In this episode of Ask Aaron, I’ll be explaining a simple way to calculate your PPC investment, regardless of how much your spending.
I’ve found that the very best way to forecast and budget is to start with the end in mind.
Let’s think about the end results, what revenue are we trying to achieve?
What does success look like for your brand?
If we want to generate £300k in revenue from paid media, which is £25k per month
To work out the expected ROAS, first we need to split brand vs non-brand
Brand we can expect 10-20x ROAS
Non-brand typically averages 3-5 ROAS
Key things to ask: How much brand search?
If 10% of 1,000 searches per month converts, that is:
- 100 sales x Avg. sale = £50 = £5k
- 100 sales x Avg. sale = £100 = £10k
How much non-brand search?
Let’s assume 1-2% of that converts and we have 20,000 searches per month
- 200 sales x Avg. sale = £50 = £10k
- 200 sales x Avg. sale = £100 = £20k
This is just an example to show the thought process you can go through to work out the multiples. From here you can divide per month and start thinking about the number of campaigns etc.
My experience shows the below is a rough guide for scaling PPC spend vs ROAS:
- £25k – £5-7k (depending on brand reliance) x 4.5-5
- £50k – £10-15k (depending on brand reliance) x 4.5-5
- £100k – £25k (diminishing brand return/economies of scale) x 4
- £250k – £65k (diminishing brand return/economies of scale) x 4
- £500k – £125k (diminishing brand return/economies of scale) x 4
- £1m – £300k (diminishing brand return/economies of scale) x 3.5
That’s it for this video and I’ll see you soon, take care.
👋 I’m Aaron, connect with me on LinkedIn.
I’m the Founder & MD of Evergreen, a digital marketing agency that specialises in growing ecommerce & retail brands.
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