The top priority for every PPC marketer is to maximize conversions while minimizing ad spend. Sounds simple enough right? Wrong! PPC management is an ongoing and very complex dance between art and science but in the end all that matters is generating as much ROI as possible and the only way you can do that is by reducing your PPC spend. We’ve all been in the situation where clients need to cut spend dramatically for whatever reason. Most non-marketers think the only way of doing that is by limiting the spend budget. That will certainly reduce it quickly but it is not often the right way of reducing spend. You are going to have to explain that conversion volume will decrease as spend decreases but you also need to come up with a plan to spend less on your PPC accounts while minimizing the impact on conversions. In some cases you might need to reduce spend pretty quickly, and the following tactics are good starting points for reducing spend quickly while not jeopardizing conversion volume.
Tactic 1: Pause Non-Converting & High CPA Keywords This tactic is actually often overlooked but can have huge impact on limiting spend. What you are going to want to do is to run a keyword spending and conversion report for the past 30 days. Some look at the past 60 but I believe if something hasn’t converted in 30 days the chances of it converting in the future are poor. You want to see what each of your keywords is spending and which ones are converting and what the CPA is for the ones that convert. What you want to find are keywords that have spent a significant amount without converting and those that have converted but at a large CPA. Gauging what an acceptable CPA is depends on your own profit margins. If you know your generate $20 in profit for your product but a specific keyword has given you 3 conversions at an average CPA of $1000 that keyword is an extremely good candidate for immediate pausing as you are spending far more than you are generating in revenue from it. Pausing poor performers allows greater budget for converting keywords.
Step 2: Reduce Daily Budgets The most popular method that I alluded to earlier is simply reducing the daily budgets for your campaigns. Once you’ve paused all of your underperforming keywords, go right ahead and decrease the daily budgets on your campaigns as well. You’ve cut off a lot of excess spend with the first tactic and this second move will allow you to consolidate your gains. I typically like to start cutting spend from high CPA or low converting campaigns first, and then pull from the others as needed. This allows you to take the spend from keywords that aren’t performing while minimizing the reduction in the better performing campaigns but you are going to have to take some from there as well and this is where the explanation about how reducing spend will also lower conversion volume comes in handy. A good way to calculate how much you need to decrease, I generally look at average spend per day. I’ll then change the budget to x% lower than that amount.
Step 3: Double Check Ad Settings Since you’re reducing your budget, you will also want to make sure you get the most bang for your buck in terms of conversion volume. What you are going to do is double check your settings for ad rotation and set it to optimize for conversions. This will let AdWords show the ad that is most likely to result in a conversion based on historical data while hiding those poorer performing ads. Another good, if often overlooked, setting to check is Ad Delivery. If your PPC campaign isn’t limited by budget, we typically recommend the Accelerated delivery setting. However, if you’re pulling back you might want to switch to Standard, as it will keep your ads running evenly throughout the day.
Conclusion Pulling back on budget can be a very daunting task, even more so if you have to pull back quickly which is often the case. However, pausing anything that’s not working and spending your budget efficiently will quickly decrease your spend, allowing greater budget for what is really working effectively.