Tips for Determining Your SEM Budget

Writing by Nick Stamoulis Tweet

When the economy took a turn for the worse, companies learned quickly they had to tighten their purse strings. Budgets were slashed in an effort to just maintain some semblance of a profit margin. Many people found themselves defending their positions within a company in order to survive round after round of layoffs. When times are tough, penny pinching becomes a way of life.

Not to say that the economy has fully recovered, but there are signs that a recovery, albeit a slow one, is on its way. The State of Search Marketing Report 2011, produced by Econsultancy and SEMPO, projected that search engine marketing will spend an estimated $19 billion this year, a 16% increase from 2010. An increase is spending is a good sign. It means that companies are relinquishing more of their carefully counted dollars for marketing efforts, which means they’ve seen that consumers are spending more. This is not to say that companies are willingly writing blank checks for their search marketing teams, but it does mean you might have a bigger SEM budget to work with this year.

How do you go about planning your SEM budget?

Be Smart About It
You have to pick and choose your battles when it comes to search engine marketing. You have to realize that you may not be able to do everything you want to right away. It can be expensive to get a SEM campaign off the ground, and you can’t always afford to do it all at once. You have to decide what it more important. Do you want to up the frequency of your company newsletter to connect with customers, or do you want to allocate more of your budget to bidding on more competitive PPC keywords? Having a list of goals will help you decide where you should start and how much money you should dedicate to each effort.

Check out the competition
Understanding your competition and what they have done in terms of search marketing can give you an idea of what you need to do to catch up and overtake them. If they are dominating the search results, you know you’ll have to devote more time and energy to SEO in order to compete. If there is no clear leader in your niche, then a smaller amount of money in the right place is going to make a noticeable difference. Big brands tend to have the money and manpower and own highly competitive keywords, both in the organic search results and PPC advertising. But what keywords can you focus on that they’ve missed?

How much are you willing to spend?
SEO and SEM are two very different things. One of the key differences is that SEM involves PPC, a paid marketing tactic. Most SEO tactics (link building, social media marketing, article marketing, etc) don’t cost anything, but require a serious time commitment. What do you have more of and what are you willing to spend? PPC might cost you more, but can lead to faster results for as long as you’re running ads. SEO is a long term process that builds on itself over time. Which is more important to you? Which one is going to provide the best value for your budget? Only you can decide that.