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finding the best budget, cpc, etc. settings

[ Edited ]
Explorer ✭ ✭ ☆
# 1
Explorer ✭ ✭ ☆



When building a campaign, what is a recommended way to find the ideal settings for budget, cpc-limit, etc. ?


Let me explain. I am building an adwords account with a relatively low budget per day. I have already set up 3 campaigns which share this low budget. Now I have no idea which one of those 3 campaigns will be the most successful in longterm. I am thinking about increasing the daily budget and the cpc-limit to get fast results, but this would burn my monthly budget fast, without knowing if I will get the data I need. 


Also I am not sure if I should try to set my budget in a way that I get more impression share per day or if I shall try to achieve higher rankings. 


With that low budget it's really hard to tell for me what the most successful way is to find the right settings in a short time (yes I am impatient). It would be nice to show my client results which would help to increase the budget. 


Would you rather work with just one campaign, two or all three? (full budget for one, but risk of working on a not successful campaign VS. shared budget, but chance to find the campaign with the highest potential)


Would you rather chose a low or a high cpc-limit? (low cpc-limit has a higher chance for a bigger impression share, but too low ad-ranks to generate clicks VS. high cpc-limit with lower impression share, but higher ad-rank)


I really wonder what your thoughts are on my questions and how you would approach this situation. 


Again. I am looking for the most efficient way to get valuable results with a low budget (as I said I am just an impatient guy with high expectations Smiley Happy





2 Expert replyverified_user

Re: finding the best budget, cpc, etc. settings

Top Contributor
# 2
Top Contributor
Hi Aleks,

The first place to start would be to define a conversion - what are you going to count as a success when visitors get to your site - basically everything else must be viewed in terms of how well they contribute to the conversions.... of all the metrics I consider cost per conversion to be king. I'm not really interested in getting more, cheaper traffic that bounces less and returns more often if it doesn't convert.

If you then test the different strategies you mention against their ability to generate conversions, you will be on your way to optimizing the campaign.

The best way to get valuable results is to first decide what is valuable....

Re: finding the best budget, cpc, etc. settings

Explorer ✭ ✭ ☆
# 3
Explorer ✭ ✭ ☆
Hi Steve

Thanks for your thoughts. It is an account for a retail shop and I already have set up conversion tracking for sales, including sales value. I think that your are absolutely right, that cost/conversion is a very important performance indicator which needs to be optimized.

I just struggle to find find good budget settings for starters with which I can measure results very fast and get enough data to make informed decisions, and that all within my narrow budget constraints... With those conditions everything I'm doing feels more like poking around and waiting for a few lucky punches. But maybe there is no other way. Or is there?


Re: finding the best budget, cpc, etc. settings

[ Edited ]
Collaborator ✭ ✭ ✭
# 4
Collaborator ✭ ✭ ✭

In addition to the good advice that you received I would like to assist with my tiny experience :


I think the next step after deciding conversion points is to decide what keyword will be profitable. It would be amazing to see average conversion rates in the keyword planner, but I don't think we will soon, so what I do for myself is to start with phrase match keywords and exact ones.


At the end of the test period, I look at the search funnel report to see what keywords assisted in the conversion paths and I increase bids for those and pause or delete the rest . In general I look at the estimates for the top of page bid for converting keywords and I set the budget to allow at least a few hundred clicks per month for those keywords . I also use bids that are 30% more than the top of page estimate and calculate the budget based on these values : top of page bid x 1.3 x (100 to 1000 clicks) per month per keyword.

Re: finding the best budget, cpc, etc. settings

Top Contributor
# 5
Top Contributor

Hi Aleks,


I would like to take a step back if I could and share how I generally approach situations like this (in case anyone is interested):


This is something I try to do early on to qualify clients in an effort to ensure we have the best chance at being successful (obv success is different for each client and business model).


Roughly estimate a an average CPC and based on the suggested client budget determine how many clicks you'll possibly receive. From there I look at the lower end of the spectrum, say what would a 1-2% conversion/sale rate generate for revenue using approximate or historical sales value information. If it's a lead generation client we try to see what closing rates look like. If they're say 30% we can roughly look at the revenue likely to be generated.


Once we have rough revenue estimates, we find out what the profit margins might look like and decide whether or not to proceed.


So it looks something like this.


Average CPC = $2.00
Client Suggested Monthly Budget = $500
Est Monthly Clicks = 250
2% conversion rate = 5 sales/conversions

Average sale value = $50

Total Revenue = 5 * $50 = $250 


(Revenue - Cost) / Cost = ROI

($250-$500)/$500 = -.5 = We would need a 4% conversion rate to almost break even.  Sure this is probably achievable but not without significant effort and with no guarantees.  No need to look at profit margins...this is not a good fit for us - especially considering that the cost figures we're using do not include management fees etc...


This is just one way of looking at things here and client discovery is very important in being able to make decisions like these. Some accounts are technically doomed from the start.  Smiley Happy 


So I ask you, and let's assume that your account is as optimized as possible and everything within your power is perfect, is there enough budget for you to work with to make this account a success?


Let's assume that all of this checks out. I would start by focusing all of the budget on the best selling and most profitable areas of the business and gradually build it out. Once you get some data, a few sales going and can prove profitability, the discussion about adding more budget should be an easy one. "Look, with this much budget, we're able to produce X sales and Y profit for you. If we double the budget, we can potentially double the sales and profit."  In my eyes, data is everything and when it's done right, there is no argument.  Numbers don't lie.  Smiley Happy


**bleep**, I get wordy early in the AM here. 




Tommy Sands, AdWords Top Contributor | Community Profile | Twitter | Philly Marketing Labs
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