The Importance of understanding PPC budget value

[DJ]

Hi all,

Below provides a wonderful example of 2 things that everyone needs to understand about budgets.

1. Is $2k/mth a lot to you as a person? It might be personally but to most business, when you measure advertising alternatives... it is not! Consider all of the following:
• A radio campaign on a talk station in Toronto costs between $8k-$13k for 4 ads per day on a 2 week run.
• See those ads that are on the GO TRAIN? I got pricing for those as well and the absolute cheapest package available for a month of advertising is $25k plus a $3k installation charge. That is very limited views.
• TV? Don’t even get me started on that one. CRAZY expensive.
• A Billboard on the 400 in Toronto? 25k per month
• Wanna advertise at the Skydome? One company we work with used to pay $750k per year to have there company name come up 4 times per game along the top ring of scoreboards that get no TV exposure. The cancelled this budget and allocated it to us.

Wonder why Client A is suddenly happy to spend money? They have been exposed to Radio and TV. Client B? Same thing. They have concluded that online is the best bang for the buck.

The moral of this story? We need to be far more aggressive in talking to the business owner and / or marketing executive in getting budgets raised. A high profile law firm gets an avg of $150k per settlement. The $4k they spend online is a drop in the bucket. Yet we don’t push the envelope and grow the account like we should.

2. Perceived budgets. The case brought up by a lawyer in another email where she is asking if we can actually spend a certain budget is one I have talked about for some time. In most cases once a company APPROVES a budget of say “$2k” month whether we spend it or not it is assumed that it is spent. In turn they are expecting the return on that expenditure. If we were to spend $1k the client will rarely notice that we didnt spend the budget. But they will notice that they didnt get the results they would have expected at $2k! What does this mean? First, the clients perception is they spend the money but didn’t get the return they should have and finally as an SEM company we don’t generate the revenue we should have because we don’t bill based on budgets we bill based upon spend.


Why am I writing about this? Because I am responsible to help the business education of all of you! If I open your eyes to anything in a post like this then it was well worth it.

Hope its understood!