How to forecast a budget for contextual advertising

[ashammi228]

Content
How reliable are these forecasts?
Take a peek at your competitors' budget
Make a calculation based on the cost of a lead
Launch a test period and make a forecast up to the sales level
Conclusions
Forecasting the budget for contextual advertising is an important part of preparing for an advertising campaign. Without an accurate forecast, you will not know how much the future campaign will cost and what effect to expect from it. There are different ways to plan the advertising budget, and while some only give an approximate idea, others show exactly how much money needs to be spent and how much it will bring in at the end. Let's consider all these methods.

Calculate the budget in the contextual advertising system
The most common way to forecast your advertising telegram db budget is with free tools: " Budget Forecast " in Yandex.Direct and Traffic Estimation in Google Ads. They allow you to find out the approximate cost of a click, their number and the total budget for a given period.

First, you need to collect a list of keywords for which ads will be shown. To collect the semantic core, Google Ads has the Keyword Planner , and Yandex has Wordstat. Specialists also use additional tools, such as the paid Key Collector, which has a wider functionality compared to the basic one.

When collecting a semantic core, you need to combine high-frequency and low-frequency keywords. Include synonyms, non-obvious names of goods or services (slang words), transliteration - writing queries in the English layout. It is important to collect as broad a semantic core as possible to cover the entire topic. The last step is to compile a list of negative words for which advertising should not be shown.

Having collected a list of keywords, we enter it into a special field in Yandex.Direct and get a table in which the following are predicted:

number of requests and impressions,
average rate and cost of one click,
CTR rate,
the number of clicks based on the ad placement (with a standard calculation, the service generates a forecast based on 9% of the traffic volume),
budget for one month.

Yandex.Direct interface
The price per click changes during the auction between advertisers: the higher the competition for a given request, the higher the cost per click.

Google Ads Keyword Planner works differently: you specify your bid and estimated daily budget, and the tool predicts the amount of traffic under these conditions.

Don't waste your advertising budget
The call tracking and end-to-end analytics service will show the effectiveness of each source in terms of “from click to sale”.

Get a consultation

How reliable are these forecasts?
Actual advertising costs may differ from the forecasts received by several times. And here's why:

Forecasts are made according to specified algorithms based on average indicators for campaigns with the same key phrases. At the same time, some advertising campaigns are effective and have a high CTR, while others are the opposite. CTR directly affects the cost per click, but what indicator your campaign will have is still unknown.
Forecasters work for advertising in Yandex and Google search, but YAN and KMS are not taken into account.
When compiling, statistics of impressions and clicks for the last 28 days are taken into account, but many queries are seasonal.
The budget is calculated based on 24-hour ad display, which in practice is not at all necessary for all advertising campaigns.
Take a peek at your competitors' budget
You can also find out your approximate advertising budget by analyzing your competitors. To do this, you just need to use ready-made tools: such as SpyWords, SEMrush or Serpstat.

The scheme of work is simple and approximately the same for all services. Enter the domain of the competitor you are interested in, and the system collects all the keywords for which this site is shown in the search results of contextual advertising. From the open statistics of search engines, the service finds out the number of requests for these key phrases and calculates the approximate number of ad impressions. For each word, this number is multiplied by the average click price, also calculated by Yandex and Google. At the end, all the values ​​are summed up, and you get the approximate amount that your competitor spends on context.

Since this calculation method, like the first one, uses average indicators for all advertising campaigns, it does not have high accuracy. Its advantage is that there is no need to collect a core, select negative words and deal with advertising settings in Yandex and Google forecasters. You can simply use someone else's statistics and roughly understand the required budget.

Make a calculation based on the cost of a lead
When creating a media plan, context specialists often rely not on the average indicators of advertising systems, but on the cost of one attracted client, calculated for a specific business (Cost Per Lead). The CLV (Customer Lifetime Value) indicator will help you find out this cost. It shows the total profit that a company receives over the entire period of cooperation with one client.

Advertising can be considered a profitable investment if the CPL is less than the CLV. But simply observing this inequality is not enough. Agree, if we spent 1499 rubles on attracting a client and earned 1500 rubles, then overall we lost rather than won. If a client brings in 1500 rubles on average, then the cost of an attracted lead should be at least 20% less. Let's say for example that the CPL is 75% of the CLV indicator.

CPL < 0.75*1500 rub.

Thus, the cost of attracting one lead should not be more than 1125 rubles. Next, we calculate the maximum cost per click. Let's assume that the site conversion is 1%, that is, one click out of 100 is converted into a sale. Then:

1125 rub. * 0.01 = 11.25 rub.

Now you can calculate an approximate budget based on the goal for clicks or leads. So, if you want to get 1,000 clicks to the site, the approximate budget will be 11,250 rubles.

Of course, this is not an exact forecast, because there is no guarantee that you will immediately be able to achieve a favorable cost per transition. And the conversion rate from transition to the site to sales can be both more and less than 1%, since it depends on many factors: advertising creative, landing page, lead processing by managers, etc. Nevertheless, this is a basis confirmed by calculations, which can also be used as a guide.

Another way to make a more accurate forecast is to use the experience of planning and running other advertising campaigns in the same topic.


Ivan Akimov, Account Director at ArrowMedia

Advertising platform planning systems provide a forecast that can differ greatly from reality (by 50-70%). Therefore, for each segment, we have our own expertise - planning and management experience, which we take into account. For example, planning systems set the average CTR for the industry, and we know what indicators our creatives will have and make an adjustment for this (we introduce an additional coefficient in planning). Thus, our forecast is more accurate than that given by Yandex or Google. We can also take into account trending queries that platforms simply cannot predict based on data for past periods. An example is tours to Turkey in August 2019.

These methods are applicable when there are no advertising statistics at the start. If there is at least some data, we can predict the entire sales funnel to the final profit.

Launch a test period and make a forecast up to the sales level
Standard forecasters work based on averages and desired traffic volumes and do not provide an accurate picture of the profitability of our future investments. But there is another way to plan: a budget forecast based on real sales. For this, we will need an end-to-end analytics service and time for a test period.

We install CoMagic, launch advertising and collect statistics for at least 2 weeks. In the reports, we track target requests, sales, revenue and how much money was spent on this. Each indicator can be analyzed in terms of advertising channel, campaign, individual ad or keyword. The ROI indicator will show how profitable the advertising was.