Many businesses struggle with figuring out how much money they should spend on advertising.

Some businesses don’t spend any money on advertising, other businesses spend too much.

Sure, the “free” advertising methods are great and if you’re generating enough money to make you and your business happy – then … good for you! Keep at it!

However, if you want to generate more sales, revenue, and profit … you’ll want to be sure that you’re spending your advertising dollars wisely.

• Related Course: How To Optimize Your Sales Funnel

How Much Should You Spend On PPC Advertising?

Believe it or not, figuring out how much money you should spend on your Pay Per Click (PPC) advertising campaigns is very simple.

Unfortunately, too many businesses don’t do the simple math to figure out how much they can and should spend on advertising. So, they wind up spending too much, or running away to cheaper, lower quality, sources of traffic.

You’ll need 3 numbers to calculate your PPC budget:

• How much gross profit you make per product/service sold ($)
  • Gross Profit = Sale Price – Cost of Good Sold
• Profit you want to keep per sale ($)
  • This is known as the Operating Profit
  • The amount of money, from each sale, that you want in your pocket
  • Conversely, what amount of gross profit you’re willing to spend on advertising to sell the product/service
  • Note: Don’t forget, operating profit is taxable and may incur other expenses
• Conversion rate (%)
  • For every 100 people who land on your sales page, X people make a purchase.
  • X/100 = conversion rate.
  • Related Tutorial: How to track conversion rates with Google Analytics

Bear with me a moment!

I know, those definitions may be a bit confusing at first sight, but after I run through a few examples, you’ll understand.

The PPC Formula

Here’s the formula the calculator follows … you can do your own math if you’d rather!

(Gross Profit – (Gross Profit * (Operating Profit / Gross Profit))) * Conversion Rate

The PPC Calculator

PPC Calculator Examples

Example 1 (Our Product)

We’re an eCommerce store that sells t-shirts.

We buy the t-shirts from the manufacturer for $2 per unit and sell them for $20 to our customers … resulting in an $18 gross profit.

We want to pocket $10 per shirt sold (Operating Profit).

We’ve determined Facebook Advertising traffic to our Sales Page converts at 5%.

Plug the numbers into the calculator …

Viola! We can comfortably spend $0.40 per click in order to pocket $10 per sale!

Example 2 (Affiliate Product)

We’re an affiliate for an online course that pays us $50 each time we refer someone to the course (Gross Profit).

We’ve decided we want to pocket at least half of that and spend the other half on advertising. So, $25 in operating profit is our goal.

Over time, we’ve figure out that the course’s sales page converts at around 3%, when traffic is sent via Google Adwords, for a few specific keywords.

Plug the numbers into the calculator …

Viola! We can comfortably spend $0.75 per click in order to pocket $25 per sale!

Profit Maximization

When you’re launching PPC campaigns, you may notice some people are paying ridiculous amounts of money per each click.

For example, the product for sale on the sales page is only $49, yet, people are bidding upwards of $15 per click! More than likely, their sales page isn’t converting above 30% to make it profitable.

So, how the heck are they able to bid so much and still turn a profit?!

Simple answer: The have a sales funnel.

That $49 product you see is just the front-end offer (sometimes called a tripwire). It’s what gets people in the door. Once they’re in the door, they go through upsell after upsell … which tend to have high conversion rates, thus making individuals worth way more than the original $49 they spend.

So, the average person may be worth about $200, making the $15 per click more practical, possible, and realistic.

Needless to say, if you find yourself surrounded by very expensive PPC ads, and you can’t compete … you need to spend some time building out and optimizing your sales funnel and sales pipelines.

Of course, if you need help with this … we’re here to help!

Ready For More?

Knowing how much you should spend per click is just one part of the equation.

Knowing how to decrease the cost and/or increase the profit is the other part …

The Sales Funnel Training Vault will teach you all the parts!

We recently took on a client that wanted to transition their robust eBay store over to their own website.

While this is not the first eCommerce store we’ve ever built – it is the first one that we transitioned from eBay, so we learned a few things that we’d like to share with you (and for us to refer back to should we receive another job like this!)

Before and After

I’ll start off describing the before and after, and then we’ll get into the details on how we made it happen!

The eBay Store

Below you’ll see a picture of the eBay store our client wanted transferred to her own website – and the eBay store still exist if you want to check it out

This is the first Website Evaluation post for Crazy Eye Marketing!

We take a look at Stauer.com – which is an eCommerce website that sells jewelry.

The point of this evaluation is to give tell the company exactly what I would do if I was “king for the day” and to provide them with several actionable steps in order to optimize their website for many different metrics (conversions, click throughs, time on page, number of pages viewed, etc.)

You’re Bleeding

Intense, I know.

Your mobile website, which, should be responsive and not its own separate entity (but, that’s a whole other issue), has a HUGE flaw … the opt-in form does not work.

The subscribe button isn't a button! It doesn't do anything when clicked!

You are literally taking away people’s ability to give you their precious contact information. And contact information is money.

You’re also aggravating these potential customers by your site not functioning properly. They want their coupon, yet, they cannot get it.

I’d address this issue immediately.

Besides, how are you going to measure anything when there is nothing to measure because your site doesn't work?

Your Homepage

Visually, it’s OK (it looks a little dated). Of course, I’d test different colors, pictures, link text, etc. However, without seeing any data, it’s hard to tell how well it’s performing – which pictures/links are drawing the most clicks.

The Main Issue With The Homepage

The main issue that I can almost guarantee is hindering your conversion rates is the location of the opt-in form – which is located all the way in the footer.

Do you not want people to see this and give you their contact information? Because that’s the way it appears.

An opt-in form should be front and center, not shoved in the bottom corner.

Your Opt-In Form

Well, I reckon I’ll address the opt-in form now.

I don’t like it one bit.

The Offer Is Not Good

First off, the offer only appeals to people who are about to make a purchase. What about the people that are just browsing? They’re not going to give you their contact information for a coupon they may never use.

Secondly, you’re offering a $20 coupon; however, most items “come with” a massive coupon …

$20 is chump change compared to the $200 I’ll save instantly, without giving away my contact information.

You need to offer something so delicious that everyone from a random window shopper to a jewelry connoisseur is dying to give you their contact information in exchange for a taste.

That $20 coupon will not cut it.

Worst Call-To-Action (CTA) To Ever Exist

The current CTA is the worst CTA to ever exist, ever.

If you’re not sure what I’m referring to – it’s that lovely button that says “Subscribe”. Don’t ya just want to put your email in there and press the button?!

I’m guessing not.

It needs to be “fun” to click, and it needs to be in line with the offer (Give Me My Coupon Now!).

Your Success Page

Now I see that the coupon is good on orders of $100 or more and cannot be combined with other codes or promotions – thus, rendering this coupon as useless.

Besides fixing the mobile opt-in form – please, please, please change your offer. All you’re doing with this is aggravating potential customers.

Tracking

It appears that you’re using Adobe Marketing Cloud (at least parts of it), and I can’t quite tell if you’re using it to run Google Analytics, Facebook Conversion Tracking, Facebook Exchange, etc. – as shown within builtwith, but it appears you’re tracking things.

At least I hope you’re tracking things.

Things like opt-ins, click-through-rates (CTR), conversion rates, open rates, social engagements, etc.

Hopefully you’re forming hypotheses and testing them, because Adobe Marketing Cloud can do a lot of stuff – and it’s expensive, so it should be used to constantly run tests – which is what I would be doing tons of.

Emails

I am about to give you some props!

The second I submitted my contact information, you delivered my coupon – as promised!

Regardless of whether the coupon is actually worth anything or not, it was instantly delivered which, a potential customer, would be very appreciative of.

Note: Normally, I would wait until I received several more emails from you before submitting this report in order to better analyze how you build a relationship and close a sale; however, since I'm only “king for the day” – I will go with what I currently have.

As king, I would keep a close eye on how well your emails perform. I would examine things like open rates, CTRs, and engagements. I would split test subject lines, content, images, etc. just like the rest of the web site.

I would also setup different email series for different customers based on what they’ve purchased and/or looked at and/or their buying habits. For example, if someone buys a certain watch, I would have an email automatically go to that person recommending a matching set of earrings. Thus, increasing sales.

Intermission

I am going to hit on a few more topics very briefly because I’m not sure if you’re enjoying this style of post or not, because if not, I don’t want to waste any more of your time.

However, if you would like to discuss more – let me know in the comments below!

Social Media

First off, where is your Twitter account? That is THE most important social media account for businesses. Twitter is one giant conversation that allows you to reach down to your customers and potential customers, and gives them the opportunity to reach you.

Facebook, you have a lot of likes 16,404; however, very little engagement. Some posts have one like. Why is that? My guess is because you’re using Facebook as a giant ad board, and people don’t want to look at ads; so, I would test the heck out of your Facebook posts and the content you’re sharing. Maybe a contest to re-invigorate interest?

Your Pinterest is not very active – the most recent pin I could find was over a year old – why is that? Are you not adding new products? Could you not promote your products in another light? You have great pictures and they need to be seen!

Your YouTube channel – I’m going to keep this short – it needs to be resuscitated.

Instagram – why aren’t you on here? Imagine getting some celebrities to take photos with your jewelry and sharing it with their followers – cha-ching!

There are so many variables you can test on social media, but it looks like you’re letting things fall apart.

Advertising

While I was browsing CNN, I was retargeted – nice!

It was good to see your ad follow me around.

As king, I would test hundreds of ads, traffic sources, landing pages, etc.

eCommerce

Of course, there is the whole eCommerce portion – in which I would examine cart abandonment, up-sells, cross-sells, down-sells, etc.

I would test images, button locations, titles, links, etc.

Everything can be tested.

The End.

While I made a few assumptions in this report – If I were “king for a day” – I would take a very objective approach to improving your website – numbers don’t lie.

What did you think of this style of post? Was it helpful to you? Were you able to glean any insights? Leave a comment below!