While it may not be the most exciting aspect of PPC, effective budget management can significantly impact your campaign performance. Often, budget considerations are overlooked in favor of newer, more captivating topics like innovative ad formats, targeting methods, or emerging channels. However, prioritizing your budget can be more effective and lucrative than experimenting with these novel strategies.

Therefore, in 2020, I encourage you to make budgeting a central focus of your PPC resolutions.

It doesn’t require a significant time investment. A brief review at the start of each month or quarter can greatly contribute to ensuring your budgets receive the attention they deserve.

You might be thinking, “That sounds great, but how can I be more attentive to my budget?” Here are five straightforward actions you can take to enhance your budget management in 2020.

1. Begin Forecasting

I’ll readily admit: I’m not a fan of forecasting.

Forecasting often feels like making educated guesses about future performance—and it is. However, these educated guesses can guide you in making informed decisions about allocating your advertising budget.

Several data points can be utilized to forecast performance in the coming months:

• Google Keyword Planner traffic estimates
• Insights from external news sources
• Month-over-month or year-over-year performance trends

For instance, Google Keyword Planner can provide estimates of future traffic.

The key takeaway from forecasting is not necessarily achieving perfect predictions but rather establishing realistic performance expectations for proactive planning.

Is a traffic surge anticipated next month? Or is a significant decline expected? Does a predicted market shift in the latter half of the year suggest front-loading your 2020 budget? Or should you conserve resources for a potential Q3 boom?

Dedicate time to anticipate future trends and be prepared. After a month or a quarter, review your forecasts, assess the accuracy, and identify areas for adjustment to enhance precision in the future.

2. Develop Projection Sheets

While forecasting offers a long-term perspective on potential performance, utilizing projection sheets can help you track your progress toward your targets for the current calendar month (or any specified date range).

Let’s break down the data in the table above, which is from one of my client’s projection sheets:

• P7D: Performance over the past seven days
• MTD: Performance for the current month to date
• Projected: Projected statistics based on extrapolating the most recent seven days’ performance for the remaining days of the month, combined with the performance so far

Here’s the formula used:

(P7D / 7 * Number of days left in the month) + MTD Statistics = Projected Performance

For a detailed walkthrough of this process, here’s a video which illustrates how to create a projection sheet.

While not an absolute guarantee of your end-of-month performance, this method can provide a well-informed estimate based on recent trends and the performance already observed in the current month.

3. Maintain Flexibility

If you’re engaged in forecasting, you’ve likely begun allocating budgets to different channels or campaign groups based on your projections. This is a positive step, but avoid becoming inflexible with these allocations.

Rigidity in budgeting can hinder performance optimization.

You’ll observe that the projection sheet illustrated above doesn’t solely focus on spending. Other key metrics, such as clicks, conversions, and CPA, are also incorporated. You can customize this formula by adding any metrics that hold significance for you.

Within this same projection sheet, I have distinct charts created for each channel: Google, Bing, and so on.

Let’s assume my budget for the month is $345,000. I might have initially planned to allocate $300,000 to Google and $45,000 to Bing. However, considering the observed performance this month and the CPA discrepancy, I’ve adjusted the spending to maximize available volume on Bing and allocate the remaining budget to Google.

This performance-driven flexibility becomes more evident when you compare the forecasted performance based on the original budget allocation versus the current projections.

With a simple budget reallocation, we achieved a $1,000 reduction in spending, gained an additional 99 conversions, and lowered the overall CPA by $0.74. While these may not appear to be groundbreaking figures, everyone appreciates saving money while simultaneously driving more conversions.

4. Select the Optimal Budget Type for Your Account

Delving a bit deeper into campaign management, it’s crucial to ensure you’re utilizing the most appropriate budget types for your specific requirements.

Each platform has its own budget configurations, and they tend to operate differently.

Facebook budgets function differently depending on whether you opt for daily or lifetime budgets.

Google Ads offers campaign-level or shared budgets.

While this may be a quarterly review item, make sure you’re implementing the correct budget settings aligned with your objectives. As your campaigns evolve and initiatives are modified throughout the year, it’s essential to periodically re-evaluate and ensure that your choices are setting you up for success, rather than simply replicating previous practices.

5. Understand Your Spending Limits

My final piece of advice is directed towards new advertisers or those launching new initiatives in 2020.

Although PPC has gained a reputation for delivering “immediate” results, this doesn’t imply instant profitability for every new endeavor. While there are exceptional cases where campaigns become profitable within hours or days of launch, this is uncommon.

In most scenarios, a period of testing, learning, and optimization is necessary before a campaign achieves profitability. Therefore, it’s essential to have a clear understanding of your affordable spending limits.

Over the past couple of years, I’ve been asked by numerous companies about the budget required for PPC success. Unfortunately, there’s no one-size-fits-all answer. However, here are some crucial points to keep in mind:

1. As mentioned earlier, results aren’t instant. You’re likely to spend more than you earn initially. Lack of immediate profitability doesn’t signify the initiative’s inability to eventually turn a profit.
2. Data is essential for optimization. There’s often a temptation to start with extremely low daily budgets. While being cautious is advisable, it can be detrimental if it hinders your ability to gather sufficient insights for optimization. Don’t overspend, but avoid excessively restricting your campaigns as well. Both extremes can lead to wasted expenditures without gaining any insights or learnings.
3. If you have budget limitations, employ the forecasting and projection techniques mentioned earlier to prioritize the most promising avenue for success first. The outcome of testing one channel (whether successful or not) doesn’t guarantee similar results for others. While testing multiple approaches is beneficial, if your budget for a new test is limited, concentrate on the option most likely to yield positive results first.

Optimize Your PPC Budget

While budgeting may not be the most captivating trend in PPC for 2020, it remains a critical factor in your success. Invest time this month in getting organized for the year ahead, establish a cadence for PPC audits, embrace flexibility, adhere to best practices, and incorporate new tests to ensure that budget optimization remains an integral part of your PPC strategy in the new year.