3 Tips to Effectively Set Your SEM Budget

Saturday, 26 June 2010

Setting up a SEM budget might seems like the easiest part, when considering advertising your business or products in search engines, however making the wrong decision with your budget allocation can have a bad impact on your campaign ROI.

A budget too high will result in some money being 'wasted' on not relevant terms or non converting terms . On the other hand, a budget too low is likely not to capture relevant traffic and will represent a high opportunity cost.

Based on experience and best practices, we have outlined some tips, which we hope will help you set your budget and maximise your campaign return on investment.

1) Your budget should reflect the search demand

This basic marketing principle is often overlooked when setting up SEM budget, which often result in inflated budget. For some reasons advertisers often think that they can spend without limits, but search traffic is a limited demand environement.

Having a budget much higher than the search volume is often the cause of poor performance. By forcing to spend more, the advertisier is likely to pay more for a click or select keywords which do not bring qualified traffic and therefore lower its ROI.

Before choosing a budget, make sure you do a quick research with the Google Adwords keyword tool to see the actual search volume. While useful, remember that the data is only an estimate and is likely to be different from the reality.

2) Take seasonality into account.

Seasonaliy is an important factor to consider when setting up your SEM budget. Search demand is not flat and depending in your industry is might vary based on the time of the year or special events.

If you are an online retailer, the Christmas season will generate a much higher demand than usual, so your SEM budget needs to reflect this.
If you are an accountant, the end of financial year will see an increase in search demand, which should be reflected in your budget.

Again the Google Adwords keyword tool can help you to identify seasonal trends.

3) Review your budget on regular basis

Setting up a budget for 12 months based on estimate is a risky exercise. 99% of the time, the estimate will be wrong so you budget is likely not to be fully aligned with the search demand.
Reviewing your budget every 2 to 3 months and adjusting it based on the demand, will make sure that you search engine marketing spend is in line with the search demand.

4 Comments:

executive recruitment said...

I love the post, what sort of a budget would you recommend for a gaming website? I did try to set a budget but the number was too big to handle and this point with the amount of revenue I am actually generating.

Alban G. said...

Hi,

It is very had to recommend a budget without more information on your goals (KPIs, Objectives).
As a rule of thumb, if you are spending a lot and getting little returns, you should probably review your budget and optimise your campaign

seo sydney said...

Thanks for giving this blog which states about the remarkable tips about the SEM budget, that keeps or optimize them in maintain there aims and growth factors.

houston seo companies said...

Great tips..thanks for sharing your post.