Effective Ad Campaign: deciding your max bid for Google Adsense price per click (PPC)?

Are you looking to create an effective ad campaign? That can be a long worth while conversation. In this article, I’m going to focus on one aspect of creating an effective ad campaign: How do you know what to bid in Google Adsense for your max bid? Its a simple equation:

 PPC = M * WCR * ROI

If that makes sense to you, then you are all set and don’t need to read the rest of this post… Otherwise, continue reading.

In my experience, the max bid is a question that most small businesses don’t ask until they are filling out the Adsense forms for their ad. That’s easy to understand, there are a lot of things to consider when spending capitol to enhance your business, but in truth this one question that will determine how effective your campaign will be and the equation above will determine the right price point.

There are a few things you must know to make the right decision. Some are obvious and easy to determine like the sale price of your product and your costs to produce it. A more difficult number is your website conversation rate. This is the number of people that actually buy your product verses the number of people that see your site.

You also need to consider your return on investment. For every dollar you spend in advertising, you are going to want to earn that dollar back plus… what? Ten percent? Fifty percent? That would be your ROI.

Ok – lets run some numbers. Lets say your product sells for $15 and costs you $10. Your margin (M) is $5. You look at your site traffic and see your website conversation rate is 2%. And you already know you want a 50% return on your money or $1.50 for every $1 you spend. Great; now lets plug in the numbers to the equation:

PPC = $5 * 0.02 * 0.50

Your max bid for a click on a Google Ad is $0.05. In this case, Google Ads don’t make sense for you since a bid of five cents won’t put you on the page! Your numbers will be different of course.

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