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How Should You Set A Pay Per Click Budget?

Used correctly, pay per click advertising can be one of the best, and fastest, ways to bring qualified prospects to your website. It's not always as cost-effective as organic search engine optimization, of course, but it does have some distinct advantages: namely, that you can have it up and running in minutes, and that you can specify any landing page that you want, making changes and testing them instantly.

But one thing that a lot of online marketers struggle with is determining the right spending level for their PPC campaigns. Paying too much, and you're basically pouring money down a funnel; commit too little, and you'll never see results.

Here are three quick tips for setting your pay per click budget on Google, Yahoo, and Bing:

Measure sales closely. Ultimately, the decision about how much to spend should come down to the issue of how much you're earning in return. If it's coming back to you in new sales almost immediately, then don't stop as long as it's profitable; if not, then ask yourself why, and set your budget accordingly in the meantime.

Measure other activity. In some industries, a successful "hit" from the pay per click campaign might not lead to an immediate sale. That's why it's so important to track the source of new business, as well as residual effects over time. Just because someone doesn't call or pick up the phone right away doesn't mean they won't later. Often, a PPC campaign can be more profitable than you first think when you get the chance to look at the big picture.

Don't bid all out for no reason. Obviously, the first ad position on any page is going to get the most hits, all things being considered. But what a lot of marketers don't realize is that the second, third, and even eighth positions can get a lot of traffic too – especially in certain markets where there's a lot of competition. That means it doesn't always make sense to pay for the top spots. Try bidding for a few different positions and see how your results are affected – you might find that you can get a much bigger return by having your ad displayed a bit lower in the results.

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