PPC can be expensive, but in reality it should not cost you anything, if it does, then your doing it wrong.

PPC is all about getting specific, specific keywords/phrases, directed via specific pull and push wording (pull to draw them in, push to stop wasted clicks), and then delivering traffic directly to the page where they can get what they searched for originally. If you do this, then your conversion rate (clicks to purchases) will go up dramtically. Your cost per client aquisition CPA will also drop dramatically. Many people run only one or two words or phrases that are way to generic, and dump all the traffic to their home page. You can not do it any worse than that. Generic words are expensive, and convert badly.

If you want success with PPC, then get specific.

And in answer to the original question, you should spend about 10% of your income on advertising.

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Old Bald & Stupid, but more than compensated for by being born Welsh. Ymlaen Cymru (forward Wales) Internet Marketing Consultancy

Someone else has already commented on ROI in this thread. That is really the only criteria for your advertising budget.

For instance, if you spend $500/month on PPC (or any other advertising) and you make sales of $2,000 of which your net profit is $500, would you run your ad again?

I certainly would.

Now suppose you spend ?1000/month and you receive $4,000 with net profit of $1,000, would you run those ads again?

Again I would.

And I might keep on increasing my spend on PPC (advertising) until the ROI tailed off.

Too many organisations set an advertising and marketing budget and that's it. Good or bad.

Test everything. Monitor your results. And keep on spending the money while you get a worthwhile return.

I spent 300-500 a day on Google Adwords. (~$15 per click) But the return was great since I had the lowest price advertised. About 90% of the click through customers signed up. Make sure to run pecials or promotions in your PPC campaign and make a SPECIFIC page accordingly to your campaign... for an example check out

www.openfax.com/google/

I feel that if you just link to your general site people will just browse around and leave to shop elsewhere.

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Openfax | Broadcast Telecom Solutions

Ariae Networks | Managed Hosting Solutions - Going through extensive network upgrades...

US Ameritel | Voice Over IP Solutions

Marketing is defeinitely an investment and you may want to look at marketing dollars as a percentage of your total revenue and not a dollar amount to keep your budget in line. I say marketing and not advetising, because advetising is costly and in the small business arena can often be replaced by a better marketing technique.

Dion,

Have you tried the no-cost ways to drive traffic to your site? Submitting articles, posting in groups like this, and sending press releases?

I own a site that sells novelty products for writers and I can buy an over-priced ad on another writer site or in their newsletter and hardly see a blip on my stat radar, but I can post in a discussion group where freelance writers hang out and get 200 new visitors that day. And it didn't cost me a thing, plus we all know how fun and helpful groups can be.

Think about who your target customers are and where they would go on the Internet and check out those sites. One article packed with helpful info could be seen by thousands of people, and with your URL in the byline, you'll get lots of traffic.

Diane

The business writer who helps people grow their small business
http://www.BouncePublishing.com

Do you have an ezine? Do you offer a free report to those who subscribe? Do you write articles? Do you teach? Do you attend networking meetings? Those are not expensive ways to gain clients. However, you don't say who your ideal client is....

If you write articles, I've written one called "Article Banks Are Internet Gold"... have 20 or so banks after the article. One thing I have to add to the article is that when your article appear on others sites, in their ezine archives or web sites in general, that gives you a link back to your web site in the resource box.

http://www.ArticleBanks.com

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Best of success and lots of joy,
Maria Marsala
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Business Builder, Trainer, Author, and former Wall Street Trader

Powering-UP service businesses and the women who own them! Visit http://www.ElevatingYourBusiness.com and subscribe SIMPLE Business Steps Ezine.