PPC Budget Strategy: The Basics from a Pay Per Click Services Expert

PPC Budget Strategy: The Basics from a Pay Per Click Services Expert

The possibilities usually seem endless when it comes to finding ways to get more traction, and thus more sales from your PPC (AdWords) campaigns. Budget however tends to be the primary topic for discussions when considering how to get the best results from your Pay Per Click Services partner. If you have been in this situation before, then you will understand that often the conversation when budget is concerned is fairly one dimensional – increase it. Now, this isn’t always bad advice, however your AdWords specialist may not be considering that a budget increase for you simply isn’t possible or that on a deeper look, not necessarily the best move we could be making in order to get the best from your PPC campaign.

How to Driving More Business. Increased Budget or Pay Less Per Customer

As Pay Per Click Services specialists we are tasked with driving more business, through the delivery of new leads, or actual sales. When creating AdWords strategy plans for clients, the formula is pretty simple:

BUDGET/CPA (Cost Per Action) = The number of leads you can get

Looking at this simplistically, we can tackle this one of two ways:

  1. Increase the AdWords budget
  2. Lower the cost per action, meaning we lower the total Cost Per Acquisition

I know, not rocket science, but surprisingly often not considered genuinely enough. Obviously, if the budgets we are working with are set in stone, then it means we have only one option: we must be more cost-effective.

Low Hanging Fruit: Budget Allocation

An extremely simple yet effective method of improving performance is to allocate PPC budget differently. Here are two simple suggestions to tackle low hanging fruit:

  1. Allocate greater budget to campaigns with the lowest CPA.
  2. Check for editorial issues and draft status in all campaigns.

Cost Per Action Is Driven by CPC and Conversion Rate

Assuming you can’t increase your budget – let’s look at what your Pay Per Click Services expert can do in terms of reviewing your CPA. How can we have an impact on your CPA?

But based on another concept, called Break-Even CPC, we know that cost per click (CPC) and conversion rate (CVR) drives CPA.

In order to grow the amount of business we get coming in from the campaign, we must lower our CPA, therefore we must focus on reducing CPCs or alternatively improving the conversion rate. Therefore, our simple strategy can be built out in a little more detail such as the below:

  1. Increase the AdWords budget
  2. Lower the cost per action, meaning we lower the total Cost Per Acquisition
  3. Shift budget to the best performing campaigns
  4. Increase the conversion rate (provided CPC increases at a slower rate than CVR)
  5. Reduce cost per click (provided CVR increases at a slower rate than CPC)

Improve CPC and CVR to Achieve a Lower CPA

Eliminate waste and resolve the issue of a low CVR:

  1. Exclude poor performing keywords, placements and audiences:
  2. In search pull a search term report and add negatives keywords
  3. For RLSAs exclude audiences with -100 percent incremental bid
  4. Check mobile performance, if poor consider negative incremental bid
  5. Get serious about test landing pages
  6. Improve targeting.

The path to lower a high CPC:

  1. Lower bids to break-even CPC, especially for top 10 percent of keywords or placements
  2. Improve click-through rate using better ad copy for all ad groups with break-even CPCs
  3. Use all ad extensions possible
  4. Pause poor-performing ads

There’s certain aspects in and out of our control with AdWords, therefore it’s crucial that we keep a close eye on those we do have a say in so that we make the most out of every penny invested.

If you are looking for a Pay Per Click Services company, please get in touch with our team today to discuss how we can assist you with expert Pay Per Click services and advice.