How much budget should you allocate towards your paid search strategy? Well, it depends…on a lot of things.
Paid search is a marketing tactic in which advertisers pay for ad placements on search engine result pages (SERPs) or other online platforms. Google ads are the most common form of paid search ads, but different search engines (like Bing) and social media platforms (including Facebook, Instagram, Pinterest, and LinkedIn) also offer ad opportunities.
Each platform sets up how you target and pay for ads a little differently, but it’s typical, especially for SERPs, to bid on keywords or phrases related to your business. The amount you bid in relation to others bidding on those same keywords will affect when and where your ads show up. On social platforms, who you want to target and what you want ad viewers to do, such as engage with a post or click through to your website, often affect how much you’ll need to pay to see results.
With that (very) brief primer out of the way, there are three overarching factors that we often see our clients surprised by when they’re beginning paid search campaigns for the first time, shifting their advertising tactics, or determining their budget.
When bidding on keywords for SERPs, rates can fluctuate wildly depending on the industry—some of them are exorbitantly expensive to bid on, while others are surprisingly low.
In January 2022, FraudBlocker analyzed the top 5,000 most expensive keywords on Google search and found that keywords for the legal industry, with phrases related to traffic accident lawyers leading the list of top 25 most expensive keywords and costing hundreds of dollars per click. Following legal keywords were phrases related to education, insurance, addiction and rehab programs, and loans.
Why does this matter? You may know of a business that saw incredible value and ROI on their search advertising with a $2,000-month budget, but if you’re an attorney and going after popular search terms, your budget will need to be significantly higher to get that ad click. It may also see excellent ROI, but your beginning budget is going to look very different than that other company’s spend.
Knowing how expensive keywords typically are in your industry allows you to better budget and forecast ad spend. (It can also help shape your content strategy—if paid keywords are too high for your budget, it’s time to implement a robust organic SEO plan.)
Keywords and phrases aren’t the only things that have varying costs—platforms charge differently, especially when they’re able to hone in on your exact core audience.
According to HootSuite, a popular social media planning and analytics tool, LinkedIn’s average cost-per-click (CPC) is the highest of the primary social media platforms at $5.26. This is partially because LinkedIn’s advertising capabilities can target users by industry and job title, making it particularly efficient—and potentially lucrative—when generating marketing or sales leads.
Meanwhile, YouTube’s CPC is second highest at $3.21 with Twitter coming in at the lowest, with just $0.38. Saturation also affects where your ads will be placed and how much you’ll pay. While major brands may be spending big on Facebook and Instagram, TikTok is still in its advertising infancy, meaning there’s potential to carve out your own space or reach more people for less.
Again, all this awareness can help you accurately plan your budget. It’s also critical to know where your target audience is most active or receptive to social ads. Putting money towards platforms that won’t reach your audience is always a waste of time and resources, but it could be even more costly if you’re shelling out on the more expensive platforms for little ROI.
San Francisco-based Grand View Research forecasts that global location-based advertising will see a compound annual growth rate of 17.4% from 2020 to 2027. Depending on your business, let’s use a local coffee brand and cafes for example, targeting local audiences in your area may be the key to unlocking your ROI. However, if you’re in an area that’s saturated with similar business and high competition, you’ll need to spend more to get your ads in front of eyes since local audiences will be highly valuable.
Placing ads for “best coffee shops in Seattle” is potentially more expensive than “best coffee shops in Boise” due to the size of the city, a higher number of coffee shops, and higher number of monthly searches.
Ready to ramp up your search advertising?
We’ll get you started with a comprehensive digital audit, analyzing your current digital spend, CPC, competitors, and SEO strength to determine where and how your budget would be used effectively.
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