Ecommerce

UK_50_mph_speed_limit_sign-e1462367735198Many online advertising campaigns are limited by a maximum daily or monthly budget.

In this post I’ll explain how to stretch that fixed spend to generate even more leads or sales.

What Happens to Paid Advertising When Cost Are Limited?

Most paid advertising platforms simply reduce the amount of times an advert is shown if there isn’t enough budget available to show the advert.

For a simple example, imagine that each click on a pay-per-click (PPC) advertising platform cost exactly £1.00. If your maximum daily budget for this ad was £20.00 per day, you would only be able to get 20 clicks at the most before the budget runs out.

If the ad was shown too many times on the same day then it might get more than 20 clicks and spend over the £20.00 maximum daily budget. The ad is then only shown to a percentage of people who could possibly see it to try and hit exactly the 20 clicks per day level:

budgets-vs-shown

There’s a linear relationship between the daily budget and the percentage of time that users are shown the advert. You can see that after a certain amount of daily budget the ads are shown 100% of the time – every time they could possibly be shown with the volume of people who may see them each day.

Display advertising platforms work in the same way if you are paying for impressions instead of clicks. Your display ad will only be shown enough times to deplete your daily budget, unless the daily budget is set high enough for the ad to be shown 100% of the time it’s eligible to be shown.

How Spending Less per Click Can Result in Extra Clicks with a Limited Budget

If the budget is a limiting factor within a paid advertising campaign, then the first thing to look at would be the amount you are paying per click.

Often lowering the amount you are willing to pay per click will increase the number of clicks overall. Using the example before with a £20.00 daily budget we could lower the cost per click from £1.00 a click to say £0.50 per click. If the ad receives enough clicks in a lower position then it could get double the amount of clicks as each click is costing half the price:

budgets-vs-shown-lower-cpc

Please Note: The graph above is very simplistic and doesn’t account for the relationship between a set ‘Maximum CPC’ and an ‘Actual CPC’. On pay-per-click platforms such as Google AdWords and Bing Ads, you will set a maximum CPC value and the actual CPC will be lower depending on competition from other advertisers below.

How Spending Too Little per Click Can Result in a Loss of Traffic

Advertising platforms are built to make as much money as possible. Generally speaking, the advertiser who is willing to pay the most will get the most prominent advertising placements where the percentage of ad clicks are the highest.

In search engines the top advert is clearly the most prominent, and studies have shown that top ad positions do indeed get far more clicks than the ads below them.

So by changing the Maximum CPC, the number of clicks overall compared to the set Maximum CPC will follow this general trend:

clicks-vs-max-cpc

Spending more per click places the ad in a more prominent position. It increases the number of clicks each day until a point where the ads are always shown in the more prominent position, and no more clicks can be bought each day.

Spending less per click places the ad in a less prominent position and results in fewer clicks per day overall. Spending too little per click can result in the ad not being shown at all, as the competition can take up all of the advertising positions above.

How to Find the Perfect Bid Amount to Maximise Traffic Levels with a Limited Budget

So we need to find a sweet spot. The clicks need to be as cheap as possible while remaining competitive enough to get enough clicks per day in a prominent ad position.

There are programs and bid strategies to handle the complexities of this, but often common sense can produce greater results without any extra costs.

  1. The first step to take is to optimise all bids towards a target cost-per-acquisition value or a target return-on-investment level.

Whether you are bidding on keywords, banners, videos or product listings, there will always be those which do better than others within the same account. Getting all bids adjusted to the same cost-per-lead or revenue-over-cost level means that we can treat them all uniformly in the next step, without spoiling any optimisation work done.

  1. The second step is to compare the daily costs against the daily budget. If the costs are equal to the daily budget then decrease all bids by 5%, if daily costs are below the daily budget then raise them all by 5%.

If the daily costs are equal to the daily budget then it’s likely that the bids could be lowered slightly and more clicks could be gained from the same limited budget. If in time the bids are too low then this means that you would need to raise the bids slightly to ensure the whole budget is used each day.

  1. Repeat Step 2 consistently each week

Repeatedly tweaking of all the bids each week will hone them all towards that sweet spot. Before long you’ll achieve the perfect balance of the cheapest possible clicks while spending the full budget each day. This maximises the number of clicks you can generate each day from paid advertising, which in turn makes the paid advertising generate as many leads or sales as you can possibly get:

ideal-bid-level-harmonic-2

Repeating this process in future weeks will ensure that the bids trend upwards or downwards depending on competition levels, seasonal changes, changes to the advertising platform, etc. In this way, you will always draw as much out of the budget as possible.

It’s important to raise or lower bids by a percentage rather than by a set amount. For example, if you lowered all bids by £0.20, then you may have major issues with bids that are lower than £0.30. Lowering all bids by a percentage will keep the lower bids intact while keeping the relationship from bid-to-bid at the same scale.

A Step-by-step Guide to Lowering All Keyword Bids on Google AdWords

To lower all keyword bids on AdWords you first need to visit the keyword tab for all campaigns or the campaign you wish to change:

step-1

Select all keywords using the top left tick box. You may have to instruct AdWords to tick all keywords if they are not all shown in the current view:

step2

Select “Edit” and chose “Change max. CPC bids”:

step3

Select “increase” or “decrease” and ensure the percentage drop down is selected. Now “Preview changes” to ensure that bid changes look correct and then process to make the changes:

step4

How to Stretch a Limited Advertising Budget Even Further

On top of bid changes there are a number of ways to get more out of a limited advertising budget for an increase in visitors with no extra costs:

  • Different Advertising Platforms – We commonly see less competition on lesser used advertising platforms such as Bing Ads. There is much less traffic overall, but with a limited budget you could switch to a different platform and get a lot more traffic for the same amount of money.
  • Different Advertising Campaign Types – Most competition can be found within search ads, but there are cheaper alternatives within display advertising, social media advertising or product listing ads. These other platforms typically allow you to send a message across before the user clicks which reduces the number of wasted clicks and therefore wasted costs from a limited budget.
  • Bid Adjustments – The quality of online traffic varies massively from different locations, different device types and different times of the day or days of the week. By lowering bids in the bad areas, the money saved can go towards raising bids within the good areas. This results in an increased number of sales with no extra costs. An extreme example of this would be to turn off advertising if the phone lines had no operator out of their working hours.
  • Improve Ad Targeting – If the ads are showing to an unrelated audience then your budget is going to waste. Ensure that the ads only show for the right keywords, the right audience and in the right locations so no budget is lost for no reason.
  • Improve Ad Effectiveness – To maximise profits, ad platforms promote ads that have high levels of engagement and a higher than average click-through-rate overall. If you improve the ad itself it can get a higher click-through-rate, which will in turn lower the advertising costs per click than average . This will allow you to get more clicks within a set budget.

It’s worth taking the steps above even if you don’t have a limited advertising budget.

Use a platform such as Google Analytics to separate traffic into different types – for example desktop vs. mobile – and then see how bids could be adjusted for each section to save any wasted costs.

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