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Don't Use the PPC Budget Tool

Here’s a statement that might shock some PPC managers:

If it is an appropriate time of the day for your ads to show, you never want them to be shut off because your account has hit its budget. If this is happening, you are not spending your money as wisely as you could be.

Let me say that another way: you don’t want your campaigns to hit their daily budget.

Now you’re thinking questions like…”Huh, don’t I want to spend my money to get visitors to my website? Isn’t that the point of PPC advertising?  If I don’t have a budget, how do I keep from spending too much?”  The short answer is bid less.  Let me explain the longer answer with a very general description.

If you’re spending $2 per click and your daily budget is $200, then the most clicks you can get is 100.  After you hit 100 clicks, your ads are turned off and don’t show the rest of the day.  This means your ad is not collecting as many clicks as it could be. Since you undoubtedly have to be on some kind of budget, you don’t want to just let your ads run and spend out of control without considering ROI. Instead, you want to control your spending with your bids.

If you lower your bid to say $1.50, then you could theoretically get 133 clicks before your ads are turned off.  If you are still hitting your budget, lower your bids again.  If you spend $1.00, you could get 200 clicks before your ads are turned off, and so on…

What you want to do is find the sweet spot where you are spending just under your daily budget on a consistent basis.  This is the spot where you will get the most clicks for your budget.

With this simple experimentation method, you’ll find the spot where you can gain the most visitors for your money given your account performance and you’ll never need a Budget Tool again.  And of course, the more visitors you get for your money, the more conversions for your business.

Then, you can look at your ROI over time and decide what to do with your bids to maximize profit.


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Mike Fleming

Mike Fleming stays on top of the latest strategies in Paid Search and Web Analytics to make sure every campaign he manages for Pole Position clients brings measurable, profit-maximizing value to their company and their website visitors. Mike enjoys playing, writing and recording music along with playing basketball to get his workout in. He resides in Canton, Ohio with a beautiful, sweet, caring and admirable girl who threw a snowball at him one day…then married him. Read Mike's full bio.

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4 Responses to Don't Use the PPC Budget Tool

  1. Randy Zorn says:

    This is a smart idea. I like it. But, why not just turn off expensive and bad keywords at the same time. This way you can bring more traffic that is converting.

    Also, adding long tail terms and additional variations can bring more traffic at really low costs. Helping you get the most of your budget.

  2. Mike F. says:

    Randy,

    Assuming someone did their keyword research correctly and picked keywords that are relevant to their business from the start, most of your optimization will be involved with writing better ads and matching landing pages to improve rather than deleting them.

    You want to be careful to delete a keyword that is performing badly too hastily. There was a reason you picked it in the first place, right? I mean, if it was a mistake to pick it in the first place then yeah, go ahead and delete it. But, if you still believe the search intent of the keyword matches with what you bring, deleting can be a least desirable move IMHO. If it’s expensive and not performing well, all the more reason to decrease your bids until it’s performing up to par.

    Your second statement is correct, but I was more directly dealing with the situation where an account is hitting its budget. In this case, adding keywords without lowering bids wouldn’t fix the problem, which is hitting the daily budget.

    Thanks!

  3. [...] the heels of writing about spending your PPC budget more wisely, I thought it only appropriate to encourage you to waste your money [...]

  4. While I generally agree that the daily budget is a tool for the uneducated, I have found one use case that justifies the use of setting a daily budget limit:

    Ad groups where you are overbidding the price at which a click is profitable.

    If your competition is not bidding highly, this technique can get your ad high placement while keeping your CPC low. However, if the competitor decides to raise their bid, this can drive your ad group into the red.

    If your bid is high enough and the competitor’s bid is high enough, this can be devastating to an account. The daily budget tool serves to function as a ‘stop-loss’ that prevents your account from getting drained.