Typical AdWords Mistakes: Budgets and Bidding [Series]
For most advertisers, AdWords is a learning-by-doing activity. We start out with some kind of knowledge foundation, but it’s not until we start to work with our own campaigns that we start to really grasp what AdWords is all about.
I’ve personally made almost every single mistake in the book; and even though my mistakes will be a lot smaller moving forward, I will continue to make them.
We can decide to do one of two things about the mistakes we make in life. We can either hide them and act like we’re perfect (wait, I’ve already mentioned that I make mistakes), or we can share the mistakes with the hope nobody else makes them in the future.
Let’s opt for the second choice.
This will be the first installment of our monthly series that covers AdWords mistakes and how you can recover from them. Today, we will be sharing mistakes concerning bid and budget management in Google AdWords.
1) “Splitting” Your Budget On Several Campaigns
If you have $100 to spend on AdWords per day and you create 5 campaigns, you will often make an equal split between the 5 campaigns and assign $20 budget to each. The danger of doing this is that, most likely, not all of your 5 campaigns will spend the same amount of money. If one campaign contains the more popular keywords, you will have to set the bidding lower in order to let the campaign run all day.
On the same note, you will have budget left over in other campaigns where you won’t reach your daily budget limits.
Set a Shared Budget for your account, and assign this shared budget to all your campaigns. This will allow you to act like you only have 1 campaign budget. It basically means that all your campaigns can draw from the same budget. You will have the benefits of always being able to spend your entire budget, but without the danger of surpassing your daily limit.
2) Setting Bids According to How Much Budget You Have
On the same lines, if you’re hitting $100 early in the day and thereby missing impressions later in the day, you will decrease your bids.
Setting your bids according to what your AdWords’ budget is, is not healthy and by all means should not be practiced. Setting your bids according to your budget means that you’re essentially ignoring your end-goal of doing AdWords: Obtaining the highest ROI possible. No matter if you are new or an expert in AdWords, this is the goal almost all advertisers are looking for.
Stop setting budgets. Yes, I’m being serious. You need to stop treating AdWords like it’s a newspaper ad or a radio spot. You can control AdWords on a daily basis and you can see exactly how every single part of your AdWords campaigns are contributing to your bottom line.
Instead of setting budgets, set goals. Set a CPA goal or preferably a Value / Cost goal. If you find keywords within the range you’re looking for, you should increase the bidding. Whenever the keyword is out of range, you decrease the bidding. If the keyword never reaches your range, despite several optimization attempts, you pause it.
After a while, you will have a campaign running on only profitable keywords and you will not care less if you spent $100 or $1,000 per day as long as the keywords are profitable.
3) Using Standard Delivery to Managing Your Low Budget
If you pay $5 per click and have a $25 daily budget, your ads will stop running once you have received 5 clicks. That can happen in the first 5 minutes of the day (00:05am), or at any other time during the day. Google makes no difference on when or how the budget is spent. Once it’s spent, you must wait until the next day to be shown again (unless you add more budget).
To combat this, you have the opportunity to choose Standard Delivery for your AdWords campaign. Standard delivery means that Google AdWords tries to predict how quickly your budget will run out. Once they know how fast your budget runs out, they will start showing your ad only with every 2nd, 3rd, 4th, or 20th search depending on how quickly your ads run out. This practice gives you a fake sense of your campaign’s presence during the day.
Always choose Accelerated Delivery if you know how to manage bids and have the time to optimize your AdWords campaigns on a daily basis. It’s crucial for your profitability that you don’t pay too much per click and reach your budget-limit too early in the day. If you do so, you might miss out on the most profitable times of the day, or repeat searchers might not be able to find you again later in the day.
Let’s say that you are paying $3 per click with a $100 daily budget. You will in this case receive 33 clicks by noon every day. Now let’s add the fact that you’re in a 2.0 avg. position. This means that we can lower the CPC. Yes, we will get a lower position, but we will be able to roughly double our click volume. By lowering our bid, we can possibly pay $1.5 per click with an avg. position of 4.5.
Instead of reaching our budget at noon every day, we will start reaching our budget at 6pm every day. Yes, we have a lower ad position, but we are starting to see 66 clicks instead of merely 33 clicks.
Next step is to drop our bid even further. We try to drop it to $.8 and get an avg. ad position of 7.8. We are now shown all day long, but we only spend $65. therefore we only receive 52 clicks with a CPC of $.8.
We lowered the bid too much and now have to back up. The ideal is to hit about 90% of your budget on a daily basis (given the need to set a budget).
4) Only Setting Bids for Your Ad Groups
Even closely related keywords can act vastly different and will require different bids. When you’re setting a bid for an entire ad group you make the assumption that everything is the same. Nothing could be further from the truth.
Analyze the results from each keyword individually and set a bid that reflects the performance of that specific keyword. Does that sound difficult and something you would need a math-degree to do?
If so, just follow this rule: If your keyword is doing well, increase the bid by 20% until you reach an avg. position between 1.5 and 2.5.
If your keyword is performing bad, decrease the bid by 20% until the keyword is below an avg. position of 8. If this happens, you pause the keyword unless it still generates any significant click volume.
5) Not Pausing Your Low-Potential Keywords Early On When Your Budget is Low
Let’s say you have $10,000 for your first month with AdWords. After a month, your results from 3 campaigns look like this:
Campaign A: $3,000 ad spend with 100 conversions
Campaign B: $1,000 ad spend with 50 conversions
Campaign C: $6,000 ad spend with 10 conversions
Currently you have paid $10,000 for 160 conversions. However, if you now stop Campaign C, you will be able to show a result of $4,000 ad spend and 150 conversions. This is vastly better than the original result.
The results mentioned above are simplified. You will almost never find a case that is as clear-cut as the one outlined above. However, I see the similar cases every single day.
When you’re starting out with a new campaign, I recommend you start pausing areas of your campaign that are not producing any real results. However, if you don’t have any meaningful differences between the different keywords or ad groups, you shouldn’t spend time pausing things.
The results from doing an exercise like the one above can mean the difference between having complete faith from your boss/Client, or it can mean you still need to fight for budget.
After you have paused the lower performing parts of your campaign and worked closely on improving the high-potential parts of it, you can start reintroducing the paused parts of the campaign. The areas might still end up being great areas of growth for you now that you’re making money. The idea behind this exercise is to make sure you have a healthy amount of profits to show before you start working on areas that have less potential.
What Topics Would You Like Us to Cover in The Next Series?
There are plenty of mistakes to take from, but we would still like to hear what areas you would like to read about first. Please share the topics or areas of AdWords management you would like us write about next time.