PPC Projections & Forecasting

This week Matt Umbro (@Matt_Umbro) hosts PPCChat with another great question set titled “PPC Projections & Forecasting.” The following is the transcribed Streamcap from the live chat:

Q1: Are metric projections (i.e.: budget, revenue, traffic, etc) necessary when running PPC accounts? Why or why not?

  • Yes. All of them are intertwined. How can you project traffic w/o budget? How can you project rev./conversion w/o traffic? – Brooke Townsend (@btownsend13)
    • Even then I think it’s more about setting times of the year when you are focusing more on efficiency vs volume. – Matt Umbro
  • Metrics are often very important to the client, but difficult to nail down. – Kyle Crocker (@kacrocker)
  • They are necessary, but sometimes I think they are given too much weight – at the end of the day they are estimates. Estimates with educated guesses, but still estimates. But for the client, I understand why they are important to share with their teams. – Matt Umbro
  • On a grand level, yes, but getting too caught up in granular predictions can become unnecessarily distracting. – Timothy Jensen (@timothyjjensen)
  • Estimated clicks & CPC. Knowing what type of bid range you should expect for keywords helps to keep you on budget. – Nate Velazquez (@NaceVela)
  • Yes, unless you’re insane. – Steve Gibson (@stevegibsonppc)
  • I think projections are needed. I’m new to AdWords, so starting with budget. But the more metrics the better! – Terry Porter (@TPorter2)
  • I find budget projections are essential for me in managing well, & IMO KPI projections are less important, but clients like them. – Kirk Williams (@PPCKirk)
  • I usually provide ballpark projections as goals to work towards in that month/quarter/year. – Davis Baker (@davisbaker)
  • Projections should have a purpose. You’re asking for budget or you’re prepping them for meaningful changes in the coming Q. – Mark Irvine (@MarkIrvine89)
    • Yes true, projections as a means to an end are helpful. Projections for the sake of projections waste time. – Kirk Williams
    • Similar to Analytics, I see projections as not absolute, but rather trends. – Matt Umbro
  • It’s easy to get wrapped up in projections. Project what is valuable for the acct & if you can act on those projections. – Erika Schmidt (@erikapdx)
  • There is always an implicit projection or estimate whenever you decide to work on one task over another. – Richard Fergie (@RichardFergie)
  • Yes, sets expectations and then when things don’t go accordingly (which they often won’t), launches thoughtful conversation. – Aviva Downing (@AvivCuriously)
  • I think they are a great guideline for assuming what you can expect v. what you’re asking for. – Amy Valleskey (@amy_valleskey)
  • So only those who never make the decision on what tasks to work on work without projections. – Richard Fergie
  • We look at overall business goals, and work backwards to see what’s obtainable/realistic but still seeing growth. – Emma Franks (@akaEmmaLouise)
    • Exactly – they are educated guesses based upon your data and vertical. – Matt Umbro

Q2: What factors go into determining your budget projections? Why?

  • We look at overall business goals, and work backwards to see what’s obtainable/realistic but still seeing growth. – Brooke Townsend
  • Client’s pre-defined budget, anticipated search volume, historical data if available. – Timothy Jensen
  • There could be many factors, but at core, it’s Seasonal impr volume, CPC and conversion type. – Glenn Schmelzle (@heyglenns)
  • I use historical data as the biggest variable when determining projections – gotta use what account history has showed. – Matt Umbro
  • Product margins and profit per order paired with sales history for individual brands. – David Cox (@dcoxdesigns)
  • Project scope, search volume, potential impact to business goals, est target CPA. – Maria Corcoran (@mariacorcoran)
  • Cashflow. Because if client has cashflow sorted, their marketing budget should be infinite.  (Assuming, of course, there’s no limit to the number of clients they can handle.) – Steve Gibson
  • Seasonality, growth expectation, historical data when applicaple. – Amy Valleskey
  • I have a handy excel sheet to calculate budget. You grab like 5 metrics & it calculates budget for you. Major nerdery that I love. – Erika Schmidt
  • Many a time, competitors’ budgets matter too. – Rohan Ayyar (@searchrook)
  • Total budget, how much they want to spend per day, CPC. – Terry Porter
  • I also follow the 70/20/10 rule, 70% of budget is for tried and true, 20% is for safe bets, 10% is for new initiatives. – Matt Umbro
  • In yearly growth projections, def use historical data in addition to calc imprvt of performance based on CPA or rev goals. – Maria Corcoran
  • Current performance (Impr, CTR, IS, CPL, Cost) as well as lost IS for potential expansion. – Emma Franks
  • Seasonality, growth expectation, CVR & CPA, CPC expectation. In-house so I dont consider budgetary limitation, rather needs. – Rachel King (@rachelking237)

Q3: Do you tend to set 1 revenue/ROAS/ROI/CPA goal per account or do you breakout by channel? Why or why not?

  • Depends on the account. For accounts with complicated products, breaking out ROAS is very important IMO for accurate analysis. I had client struggling to meet ROAS goals. We broke out their “complicated” brands, and remaining ROAS was beating goals. – Kirk Williams
  • I am running an AdWords account for my employer, so just the 1 account. Will be watching to see how others do it. – Terry Porter
  • Was a great signal to both of us to treat them separately to get more accurate idea of ROAS. Now I report them completely separate. – Kirk Williams
  • Hard to answer as in-house, but we have an overall marketing ROAS, with specific ROAS goals for PPC by campaign. – Brooke Townsend
  • Depends on the overall goal. Sometimes you have to use the high margin channel to make up for the high volume, break even ones. – Jesse Semchuck (@jessesem)
  • Goals often are dependent on budget. I can’t honestly pitch an assisted conversion path to someone with a tiny budget. – Mark Irvine
  • By channel; in most cases, clients don’t want to ignore other channels in favor of the best performing one. – Rohan Ayyar
  • 100% by act for opt. Products will have different REV value. Also audience can vary w/LTV. Brand goals should be set diff too. – Maria Corcoran
  • I will break out goals by campaign/category, but generally, clients want to see an exec summary overview. – Matt Umbro
  • I run ROAS by brand to consider AOV of product grouping under each then manage P/L by channel. Team runs CPA by channel by brand. – Rachel King
  • I like breaking PPC ROI goals out by brand terms & non-brand terms & have account structure that supports that measurement. – Tim Mayer (@timmayer)
  • If channels have diff purposes, then breakout goals. Awareness channels can’t have the same rev as a purchase-level channel. – Erika Schmidt
  • Also depends on time of month – measure Net ROI to campaign by device monthly but CPA daily. I don’t work off assumed ROI. – Rachel King

Q4: Do you provide multiple projections based upon varying goals (i.e.: efficiency, volume, brand awareness)? Why or why not?

  • I do different projections based on scenarios. IE: growth of 3x, efficiency gain of X, etc. A good way to look at all angles. – Brooke Townsend
  • Try to align projections (and reporting) to goals to close the loop and fit with client’s priorities. – Kyle Crocker
  • I think you can project based on a campaign’s purpose, is it awareness only, purchase intent, competitive? – Terry Porter
  • I run 5 What-ifs based on changes to KPIs, being in-house. In prior agency life would provide qtrly scenarios for growth. – Rachel King
  • I’ll provide projections based upon potential budget increases/decrease. – Matt Umbro
  • No. I believe a campaign should have one main goal. – Steve Gibson
  • Not necessarily based on varying goals, but based on varying factors that could influence outcome. – Emma Franks
  • I really prefer “What-ifs” to projections. Change in KPIs is typically a result of change in the account. – Mark Irvine
  • Choose one primary goal and project for that. Secondary goals are ok to project for but must be clear that those are secondary. – Aviva Downing
  • TBH, not a whole lot. I see slight shifts, but we see more shifts in consumer behavior than Google updates. – Rohan Ayyar

Q5: How much do industry factors play into your projections (i.e.: algorithm changes, right side ad update, etc)?

  • TBH, not a whole lot. I see slight shifts, but we see more shifts in consumer behavior than Google updates. – Brooke Townsend
  • If there’s a significant new feature making a new channel worthwhile investing in, allocate new budget. – Timothy Jensen
  • Google constantly intros uncertainty into the mix. Vastly impactful and impossible to predict from historics. Hence What-ifs! – Rachel King
  • The only constant is change – create your projections with the knowledge and information you have. – Matt Umbro
  • When AdWords changes things, it makes a big difference. Text ads to enhanced ads, etc. Especially when you are new to ppc! – Terry Porter
  • If you’re seeing changes in other accounts, it’s sensical to see it affecting your projections. If not, then no. – Mark Irvine
  • Projections might lay a base for understanding industry (and other) changes – especially if they are made from historical data. – Kyle Crocker
  • More in presentation of data: this is the story of what COULD happen, but industry is always changing so be willing to adjust. – Emma Franks
  • Current team mantra: what we knew yesterday Google may change tomorrow. I.e. Yellow Ad labels running again today. – Rachel King
  • Some make more difference than others, of course. Difficult to predict & take into account nature & scale of algo changes. – Rohan Ayyar
  • They can have an indirect impact on ROI which then has a knock-on effect on budget projections. – Bhavek Rughani (@bhavekrughani)

Q6: How closely should you be held responsible for the projections you create? Why?

  • It’ll always be a chase to optimize to the newest update – adapt and adjust as necessary. – Amy Valleskey
  • Assuming you set proper expectations (including saying that projections are estimated best guesses). I would say that you should be held responsible to come within at least 10% of projections. – Matt Umbro
  • Everything is a product of expectations. Set proper ones & use appropriate disclaimers/contextualizing to be in best spot. – Julie Bacchini
  • Like it or not, you’re going to be held to these numbers to an extent. This is your chance to under promise & over deliver. – Mark Irvine
  • Certain clients I KNOW will use it as a fact, others use it as a goal. Know your clients and communicate your hesitations. – Tim Halloran (@timmhalloran)
  • As a data-driven educated guess that is never 100% accurate, I try to have 85%+ confidence. Im never held to them internally! – Rachel King
  • In-house answer: you’re always going to be held responsible for projections, while basing it off of overall business goals. – Brooke Townsend
  • Again, as long as you set proper expectations with projections, you should be held responsible. – Matt Umbro
  • Gives you a chance to prove yourself though. I’ve had to prove that some things just aren’t possible given the goals. – Brooke Townsend
  • Never, ever over promise. Even when the CEO tries to force a concrete number in front of an audience. – Rachel King
  • Which is where it depends on analysts confidence in prediction and how this was communicated. Say “this will 100% happen” and then it doesn’t – line up and put your head on the block. – Richard Fergie
  • I am new at this, so I hope that I will be given a chance to show improvement. I projected X and we got Y. Make that better! – Terry Porter
  • You should always be held responsible but it does help to have flexibility otherwise you can over obsess. – Bhavek Rughani
  • ALWAYS specify (include in writing) assumptions used for any projections! – Julie Bacchini (@NeptuneMoon)
  • At least in-house there is more subjectivity. Ie volume 10% short but AOV was up 15%, Net P/L grew 1% after we cut X expense. – Rachel King

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More PPCChats

Don’t forget to stay tuned for the next #PPCchat on Tuesday at 12 noon Eastern, 9 am Pacific and 5pm in the UK. Same Chat time, same Chat channel.


Check out the PPCChat Twitter list to see and connect with all current and prior participants.

• Matt Umbro (@Matt_Umbro)
• Paul Kragthorpe (@PaulKragthorpe)
• Amy Valleskey (@amy_valleskey)
• Aviva Downing (@AvivCuriously)
• Bhavek Rughani (@bhavekrughani)
• Brooke Townsend (@btownsend13)
• David Cox (@dcoxdesigns)
• Davis Baker (@davisbaker)
• Emma Franks (@akaEmmaLouise)
• Erika Schmidt (@erikapdx)
• Glenn Schmelzle (@heyglenns)
• Jesse Semchuck (@jessesem)
• Julie Bacchini (@NeptuneMoon)
• Kirk Williams (@PPCKirk)
• Kyle Crocker (@kacrocker)
• Maria Corcoran (@mariacorcoran)
• Mark Irvine (@MarkIrvine89)
• Nate Velazquez (@NaceVela)
• Rachel King (@rachelking237)
• Richard Fergie (@RichardFergie)
• Rohan Ayyar (@searchrook)
• Steve Gibson (@stevegibsonppc)
• Terry Porter (@TPorter2)
• Tim Halloran (@timmhalloran)
• Tim Mayer (@timmayer)
• Timothy Jensen (@timothyjjensen)

Streamcap Projection, Forecasting, and Creation

This is a guest post by Paul Kragthorpe; works at WebRanking in Minneapolis, Minnesota.
Connect with Paul @PaulKragthorpe, and Google Plus.

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