Recently, we came across something surprising: a presentation stating home care companies can get results with a PPC advertising budget of as little as $250 per month.
That got our attention. We’ve been telling our clients that they should set a minimum budget of $1,000 per month in order to see results. In fact, we say with anything less than that, you are better off keeping the money in your account. But $250 a month? Why such a discrepancy? Were we doing something wrong?
This sounded too good to be true. So we ran some numbers in the categories specific to our industry. We plugged that data into a simple formula that determines potential return on investment. What we found may surprise you.
How Pay Per Clicks Ads Work
A strategic ad campaign often includes search engine marketing. Promoting your business in search engines, like Google, allows you to reach the thousands of people who are actively searching for your services. Pay-per-click (PPC) advertising is one effective way to advertise your business on these platforms.
Here’s how it works. Your business pays a fee each time a person clicks on your ad within a search engine results page (SERP). Each click directs potential clients to your website where you have the chance to sell your services. For home care, success in PPC campaigns is measured by the number of people who click on your ad who ultimately become paying clients.
Keywords Are Key
Google makes money by requiring businesses to “bid” on certain keywords that people use when searching for services your business provides. You pay a certain cost-per-click (CPC) price for each keyword (see table below for popular home care keywords). While costs vary, the average CPC for home care industry-specific keywords is around $5.
Once you’ve determined the best keywords for your business, budget for the amount that you want to spend on selected keywords over a 30 day period. Run your ads. Then, look at a few key statistics. First, determine your landing page conversion rate. To do that, count the number of people who have contacted your home care business through a phone call or a completed form during the select period. For our purposes here, we’ll use the average conversion rate across all industries, which is 2.35%.
Next, analyze your close rate based on those landing page conversions. How many of those initial inquiries resulted in an actual new client for your business? Compute the amount that you will generate from your new clients (using average lifetime value) and subtract your initial investment and, voila...your return on investment (ROI) for your ad spend!
Comparing PPC Budgets
Helpful Tip: Keep in mind that your monthly budget is spread throughout the entire month. If you are expecting 50 clicks in a month that means less than 2 clicks per day. And when your daily ad spend is used, your ad stops running. So your ad could run very briefly each day.
While close rates are different for every business, imagine your home care business is able to set up 1 new in-home assessment for every 2 inbound leads (conversions).
Now that we have all of the facts, we can finally return to the budget question posed at the beginning of the article. With a monthly budget of $250, you’ll yield approximately one inquiry from your ad. So, ultimately, a $250 budget will present you with a 50% chance of gaining one client.
A $250 budget will present you with a ~50% chance of gaining one client.
Using the same formula, consider the opportunity a larger budget allows. $1,000 a month pays for 200 clicks, still at $5 per keyword. If 2.35% of those clicks convert, that means you’ll earn 4.7 (5) inquiries. Again, with a close rate of 50%, that is an estimated 2.5 (3) clients per month.
Finally, an even larger budget contains the most potential for you to raise revenue. $3,000 pays for 600 clicks. If the estimated 2.35% of those initial searches results in an inquiry via phone or email, you have the chance to earn 14 clients. With an estimated close rate of 50%, that’s an estimated 7 clients per month.
You Get What You Pay For
Clearly, a higher budget buys more clicks which in turn drives more people to your site. At Providentia, we strategize and execute effective PPC campaigns. We know which keywords to pick (and which ones not to pick). We know how to write ads targeted to your geographic market. Our ads will generate interest. It’s your job to close the deal and convert those inquiries into clients. A larger budget doesn’t necessarily guarantee higher profits, but it does promise that more people will reach out to you to inquire about your services.
If you would like a free evaluation of your current PPC campaign on Google, please contact us and we will be happy to discuss it with you and make some suggestions.