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What happens if I cut my overall Adwords budget in half?

Visitor ✭ ✭ ✭
# 1
Visitor ✭ ✭ ✭

If I hypothetically kept everything the same, and cut my Adwords budget in half, what would the outcome be? Would I get half the impressions, and consequently half the conversions? Or do impressions not increase linearly? 

3 Expert replyverified_user

Re: What happens if I cut my overall Adwords budget in half?

Explorer ✭ ✭ ☆
# 2
Explorer ✭ ✭ ☆

Hi Gracie,

 

In theory you should recieve half of clicks, impression, etc up to a certain point. For example if my keywords cost $5 a click and my budget was $300 a day and cut that in half It would be safe to assume that i would recieve about 50% of the previous traffic. Using the same $5 a click if my budget was $40 and cut it in half I would assume i would see more than a 50%  reduction in traffic and conversion.   

 

 

Re: What happens if I cut my overall Adwords budget in half?

Top Contributor Alumni
# 3
Top Contributor Alumni

As JeremyL says, that's the theory.

 

In practice, you should expect to receive less than half the number of impressions you're currently getting, especially if your budget wasn't very high to start with. That will translate to less than half the number of clicks.

 

You should probably expect your conversions to go down by an even larger percentage. Depending on what time of the day your conversons are happening, it's quite likely that your budget will be exhausted and your ads offline by the time the "converting visitors" are online and searching.


Theresa
Google AdWords Top Contributor
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Re: What happens if I cut my overall Adwords budget in half?

Participant ✭ ✭ ✭
# 4
Participant ✭ ✭ ✭

Nice replies here, and my conclusion of it is that you should probably (all things equal) cut your bids in half as well. At least try it, and see if you can still get as much traffic as before, but at a cheaper price.

Re: What happens if I cut my overall Adwords budget in half?

Explorer ✭ ✭ ☆
# 5
Explorer ✭ ✭ ☆

Some cracking points in already. 

 

Reducing your keyword bids by half will get you close to the clicks you were getting with the full budget since your CPC is lower too. However, the impact of this on your conversions would be far greater if you push your keywords lower from positions that they have converted for you at historically.

 

If the intention is to limit spend then scheduling your ads to run during hours that are best from the conversion perspective should be done before the budgets are reduced. This would ensure that your ads run during the best hours, albeit with lower visibility.

 

 

Re: What happens if I cut my overall Adwords budget in half?

Top Contributor
# 6
Top Contributor

Hey folks,

 

Just to throw a spanner in the works I'd tend to disagree with the point about halfing your bids if you're halfing your budget.

 

I understand the reasoning of lowering your CPC so that you can get more traffic from a lower budget, but I think you have to really consider the effect -50% overnight on your CPC can have on your ad rank.

 

E.g. Let's assume your KW has a QS of 7 and before you cut your budget your Max CPC was $2.00. You'd have an ad rank of 14 (right?). Quality score and ad rank do not factor budget, so if you all of a sudden cut your CPC to $1.00 as suggested above, it is my understanding that your ad rank (=QS x Max CPC), would drop to, at best, 7 when it was previously 14.

 

So let's assume that PRE budget cut your ad rank of 14 got you 3rd position, which is a nice spot often in the top right corner which has a good CTR. Now, assuming that the competition hasn't made any drastic changes, let's jump to post-budget cut when you have an ad rank of 7. Feasibly this could drop you from 3rd position to 5th position or even lower, but for the purpose of this demonstration we'll say 5th.

 

Now I know there are a lot of factors in CTR, but let's assume that a large factor in CTR is Avg. Position. I'm not saying that 1st position is best but I think we can all agree that generally speaking, the higher your position, the larger share of clicks you will receive. So PRE budget cut when you were 3rd, if your ads, competitors and all other factors remain consistent, you would probably have a higher CTR than when you drop to 5th POST budget cut.

 

Therefore, adding insult to your already injured ad rank from 14 to 7 you now face the issue of a decreasing QS because your CTR is dropping because of your lower position (again, we don't have all details but know that CTR is a huge part of keyword QS). So let's say after 3 days of POST budget running in 5th position your CTR dropped by 20% which caused your previous QS of 7 to drop to 5. Going back to the POST budget cut calculation of Ad rank your new rank would be $1 CPC x 5 QS = Ad Rank 5.

 

Now you've got an ad rank of 5 which used to be 14. If you wanted to get back to having an ad rank of 14 from this position you'd have to increase your max CPC to $2.80 just to get back to where you were when you were previously paying $2.00 PRE budget cut.

 

Conclusion

I didn't set out to ramble on in such a sudo-scientific manner, but I hope that goes to demonstrate why I don't think halfing your bids just because you halved your budget is a good idea.

 

Of course my calculations are approximate and contain a lot of assumptions which is always dangerous, but that's adwords, right?

 

Good luck!

Jack Porter-Smith
Jack's G+

Re: What happens if I cut my overall Adwords budget in half?

Participant ✭ ✭ ✭
# 7
Participant ✭ ✭ ✭

Hi

 

decreasing QS because your CTR is dropping because of your lower position

 

Because CTR and its effect on quality score is relative to other advertisers in the same position and comparable auctions, I do not agree with Jacks arguments.

 

If you could just "buy" a higher rank thus a higher CTR thus a higher QS - the system would be totally flawed

 

http://www.ppchero.com/ultimate-guide-to-adwords-quality-score/#ch204

Re: What happens if I cut my overall Adwords budget in half?

Top Contributor
# 8
Top Contributor

David,

 

They are not argumens that I make - they are points devised for the OPs consideration as an alternate point of view.

 

I did say that I made a lot of assumptions and rough calculations at the end of my post and maintain the stance that, whichever way you look at it, halfing your CPCs overnight is not neccessarily the best way to maintain traffic levels if you have to cut budget.

 

As for your wider point regarding the system being flawed if what I say is correct... well... to an extent it is that way.

 

Remembr going back to its roots, AdWords is still an auction, and at auctions, people compete to get what they want and finance is still a large part of that. If 2 advertisers have comparable QS (say, 8 and 6) then I would expect the one with the biggest budget will win, regardless of their specific QS.

 

Where it would be flawed is if an advertiser with a QS of 2 could out-rank a QS of 9 based on 'buying' a higher rank.

Jack Porter-Smith
Jack's G+

Re: What happens if I cut my overall Adwords budget in half?

Top Contributor
# 9
Top Contributor

Taken from the linked article:

 

"On the surface, this would seem to be true, but Quality Score is actually adjusted to compensate for ad position differences.  Google considers the fact that higher positions naturally generate a higher CTR than lower positions, so they compensate for this by adjusting their formula to break up the self-reinforcing nature of those higher positions."

 

I still think a reduced average CTR on a long term basis is going to eventually have a negative impact on the campaign. Yes the Quality Score will be adjusted for the auction at that particular search which makes the auction fair for all advertisers but cumulatively the reduced CTR is going to stack up over time. The only way to overcome this would be for Google to introduce multipliers into the algorithm regarding a predicted CTR whenever an ad is shown in a lower position and then record this data at various ad positions to get an overall average but I can't see that being in place to be honest.


ScottyD, AdWords Top Contributor
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Re: What happens if I cut my overall Adwords budget in half?

Explorer ✭ ✭ ☆
# 10
Explorer ✭ ✭ ☆

>> my conclusion of it is that you should probably (all things equal) cut your bids in half as well. At least try it, and see if you can still get as much traffic as before, but at a cheaper price.

 

Um, no.

 

If you cut your bid, you affect your position. You may position yourself off the first page and this would more than cut impressions in half (probably cut by 80% or more), dramatically cut your CTR (even if you stay on the first page as absolute CTR is higher in higher positions). So you certainly won't get the same amount of traffic. Any traffic however will be cheaper.

 

Keeping the same budget but reducing only the bids will make the budget go further. In other words, you should get more clicks. But I'm with Nikhil here. You also affect other things such as conversions and thus cost per sale. Your CPS may actually go up.

 

If you SPEND $300 and cut that by half, yes the theory is that you should get half the impressions and therefore clicks, all else being equal.

 

If you spend $150 out of a $300 budget, then little will change if you cut the budget to $150. So the question is, are you spending your full budget each day?

 

Cutting bids or budget will not affect your QS. That is calculated taking position into account and will not change. QS is a relative measure of CTR, not an absolute one.