage their digital advertising, they need a way to control costs so that person or digital advertising agency doesn’t spend more than the business can reasonably afford. This is because they view marketing as an expense instead of an investment, and like most expenses, the client wants to allocate a set amount of money towards advertising. This is especially true with small businesses working with a limited budget.
Therefore, the client will ask for a budget recommendation or submit an RFP (request for proposal), but what they are really trying to figure out is:
- What to do with the money they already have to promote their business
- How much they can spend on digital marketing because of search trends, seasonality, user behavior changes
- What they will get in return for spending on digital advertising.
Upon delivering a recommended PPC budget, the client will then need to review and approve this new information against the information they already have to see if it fits their expectations. As illustrated in the previously described scenario, most clients will already have a rough expectation (whether they know it or not) about what an acceptable answer is.
What clients don’t realize is that they aren’t actually looking for a budget recommendation number, they are actually looking for how to spend their advertising dollars most efficiently while also remaining competitive enough to get results. Therefore, in order to close the information gap between you and the agency, you should be prepared to share some additional information with the agency. This includes, but is not limited to:
- Expected amount or a general range you’re comfortable spending (i.e. $10,000 / month or $100,000 / month)
- When you need the budget recommendation by (i.e. deadline)
- What time frame you need the budget recommendation for
- Your marketing objective
- What marketing success looks like to you
- What your ideal customer looks like
- How you are currently getting results/finding customers
- How frequently you are getting results/finding customers
- What you have tried in the past
For the partnership to be successful, divulging this information at the time of the ask will help the agency deliver a better PPC budget recommendation. Actually, the more information you can share with them the better.
The Agency Perspective
The other side of the information gap is the information that the marketing agency has (or knows how to get) that the client is looking for. While the client is expected to be the expert of their own business, the agency is expected to be the master of the digital marketing solutions and the client is looking for their expertise.
Specifically, agencies can bring the following to the table.
- Search Volume & Trends For Target Keywords
- Keyword & SERP Competitiveness
- Estimated Reach
- Estimated CPCs
- Available digital advertising solutions such as strategies, platforms, campaign types, and audiences
- Best practices
Once the agency can combine the information from the client about their unique marketing goals with their information and expertise, they can deliver a more relevant budget recommendation.
How Most Advertising Agencies Provide Budget Recommendations
In order to provide a data-driven estimate as a PPC budget recommendation, most marketing agencies will use one of several approaches to come up with a number:
- Use your monthly budget trend to predict how much you’re on trend to spend
- Do keyword research and give you search volumes estimates and the corresponding cost
- Multiply your current budget by the estimated increase in CPC
- For agencies that specialize in a niche, they may give you an estimate based on the average spend of your surrounding competitors
- Give you the largest number that they think you can spend (or afford)
- Use your search impression share to estimate the maximum cost you can spend
- A combination of the above ways
As you can see, there are a variety of ways ad agencies can use the data they have, combined with the information the client has provided to give a data-driven PPC budget recommendation.
Limitations Of PPC Budget Recommendations
As important as a PPC budget recommendation is, nailing a budget recommendation, is more complicated than it might at first appear because of some limitations and unspoken dynamics that occur.
Unlimited Options
Once the agency has a general idea of what you are trying to achieve, they can begin developing an appropriate digital marketing strategy. There is no single right way to create the most successful advertising strategies because there are so many different options. This ranges from advertising platforms, like Google Ads & Facebook ads, to different campaign types within those platforms, to different networks like Search or the Google Display Network (GDN), to different client goals. The possibilities are truly endless.
Additionally, while only a certain number of people search for your keywords daily, other channels, such as display ads or paid social advertising have virtually unlimited spending potential because they can simply increase the frequency of which your ads are served.
To increase the chances of agreeing on a budget recommendation, some agencies will build some flexibility into the PPC budget recommendation by providing a range (i.e. $4,000 – $6,000) instead of a single number. A slightly different approach is a “high/medium/low” or “competitive/recommended/aggressive” budget recommendation. Giving more than 1 number helps to eliminate the risk of not over- or under-shooting the client’s comfort zone.
Pro Tip: If a PPC budget recommendation includes a range or multiple numbers, make sure that the agency specifies how the strategy and tactics vary at each level to better understand your options.
No Guarantees
As much as we’d love to be able to say that “if you spend X, you will get Y,” intelligent advertising agencies know that results aren’t guaranteed, especially in the short term. While we all want stability in the long run, the truth is that we live in a dynamic and global economy where technology comes and goes, new competition enters the marketplace, and customer demands can change quickly.
On top of that, goals change, websites have issues, humans make mistakes, and new laws or policies, like Apple’s iOS 14.5 update, come into play.
Pro Tip: While results can’t be guaranteed, you can significantly increase the chance of creating a successful advertising campaign by putting a proper measurement strategy in place before you start advertising.
Short Shelf Life
A budget recommendation is very time-sensitive because the future is unpredictable. Think of it as a picture that fades over time or a coupon with an expiration date. All these things have a useful shelf life and so too do PPC budget recommendations.
When an agency delivers a budget recommendation it may not be valid or accurate if you decided to move forward in 6 months. This is because digital marketing moves incredibly fast, seasonality can affect performance trends, new campaign types or competitors may come into the mix, your company may need to change its business or marketing goals, or even the person who approves budget recommendations can change. All these things affect the relevancy of a recommended PPC advertising budget and determine the validity of the final PPC budget that is delivered.
On top of this, once the digital advertising campaigns are live, there will be new information that can be used to inform your digital marketing strategy so the initial PPC budget recommendation should only act as a starting point. Afterward, your PPC advertising agency should proactively provide you with up-to-date budget recommendations, whether that is to raise or lower your budget.
Pro Tip: Once the campaigns are live, we recommend re-evaluating your budget every 3-6 months. This gives the agency a long enough time to collect new and useful information as well as helps you understand the options you have to better utilize your budget
Wastes Time
So you’ve asked for a budget recommendation, and by the end of the week, what you get back is not up to your expectations. What do you do next? Unfortunately, there isn’t a lot you can do except ask for another budget recommendation and explain why the first one fell flat.
By the time that gets back to you, you’ve wasted another week and could be at risk of not meeting your deadlines.
But, what if there was a way to avoid all the complexities and limitations of asking for a budget recommendation so as to minimize your risks of the PPC Budget Recommendation Predicament.
A Better Way To Get PPC Budget Recommendations
We won’t deny that as a digital marketing agency, we have our own perspective on the matter of budget recommendations, but in our experience, most clients are asking the wrong questions and subject themselves to unnecessary frustration due to the PPC Budget Recommendation Predicament.
In order to prevent the PPC Budget Recommendation Predicament, simply ask for a strategy recommendation instead of a budget recommendation. For example, you should instead ask “what strategy do you recommend with a $X, $Y, or $Z monthly budget?” An even better approach would be adding something like “I would like to [insert SMART Goal here]” beforehand to give your ad agency as much context as you can.
By doing so, you as the client, get a recommendation that aligns with your overall business needs and goals and is within the budget constraints you have. By clearly communicating your budget levels and advertising goals, you can eliminate the frustration that often occurs with the PPC budget recommendation predicament.
In the end, advertising is a partnership so both parties, agencies and clients, need to have open and honest conversations and be transparent with each other. If your agency isn’t asking, they may not be truly invested in your success or missing important details that can be used to better inform your advertising strategy.
To learn more about how Intigress partners with our clients to generate real business results, contact our team of digital marketing experts today and we’ll walk you through our SEO and advertising solutions.