There's a common question that most people that start running their own paid traffic ask. How much should I be spending on ads? Instead of just throwing up some random number, you need to use certain metrics to find out what you should be spending.
We are looking to find the max investment we could pay per deal. Once you have this number you will be able to increase your budget according to how many more deals you want to make. Could be as low as 1 deal a month or maybe you want 5 deals a month.
The first step would be to make sure you have Google Analytics linked to your landing page/website. Now we will have access to data that will help us find our max investment.
The second step is to do the math. We'll be using 4 key metrics
- APD (Average profit per deal)
- LPD (Leads per deal)
- Crv. (Conversion rate of landing page)
- CPC (Cost per click)
For this example...
Joe Shmoe's Metrics
- APD= 12k
- LPD= 1/25
- Crv= 4%
- CPC= $4
Joe Shmoe is a wholesaler whose APD is 12k, LPD is 1/25, and the Crv of his landing page is 4%. So Joe needs 625 clicks to his website to close 1 deal (25\625) based on his website Crv. of 4%. Joes's CPC is $4 on Google AdWords. Based on this knowledge you can multiply Joe's CPC by his needed clicks (4 x 625) which would equal 2,500. So Joe should be investing $2,500 in paid advertising to generate 1 deal. Now you could add a 30% buffer just to be safe. This is just an example everyone's numbers will most likely be different. All you have to do is Switch the numbers with yours to effectively calculate your max investment peer deal.
Now obviously you may find cant spend your whole max investment per month, that's okay, spend what you can. However, don't expect PPC to be an ineffective marketing form just because you couldn't meet your numbers. This formula can also work with other forms of marketing, just switch conversion rate for what you using.
Remeber to not stop, keep optimizing and testing. You never know how close you are to gold. Just trust the number and you'll soon find yourself passing the break-even point, where you will start seeing real ROI gainz.
Would to hear what you guys are spending on paid traffic and marketing in general.
I have a background running paid traffic so any questions or concerns you may have I would be more than happy to answer.