How much should I spend on PPC for an e-commerce site?
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The amount you should spend on PPC advertising for an e-commerce site depends on several factors, including your business size, goals, product margins, and the competition in your industry. Here’s a breakdown to guide you:
1. Set a Budget Based on Revenue Goals
- Rule of Thumb: Many e-commerce businesses allocate 10-20% of their monthly revenue to marketing, with about 50% of that going to PPC.
- Example: If your target monthly revenue is $50,000, you could allocate $5,000–$10,000 to total marketing, and $2,500–$5,000 to PPC.
2. Analyze Your Customer Acquisition Cost (CAC)
- Calculate the cost of acquiring a customer through PPC.
- Example: If your PPC ads cost $1 per click and 5% of visitors convert, the cost to acquire a customer is $20 ($1 / 0.05).
- Compare your CAC to your customer lifetime value (CLV) to ensure profitability.
3. Consider Industry Benchmarks
- Cost-per-click (CPC): Research CPC in your niche to estimate your spend.
- Example: In a competitive niche, CPC might range from $1 to $5+.
- Conversion Rates: Typical e-commerce conversion rates range from 2-5%, depending on the product and website quality.
4. Test with a Minimum Viable Budget
- Start small to gather data and optimize campaigns.
- Example: Begin with $500–$1,000/month, analyze performance, and scale up as you achieve a positive return on ad spend (ROAS).
5. ROAS Goals
- Aim for a ROAS of at least 3:1 (i.e., earning $3 for every $1 spent on ads).
- Example: If your goal is $10,000 in revenue, plan to spend about $3,000 on PPC.
6. Factor in Platforms
- Your budget may vary based on the platform:
- Google Ads: Higher CPC but often higher intent.
- Facebook/Instagram Ads: Lower CPC but requires more testing and creative assets.
- 7Search PPC: Cost-effective option for driving traffic and sales with targeted campaigns.