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
-
AdWords/Analytics Paid Search conversions not matching up - any idea why?
Hi all, Any ideas as to why AdWords and Analytics are showing different Paid Search conversion numbers for me when I check on a daily basis? Both accounts are linked, they share the same destination URLs to trigger a conversion, some days each reflects the same amount of conversions, then some days it's anything from 1-5 conversions different (Analytics is always the one to show more). Thanks M
Paid Search Marketing | | Martin_S0 -
Bing Adwords
Hello Moz Community, I am curious to see if anyone else is experiencing the troubles I am having with Bing Adwords. In the past (not even a month ago), my companies campaigns were driving great traffic, with high CTR, Conv. Rate, and low CPC; but recently (start of February) traffic has increased (not the good kind) and CPC has gone through the roof. When I say not the good kind, I mean the traffic we are getting is not relevant at all to our industry our the campaign/ad groups targets at all. These campaigns have been running for a good year with regular maintenance and great results. I keep up to date with all the negative words, constantly am A/B testing copy and landing pages, and keeping up to date with good SEO/SEM habits. Since February has started like I said traffic has increased (not the good kind) and search queries seem to be more and more outrageous by the day. I guess my question is has anyone else experienced this and is it a possibility that Bing (Microsoft) loosened up their algorithm to drive more (I hate to say it) money into their pockets? I haven't heard/read anything publicly that they made such a change but I have read that they have had an increase in profit and a majority of CPC for accounts have increased without actual search share going up. Please feel free to share you thoughts about this and if you have experienced this in anyway. Thanks All, Brian
Paid Search Marketing | | BrianBar0 -
AdWords Sitelinks Disapproved
Hello,
Paid Search Marketing | | Instabill
I cannot find a justifiable reason as to why Google AdWords has disapproved my sitelinks. 1. My link text is descriptive of each page. For instance, I use the link text "Merchant Accounts" for the URL http://www.instabill.com/services/merchant-accounts/ 2. I have four extensions within one campaign. Each have 5 sitelinks with all the same link text and destination URLs. However, only two of the "Merchant Accounts" sitelinks were disapproved from two out of the four extensions. Two "High Risk Accounts" linking to our High Risk Merchant Accounts page were disapproved out of my four extensions, one "Industries We Serve" to our eCommerce Industries page was disapproved, and one "Offshore Accounts to our Offshore Merchant Accounts page was disapproved. Why are some disapproved and not all? 3. I use Daddy Analytics to generate my destination URLs for tracking purposes, but I do not see this as being an issue since the URL still begins with the URL in bullet point 1. After reading a few threads within the AdWords community and reading the AdWords Sitelinks Guidelines, I feel as if I have followed the guidelines. Any helpful advice would be appreciated.0 -
Why you should never use Google Adwords To Conduct Key Word Research
Buongiorno from 22 degrees C too damn humid Wetherby UK, The other day a client wanted to know how much a ppc campaign would cost with a specific bank of keywords. So off i went and loaded in the key words and set the ads thinking it was not live.... A week later i get a tap on the shoulder asking why weve been invoiced for £xxxx oh dio mio!! The damn campaign went to live. So ive got two questions: 1. Do Google adwords automatically go to Live once youve loaded up phrases and ads, i really thought it would have made it more obvious, A " Would you like your campaign to go live" prompt would have been appreciated. 2. As a safety measure is configuring a Google Alert in Analytics to ping when paid traffic is picked up not a bad idea just so ive got a warning sytem set up so to speak. Grazie tanto,
Paid Search Marketing | | Nightwing
David1 -
How Can I Target Certain Countries in Google AdWords without Excluding Other Countries?
So, here is the situation: Our company works with merchants worldwide (with the exception of those who live in excluded high-risk countries--mostly in Africa), but most of our Google AdWords leads come from Indian merchants. My CEO wants our campaigns to convert leads from other countries (i.e., the UK, Germany, US, Canada, Australia, etc.), but I have no idea how to do that without excluding India. However, my CEO does not want to exclude India from our AdWords campaigns as the leads are profitable. We simply want more diversity with out leads in terms of geographic location. I am sure there are resources on the Web about how to do this, but I am not an Adwords expert and am unsure of what phrases to search to find the answers. Direct advice or helpful links are much appreciated. Regards,
Paid Search Marketing | | Instabill
Meghan0 -
Adwords for Video Question?
Hi I'm just wondering how specific the targeting can be for an adwords campaign that targets youtube videos. Specifically if the following scenario is possible... If I was to promote a car alarm, is it possible to have my adverts show up before news stories of car thefts? i.e. can I pick and choose individual videos? Thanks
Paid Search Marketing | | adamlcasey0 -
Competitors using bots for AdWords ?
I was having a discussion with a SEO manager on a LinkedIn group about page speed (she pretends that page speed is not taken into account by Google for SERPs at all and claims that all of what Matt Cutts says is BS) ; and she explained that she is using bots to click on her client's competitors AdWords and "kill their daily budget" So my question is, if you run/manage AdWords campaigns, have you ever met noticed such a behaviour, past the few usual click fraud rate ? What is your average fraud rate ?
Paid Search Marketing | | iung0 -
Adwords Bulk Discount
Had a few calls recently from agencies offering bulk discount on Google Adwords spends if we pass management over to them and spend more than £5,000 ($7,500) a month, they claim they can offer a 5% discount over what we're currently paying... Can't find anything about this, does Google offer such a deal to agencies?
Paid Search Marketing | | digitalarts0