Forecasting Your Pay-Per-Click Budget in Google - Step Two: Estimating Traffic
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Once you have finalized your keyword list, you can use Google's Traffic Estimator, which is available to advertisers only. The Traffic Estimator provides most of the critical information you'll need to forecast your budget on Google including your keywords, currency type, maximum bid amount (if you leave this field blank, Google defaults to the recommended maximum bid for the #1 position) and geographic region where you want your ads to appear. The results look something like this.
Table 1 - Google traffic estimate for keyword list at maximum bid amount suggested by Google for #1 Position
| Keywords | Clicks/day | Avg. CPC | Cost/Day | Avg. Position |
| Keyword 1 | .4 | $0.44 | $0.16 | 1 |
| Keyword 2 | 2.8 | $0.33 | $0.85 | 1 |
| Keyword 3 | 5600 | $0.44 | $2,460.16 | 1 |
| Keyword 4 | 5.7 | $0.79 | $4.49 | 1 |
| Keyword 5 | <0.1 | $0.05 | $0.00 | 1 |
Let's go through the rows in the table one by one so you can see how they will relate to your end result - the monthly budget forecast. All of them are fairly self-explanatory, but there are a few things I want to bring to your attention.
Clicks/Day- This is the amount of times Google predicts your ad will be clicked on any given day based on the parameters you specified when you entered your keyword into the Traffic Estimator. Changing things like geographical region and maximum bid amount will change this number.
Avg. CPC- This is the average cost per click (CPC) for the keyword noted in the leftmost column. I have not specified any keywords because, as I mentioned above, this tool is only available to advertisers and bid amounts are confidential. Google never discloses the exact amount of any advertiser's bid, but rather uses estimates based on aggregate information.
Cost/Day- This is how much the specific keyword in the left column will cost you per day, assuming the click estimates are accurate. Note that I said per DAY. I typically multiply the numbers in this column by 30 to get my average cost per month. Also note that this number is different from the maximum bid you specified. For example, you may have set a maximum bid of $1.00 per click for this series of keywords, but the average (actual) cost per click of the keyword is only $0.44. The maximum bid you set regulates where your ad appears in the sponsored listing results and how often it appears.
Avg. Position- This is the position your ad will appear in the sponsored search results if you choose to run the campaign with the maximum bid you specified in the Traffic Estimator (again, if you did not specify an amount then Google will automatically put in the maximum bid amount needed for the #1 position). Google doesn't care about your monthly budget, so really pay attention when you're setting this up. The number one paid search listing is often a highly competitive and expensive position and I do not recommend it for those who are watching their budgets closely. The top position isn't always the best position in terms of leads and conversions, even though it may be the best position if you just want clicks.
I take the above information and plug it into my own Excel spreadsheet, where I can insert a couple of columns to get my final result. The shaded columns are the ones I added. I've calculated estimated clicks per month for each term, estimated cost per month for each term, and totals and averages for the month for the entire campaign.
Table 2 - Spreadsheet of Google's traffic estimate with additional columns added
| Keywords | Clicks/day | Clicks/month | Avg. CPC | Cost/Day | Cost/Month | Avg. Position |
| Keyword 1 | 0.4 | 12 | $0.44 | $0.16 | $5.28 | 1 |
| Keyword 2 | 2.8 | 84 | $0.30 | $0.85 | $25.20 | 1 |
| Keyword 3 | 5600 | 168,000 | $0.44 | $2,460.16 | $73,920.00 | 1 |
| Keyword 4 | 5.7 | 171 | $0.79 | $4.49 | $135.09 | 1 |
| Keyword 5 | <0.1 | 0 | $0.05 | $0.00 | $0.00 | 1 |
| Totals/Averages | 5608.9 | 168,267 | $0.40 | $2,465.66 | $74,085.57 | 1 |
Of course the red flag here is keyword #3. It is extremely expensive not because of the cost per click, but because it is a very popular term. I have to ask myself at this point how badly I want to keep this term. Is it a multiple word phrase or a one-word term? How targeted would the traffic be if I left the term in? Assuming my monthly budget is $500 for Google, how many other more relevant terms can fit in if I take this term out? Without Keyword #3, the table looks like this.
Table 3 - Spreadsheet of Google's traffic estimate without keyword #3
| Keywords | Clicks/day | Clicks/month | Avg. CPC | Cost/Day | Cost/Month | Avg. Position |
| Keyword 1 | 0.4 | 12 | $0.44 | $0.16 | $5.28 | 1 |
| Keyword 2 | 2.8 | 84 | $0.30 | $0.85 | $25.20 | 1 |
| | | | | | | |
| Keyword 4 | 5.7 | 171 | $0.79 | $4.49 | $135.09 | 1 |
| Keyword 5 | <0.1 | 0 | $0.05 | $0.00 | $0.00 | 1 |
| Totals/Averages | 8.9 | 267 | $0.40 | $5.50 | $165.57 | 1 |
That's well within my budget, but my clicks are drastically reduced. There are two ways that I can compromise. I can add more keywords, as I stated above, or I can change my maximum bid for the expensive keyword. This will also change the position and frequency of the term, but that's okay because what I'm trying to do here is bring the cost down and bring the estimated traffic up.
Table 4- Spreadsheet of Google's traffic estimate with revised values for keyword #3
| Keywords | Clicks/day | Clicks/month | Avg. CPC | Cost/Day | Cost/Month | Avg. Position |
| Keyword 1 | 0.4 | 12 | $0.44 | $0.16 | $5.28 | 1 |
| Keyword 2 | 2.8 | 84 | $0.30 | $0.85 | $25.20 | 1 |
| Keyword 3 | 4200 | 126,000 | $0.05 | $210.00 | $6,300.00 | 1.3 |
| Keyword 4 | 5.7 | 171 | $0.79 | $4.49 | $135.09 | 1 |
| Keyword 5 | <0.1 | 0 | $0.05 | $0.00 | $0.00 | 1 |
| Totals/Averages | 4208.9 | 126,267 | $0.33 | $215.50 | $6465.57 | 1 |
My monthly budget is still very high even though I reduced my maximum bid for keyword #3 to .10/click (Google estimates the actual cost of the term is about .05/click. The only thing I can do if I really want to bid on this term is separate it from the other terms by putting it in its own campaign and capping that campaign at $334/month, which is about the difference after I subtract the monthly cost for the other terms in my campaign. I can then monitor the effectiveness of this term, and if it is not pulling in valuable leads or producing sales, I'll eliminate it from the campaign.
Next: Step Three: Setting up the campaign >>
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