Pay Per Click (PPC ) is a form of paid online marketing where advertisers pay a fee each time their ad is clicked.

What is Pay Per Click (PPC)?

As mentioned above, it is effectively the same as Cost Per Click (CPC): the advertiser pays the search engine for every click on their ad.

The advertiser only pays when their ad is clicked by an online user.

Search engine advertising is one of the most popular forms of PPC.

The most common PPC ad format appears on search results pages of search engines.

When is a PPC model used?

Because PPC marketing allows you to reach leads and prospects when they’re researching and looking to buy, it’s a highly effective way to bring interested visitors to your site.

It’s super important to track conversions in order to know whether a PPC campaign is doing well and how many conversions can be attributed to paid search rather than other marketing channels.

You can choose between an array of ad formats, including text ads, image ads, mobile ads and video ads.

Google Ads is the single most popular PPC advertising system in the world.

How is calculated?

Let’s say the advertiser’s revenue is $ 1000, the sales period will last 5 months and the average sale amount is $ 100. In this case:

Number of customers = (Revenue / Sales Period) / Average Sale Amount

Number of customers = (1000 / 5) / 100 = 2 customers

The advertiser needs to acquire 2 customers in order to achieve $ 1000 of revenue within 5 months.

CR2 stands for the close rate of your sales team.

For example, if your sales team closes 2 out of 4 leads, the conversion rate will be 50%.

CR1 can be described as a conversion rate of your website’s visitors.

For example, if 10 out of 1000 visitors turn into a lead after they visit your website, the conversion rate is 1%.

Now let’s enter these values into the second formula and calculate the PPC budget needed to achieve advertiser’s business objectives. CR2 = 50%, CR1 = 1%, CPC = $ 0.4.

Pay Per Click Budget = (Number of Customers / CR2) / CR1 * CPC

Pay Per Click Budget = (2 / 0,5) / 0,01 *0.4 = $ 160

$ 160 will be enough to buy 400 clicks

So, $ 160 can be called an effective PPC budget for this particular campaign.

Use internal data or Keyword Planner within Google AdWords.

I hope this content will help you. If it does, please do not forget to upvote and share this answer on Social Media. Thanks a lot. All the best!