Why would a business want to cap their Adwords budget?
-
If a business has an unlimited supply of product and an unlimited capacity to distribute that product why would they want to limit their Adwords campaign budget?
If your Cost per Acquisition for a conversion is lower than the Customer Lifetime Value for any given keyword bid, why would you want to prevent your campaign from reaching as many people as possible?
Thanks in advance
Danny
-
Thanks Jasmine
Great answer and one to which I can completely relate.
I have been consulting now for approx. five years. One of the things I have found interesting is the degree to which so many businesses hamper their own growth through pointless bureaucracy, internal politics and employees who put their personal career progression above the needs of their employer.
-
While I do agree that there are difficulties in explaining the value to clients, the most common reasons I have come up across are accounting & cash flow.
When I was managing agency side and I just wanted an additonal $1000/mo (which seems like nothing for most advertisers), there was significant push back. One reason is the client is not only footing the bill for their account, they are also footing the agency bill. There could be added costs when expanding budgets depending on the pricing structure, and everyone wants everything as cheap as they can get it. So if the added cost of the agency + the added cost on the business for the advertising is too much in comparison to the budget the business had put forward for the year, then there is no way they can plan on spending more.
In addition to this, if you are working with smaller businesses, they don't have the flexibility in their cash flow to spend more even when there is a proven opportunity. Not to mention, advertising is very likely not the only bill they are paying each month. They have all the costs associated from man power to tools & software internally to operational overhead. They might say their profit is $65/item but it might actually be more like $15 after everything else is accounted for. Which is poor planning and communication from your client.
If you are working with a larger or public company, accounting requires that you bring in X amount of money (because Stock Market or Parent Company, or Investors, etc). If you are advertising based on LTV (lifetime value) not New Sales, then the accounting team doesn't see the same return you are assuming you are getting. It appears to the accounting team that you are overspending and not getting the same value on more cost compared to previous years.
But, take your client out for a beer if you can. Get them to unload on you about the issues and tribulations that they are coming up across internally or if the company does have a cash flow issue. There are real business reasons behind not spending more, and it might be as minor as "we are exploring another channel that is proving to be quite costly right now" and wont' have anything to do with you or your work.
Good luck! This is the hard part of consulting
-
Hi Danny,
IMO in such case we need to educate the client that by limited budget campaign loosing Impression Share, loosing clicks, loosing conversion.
Having enough budget will allow us to always be shown throughout the day or time we need to be shown. A very strong reason why most campaigns fail is due to the ads not being shown throughout the day since they are limited by budget. This results in lost impression share which means lost clicks, which means lost potential leads or sales.
In short Lost Impression Share, Lost Clicks, Lost Conversions = Campaign Failure
Thanks
-
**It comes down to having data demonstrating the value and properly communicating this with the client. **
That makes perfect sense when starting out. I hold the opinion that many if not most businesses are not able to make a profit at PPC given the competitiveness of PPC and the cost advantages (shipping, inventory, labor efficiency, etc) of large companies. If you don't do careful math you can happily bid yourself into bankruptcy.
So, telling the client to test with a budget amount to prove that they can make a profit makes sense. But once that is demonstrated they should not be budgeting.
The only exception (and this is not a budget) is when you are looking for the sweet spont of "maximum profit per day". That is the intersction of sales volume and bid costs that has the highest yield per unit of time.
-
It comes down to having data demonstrating the value and properly communicating this with the client. Without good data, it's difficult to show the value. Even if you had this data, communicating this value can be difficult because acquisition costs can easily exceeds CLV in the short term (as CLV will hopefully grow). Once there is a tipping point (where CLV exceeds acquisition costs) it's much easier to show value. So clients may see a short-term loss and attempts to minimize their exposure by capping their ppc budget.
-
I don't doubt you guys at all but I would really love to know if there is any alternative (and logical) point of view on this.
Budget capping is so prevalent here in the UK and with businesses of all sizes that I worry that I might be giving clients the wrong advice.
-
When they stop bidding, they are making opportunity for all of their competitors. I hope that this weakness of mind persists. They should be trying to run us out of business.
-
Out of fear (of something new) and not understanding. As most of us know, educating some SMB's on the benefits of an uncapped budget is a chore and many are not receptive on learning about it. On the flip side, this works to the benefit of others that do not cap their budget.
-
LOL
-
I must be missing something here.
Danny. You are right. Bet on yourself. Bet big.
-
That was my first instinct, but considering how many agencies are working with capped campaign budgets there must surely be some other explanation?
I must be missing something here
-
Low IQ.
Got a burning SEO question?
Subscribe to Moz Pro to gain full access to Q&A, answer questions, and ask your own.
Browse Questions
Explore more categories
-
Moz Tools
Chat with the community about the Moz tools.
-
SEO Tactics
Discuss the SEO process with fellow marketers
-
Community
Discuss industry events, jobs, and news!
-
Digital Marketing
Chat about tactics outside of SEO
-
Research & Trends
Dive into research and trends in the search industry.
-
Support
Connect on product support and feature requests.
Related Questions
-
Setting a total monthly spend limit for the Adwords account
Hi, I manage a number of campaigns and even though I keep an eye on daily budget based on our monthly budget, I freak out thinking we would waste a lot more money accidentally. Is there a way how I can set a cap for the whole Adwords account so I will not go over, even if I leave daily campaign budgets on crazy amounts? Thanks. Regards, Katarina
Paid Search Marketing | | Katarina-Borovska0 -
What is the best way to update Adwords final URLs if I'm moving to a new CMS?
Hi there - One of my clients is redeveloping its website. That means, the domain is remaining the same, but the whole site is being rebuilt in wordpress so all the adwords final URLs need to change OR be redirected. There are 550 live adgroups and 3400 ads. We haven't set up tracking. I can't find anywhere what the best thing to do is in this case. The key issues seem to be: 1. 301 redirects - given we have to do these anyway as part of migration, this seems to be the easiest path as Google is ok about redirects as long as they don't go to a different domain. From what I'm hearing, you don't get adversely impacted in terms of quality score etc. This has the huge advantage that you don't have to edit the ad therefore no loss of statistical history or risk of downtime whilst you wait for approval. HOWEVER, there is some concern that if you then redirected again IN THE FUTURE, the redirect might not work (in some browsers) or cause a loop. I'm also concerned that it's messy to leave it like that (ie: with the wrong URLs throughout). 2. Buik updating ads - I don't think this is an option as if you bulk download and then reupload, Google will see this as a new ad, and delete all the statistical history - I'm also concerned that that WOULD impact quality score as you'd be starting from scratch! 3. Changing each ad individually - as far as I understand you'd have to create copies of all the ads (so that you keep the history of the old ones) and effectively create new ones with the correct URL - one by one. You end up with a messy account (a lot of paused ads) but you keep the history? This is obviously the most time consuming and I can't see a way of avoiding ads having to go in for approval again, given the urls are all different, so you'd have to do this a an ad level, not an adgroup/campaign level etc. People redevelop their websites (without changing domains) all the time. It seems strange that no one is mentioning this problem! Any ideas?! Many thanks
Paid Search Marketing | | catalystmdc0 -
World Localities in AdWords?
If I target the topic "World Localities>San Antonio", what type of sites my ads will be display? Are they sites about San Antonio, like tourism guides or event listings? Or are they related to San Antonio, like a university or flower shop in San Antonio?
Paid Search Marketing | | howlusa0 -
Adwords enhanced campaigns - Specify alternate destination URLs
Morning Mozzers, I am setting up a new campaign for a client, they would like to target mobile devices which evidently i can no longer do with enhanced campaigns; however i have increased the Mobile bid as much as possible and set the default CPC low to try and minimise appearance in desktop search. The client has a desktop and a mobile version of the destination page but the site will not direct users to the correct page based on their device as they are two separate domains. As such i want to know if i can specify an alternate destination URL for an ad in Adwords based on if the click comes from a mobile or desktop device? The other option is to set all my Ads within the Adgroup to have mobile as the device preference and just use the mobile landing page, but not sure if there is a neater solution here? Thanks, Tom.
Paid Search Marketing | | Sarbs0 -
Suburb Specific on Adwords
I'm wondering if anyone can help me. I am in the process of setting up an adwords campaign that targets sepcific suburbs in a city. I want the ad copy to state "removalists in" with the specific suburb in the first line. e.g Removalists in Richmond Do l have to set up an separate campaign for each suburb l want to target or can l do this by having a campaign targeting all variations of the suburbs by phrase and then adjusting the ad copy so it changes for that relevant suburb search? Any advice would be a great help. Thanks
Paid Search Marketing | | RobSchofield0 -
AdWords *free* vouchers hurt SEO?
Maybe it was the penguin, or maybe it was Panda, but around about the time of the three updates close together and the rumoured 'parked domain' update that went wrong, I used a free adwords voucher. The site in question used to rank for practically every search term relevant to the niche. Now, I can search back to 60 pages in Google results and nothing. Now, I know its not been de-indexed, it still there when I search for info:TheDomainInQuestion.co.uk It also has 6 site links when searching for the url alone. Each and every page is hand written original content built up over many years and also edited and updated regularly. On linkdetective, I have a very nice rainbow type graph regarding the type of links and also a very very good spread of anchors. 118 different phrases pointing in and aside from one site that linked to me sitewide (16000+ but since removed and now down to 3300 and dropping almost daily). Even with that, the highest percentage of anchor text was 20%. Basically, gone through practically everything that is available on the web about combating penguin and panda, yet the site kept dropping and has disappeared completely for keyword phrases. Might sound a bit paranoid, but could Google have done this on purpose to try to make me carry on with adwords?
Paid Search Marketing | | NinJaSkrtel0 -
Redirecting AdWords Display URLs
I feel it's a best practice (from a user experience POV) to create a 301redirect when using a fictitious display URL in your PPC ads. And according to the AdWords help page (http://support.google.com/adwordspolicy/bin/answer.py?hl=en&answer=175906&rd=2) Google doesn't have an issue using a redirect. "Redirects used for tracking purposes are fine as long as the final landing page has the same domain as the display URL." I'm curious if there is ad score penalty if one does not ionclude a redirect - i.e. the user types in your display URL and gets a 404. Has anyone seen an evidence of this?
Paid Search Marketing | | legalseo0 -
Downtrodden Adwords Quality Scores -- Really?
Wow! 93% of our Adword keywords in our new campaign received a Quality Score of 4 or less. That means most of the keywords aren't showing. I received the quick answer from our Adwords advisor that, "Quality score is created from a variety of factors ... etc." Yes, I know that by reading Google's documentation. I dug deeper into the data. When I looked at keywords dashboard for this campaign, what vexes me is that it's all about "Keyword relevance: poor". That is repeated time and again in the keywords hover, bubble pop-up in Adwords. "Landing page quality: no problems". "Landing page load time: no problems". 63% of keywords have quality score = 3 29% of keywords have quality score = 4 We have thousands of keywords that are electronic part numbers. All keywords use phrase matching. We use dynamic keyword matching in the ads. I dug deeper. I chose random keywords (and corresponding landing pages) from lower quality scores (1,2,3,4) and higher scores (5,6,7,8,9,10). What is the difference? Examples: Quality score 1 = http://www.usbid.com/parts/LM2901 2 = http://www.usbid.com/parts/BZX84-A20 3 = http://www.usbid.com/parts/MAX4796 4 = http://www.usbid.com/parts/TMP302A 5 = http://www.usbid.com/parts/LTC4267-3 6 = http://www.usbid.com/parts/CAT1161LI-28-G 7 = http://www.usbid.com/parts/DS1216C 8 = http://www.usbid.com/parts/R10S-E1Y1-J5.0K 9 = http://www.usbid.com/parts/208M822-19B11 145785-000 10 = http://www.usbid.com/parts/TP3-PNEU-0.250 243362-000 Notice URLs with score 9 and 10 have url-encoded space (%20) -- just pointing it out. What is the difference between these pages that have such different quality score? And, interestingly enough, the majority of example keywords in the Urls above (LM2901, BZX84-A20, etc) have zero impressions and zero clicks thus far. Yes, the keywords have low traffic because this is exactly what people search for an purchase when making a B2B component buy. It's all about the exact part number. **I'd love specific suggestions of how to improve quality score of pages with a 3 or lower! ** Thanks kindly, Loren
Paid Search Marketing | | groovykarma0