It’s all about the money. In the case of digital ads, it’s at least 40% about the money. The budget is one of the core elements of any campaign. Don’t spend enough, and your ads might under deliver.

Spend too much and you risk bankruptcy. So what is the right budget for your campaign? What should you spend every day?

There really is no one answer to these questions. It’s quite subjective. I know I know lame answer. I get it.

But, hear me out for a second.

It’s actually good that there isn’t any standard budget. It’s good that we get that freedom to choose. Because every product is different. Every brand prepares their budget based on tons of variable factors. Also, every market is different because the consumers are different. So it’s quite impossible to give out one figure that works for all.

So then how exactly do you figure out a budget that works for you?

A couple of ways.

First, you need data.

And lots of it. In marketing data is power. Have the right data, and then sky’s the limit. So at least initially, you’ll have to run campaigns on a small budget for a few days and see the kind of results that you get.

Of course we’re talking about digital ads here. When it comes to offline ads, each publisher will have his or her own unique charges. So it’s kind of easier to plan those.

As we were discussing, the digital ads budget needs to be a bit flexible. Each industry has a certain minimum cost per click or cost per conversion. High value products and services will of course have a higher cost per conversion.

The average order value

What is your average order value?

How much do people spend on your product/service on an average?

The average order value is an important number that can help you determine your ideal cost per lead/conversion or your cost per click. An important related point here is your profit margin.How much do you actually earn on every order? It’s quite crucial to be able to answer these questions before setting up a budget.

The competition

Another point to consider would be your target market. How much are your competitors paying? I mean if your market is highly competitive, then brands and individuals would be willing to pay more per click, conversion, lead or impression.

This will drive up your cost.

Let’s talk about insurance for example. Insurance is a super competitive market, because of the ever growing medical expenses in most major economies. Also, the consumer demand is on the higher side. So insurance companies will be willing to spend more on every lead and conversion. So if you’re running insurance ads, then you should be okay with paying more on every interaction.

Before setting a budget, you do need to consider the level of competition in your target market.

The Keywords

Now this is more relevant for Google search ads, since they are based on Keywords.

Now of course you have to set your bid for every keyword individually. Which means that if you’re using keywords which are highly competitive then you’ll end up paying more and your daily budget will increase.

Also, if you are using a higher number of keywords, then you’ll have to set your daily budget accordingly. If the budget is too low, then the campaign won’t deliver as your ads will not be shown for certain keywords.

You don’t have to set individual bids for keywords if you don’t want to. You can also set the budget at the ad group level or the campaign level, but make sure that you have a budget that can cover the cost of your keywords.

In simple words, more keywords equals more money.

Initially it is great to do some amount of A/B testing. These tests will allow you to gather data and then make educated decisions. Know your consumers, your target market and competitiveness within your niche. Go easy and scale as you see results. Never go all or nothing with digital ads.

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Hey there. I’m Abhishek Samant. I’m a digital marketer. If you liked what you just read then do drop a follow. Helps a ton. Thank you!

LinkedIn — https://www.linkedin.com/in/abhishek-samant-digital-marketer/

Web — www.msmw.in

Mail — [email protected]

My podcast — https://open.spotify.com/show/0k4rQBTnvyps1m0LIhV1a2