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PLA Budget Settings

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# 1
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I was just wondering what are the best practices when setting budgets for PLA. Google won't tell me what my competitors are paying so its just a guessing game. Any advice would be great.

 

Regards

Dave

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Re: PLA Budget Settings

Top Contributor
# 2
Top Contributor

Hello, Dave.

 

What I'm usually trying to do is to show all my products in that PLA campaign. Sometimes, that does not happen, because the products that trigger PLAs more often spend most of the budget, and then there's not much left for the other, less searched.

 

In this situation you can gradually increase your budget until products which were invisible in searches in the past start showing.

 

At the same time, you should check your ROI, per product, and pause the ad groups (I'm talking about campaigns where each product has its own ad group, by using adwords_grouping in the product targets) which are not profitable.

 

Last, but not least, you can have a look at Impression Share with PLA campaigns as well. If you're losing IS due to budget, you should definitely try to increase it (while maintaining profitability, of course).

Calin Sandici, AdWords Top Contributor | Find me on: Google+ | Twitter | LinkedIn | myBlog
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Re: PLA Budget Settings

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# 3
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I already split all my PLA ads by brand. At the moment I set them all to 50p per click but finding this expensive so I’m trying to figure out what is the best price for that particular brand.

Re: PLA Budget Settings

Top Contributor
# 4
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Best price for brand ... Ok.

 

If you don't want to go to product level, where you know precisely what the margin per sale is, you'll have to work with averages per brand, both in terms of click cost and in margin per sale.

 

max. CPC = (Margin per conversion for that brand) X (Conversion rate for that brand) (conversion rate being a number between 0 and 1). That's the break-even condition.

 

If the conversion rate for that brand is 2%, or 0.02, i.e. you sell to one in 50 visitors or clicks, and the average margin per sale is 10$, you should not spend more than 10 x 0.02 = 0.20$ per click.

 

That way, for 50 visitors you pay 10$ and if one converts you also make 10$.

 

Now, if you also want some ROAS, such as a 2$ in margin for evey 1$ spent on advertising, you need to divide the max CPC by ROAS as well, and thus your max. CPC in order to attain the desired ROAS gets halved.

 

Go back in time Smiley Happy, look at the conversion rates for your products & ads directed to them, calculate your margin per sale, think of a ROAS and set your max CPC.

 

Alternately, split your campaigns by brands and use CPA bids and you don't have to do the math. If a brand usually brings you 15$ per conversion in margin and you want a ROAS of 2, try to set a CPA bid of 7.50 and see if it works.

 

 

 

Calin Sandici, AdWords Top Contributor | Find me on: Google+ | Twitter | LinkedIn | myBlog
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Re: PLA Budget Settings

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# 5
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Yes thats an intresting idea. Thanks!

Re: PLA Budget Settings

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# 6
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Ok, have a go at it and let us know how it works.

Calin Sandici, AdWords Top Contributor | Find me on: Google+ | Twitter | LinkedIn | myBlog
Was my response helpful? If yes, please mark it as the ‘Best Answer.’ Learn how here.