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Case Study: How Increasing Your AdWords Budget Limit Decreased Costs and Increased Conversions

by | Jan 9, 2013 | Case Studies | 0 comments

It’s perfectly understandable to be afraid when you are asked to spend more money on just about anything in life. Especially when you are talking about most specifically, your AdWords daily budget. The uncertainty of whether or not this will be a loss or a gain is something that troubles just about anybody.

However, with PPC, it’s important to know that you will get what you spend, and depending on your budget and industry, this may be positive or negative.

That being said, should we be stingy with our AdWords budget when we know it’s working for us? Here are 3 of the most frequent situations when you shouldn’t be cheap:

1. When Your Industry Doesn’t Allow You To Be Cheap

There are certain industries that do not allow stinginess in order to have success. A lot of service industries and many of those in insurance (with CPCs as far up as $54. 91!). Industries we have worked with in the past such as plumbers, lock smiths and carpet cleaning companies tend to have high CPCs ranging from $8 to $15. Having a $20 daily budget simply will not cut it for these types of industries, since a campaign that has only 1 to 3 clicks per day will most likely result in very little to no business for you.

Should you be giving up then? Absolutely not. There is a reason why the CPC prices are high, and that’s because your competitors are definitely doing PPC and know it’s worth it. It’s important in these cases to have killer ads, and a reasonable daily budget amount that will allow you to get more than a minimum of 10 clicks per day. Having a reasonable daily budget amount will allow you to be a valuable player in the field and increase your CTR, which in turn will lead to higher Quality Scores which will allow us to have lower CPCs in the future.

2. Lost Impression Share, Lost Clicks, Lost Conversions = Campaign Failure

Having enough budget will allow us to always be shown throughout the day or time we need to be shown. A very strong reason why most campaigns fail is due to the ads not being shown throughout the day since they are limited by budget. This results in lost impression share which means lost clicks, which means lost potential leads or sales.

Take this example from one of our Clients: Our Client sells wood finishing products and had a $20 daily budget for advertising. Although he was seeing sales with that $20 daily budget, he was constantly limited on certain peak days by this limited budget amount.

We convinced our Client to increase his daily budget to $50 in order to have extra resources for peak days. As a result, we were able to capture 25% more conversions with a slightly less overall cost. We were thereby also able to lower the cost-per-conversion by focusing our budget on converting terms and ultimately, increase overall revenue.

This can be the end for any campaign, or as mentioned in the example of one of our Clients, this could be holding the campaign back from more success. If we are invisible during peak times, this would be the same as lost business. Meaning, we’d be basically handing over business to our competitors.

3. If You Want More Money in Business, You Have to Spend More Money

This was actually a principle I came to learn when I began to work at White Shark Media, and it makes absolute sense.

Investing in business is always a risk you will have to take in order to expand. The same goes with your AdWords budget. Always going back to the same example, we have a campaign that is already producing sales, but as a business person, you should always look to expand.

A business that is not looking on how to be better than they were last year, is simply conforming and stagnating while they could be excelling in comparison to their competition.

Maintaining the same daily budget for years will result in lost business eventually in the future. Sometimes you have to take risks, in order to see results, or else you will be on the sidelines getting the bare minimum always.

So What’s a Good Daily Budget Amount?

That being said, here are some tips to keep in mind when assessing what budget amount you should have:

  • Make a good assessment for your budget, analyze CPCs in your industry and have a strategic plan.
  • Always have extra money in your budget to capture clicks on peak days.
  • Strive to get the best Quality Score possible in order to have lower CPC costs by optimizing your campaign correctly.
  • Analyze your campaign in order to see when you should be focusing your budget more. This also applies to specific keywords and ad groups that are converting more for you.
  • Create a strong negative keyword list to avoid spending thousands on keywords that have nothing to do with your industry.
  • Using the right match types for your keywords will help you get more relevant results. Avoid using broad match if your CPCs are high and you are using very broad keywords.

Never be afraid to spend more money in AdWords once you start seeing positive results from your campaign. It’s important to have a game plan and make a good forecast on your spend. Establish what you should be expecting out of this, and most importantly, make sure you have a well-constructed campaign that is cost-effective and will use your daily budget most effectively.

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