Posts Tagged ‘Bids’

Adwords Budgets

Sunday, November 23rd, 2008

When setting up a PPC campaign, one of the most important things to consider is how best to maximise your return on investment.  Higher bids may result in more sales but that does not necessarily mean more profit. A poorly constructed AdWords account can have many problems that could be easily fixed and make a huge difference to your ROI.

One common problem that I see when taking over the management of campaigns is a daily budget that is restricting the exposure of a campaign.  For example, you may be in a situation where your ads are in the top position, you spend £1 for each click, your daily budget is £100 and these 100 clicks are reached by mid-day.  This means that your ads will not be shown in the afternoon, limiting your exposure.  If you reduced your CPC to 50 pence, your ads may drop a few places but you may find that your ads run throughout the day giving you 180 clicks for £90.

The example above is purely hypothetical but I have seen many examples where incorrect budget settings can severely limit a campaign’s effectiveness.  One solution is not to limit your spend by your budget.  Instead, restrict the daily spend by limiting your CPC bids.  For example, in the above example, after changes were made, the daily cost was lower than the daily budget. To reduce the daily cost again, lower the CPC from 50 pence instead of lowering the budget.

An argument against this approach is that it does not safeguard against spikes in the number of clicks.  Although this is true, it is worth remembering that PPC campaigns should be though of as an investment rather than a cost and an increase in clicks should generally translate to an increase in profit.