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Paradox: Higher budget is bad for your Adwords campaign

by SEOMystery
12 replies
  • PPC/SEM
    • |
I have been running some AdWrods campaigns for more than 2 years and I have a lot of historical data, through out this period I reached what you can say the optimal CPC for each Ad Group that gives me highest conversions within my budget.

My budget was small so my CPC values were low accordingly, now I have much higher budget (10x) available to spend, so I started testing to see what I can achieve with this. So basically I expect to get 10x more conversions when I spend 10x more, right?

wrong!

Higher Bidding led to lower conv rates

While I was testing with increasing my CPC bidding, I noticed that the higher the CPC the lower conversion rates become, you get more impressions and higer CTR but you get lower conversions,I am not sure if that is because Pos#1 is not ideal for conversions (if that is true then it will be problematic because it means you should never increase your bids to avoid being in #1).

The issue is not related to budget setting, because I increases the daily budget for each campaign when I increased my bids , also when I look at Lost Search Imp (Budget) it is 0.00% all the time.

Also my quality scores are very good, I have plenty of 10/10 and 9/10 keywords, and rarely below 7/10 keywords.

Higher bidding led to lower share impressions!

The second strange thing now is that I tried to increase my impressions shares in 2 campaigns,

So 3 days ago I set the bids 3x times higher and enabled Enhanced CPC, guess what happened? The next day my impression shares dropped from 50% to 35% (I will give it more time maybe 3 days not enough to tell)

I am completely baffled!

Where, how to spend my budget?

This is very depressing the high budget now I have is useless, although I can spend now 10x times, but I will not get more conversions, and even If I manage to get more conversions, my cost / conv will be insanely higher than my target CPA.

Edit: I have new theory, which is that Google uses your average monthly spending as a hidden cap for your campaigns budget, thats the only explanation I could think of to explain why impressions share decreases when I increase CPC regardless of any increase in the budget (even up to 10x)

Any advice?
thanks
#adwords #bad #budget #campaign #higher #paradox
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  • Profile picture of the author dmrson
    Consider maybe spending your extra money on Bing and Facebook ads and Stumbleupon impressions
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    • Profile picture of the author SEOMystery
      FB was good in the past but now it is changed for worse, their new greedy advertising system makes it very expensive to get conversions.
      I tried Bing Ads I had a lot of impressions but very low conversion rates compared to Google.

      I tried also Reddit (very expensive), Twitter (average), Youtube (extremely bad for conversions although very cheap video views)

      I will try Stumbleupon.
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  • Profile picture of the author DURABLEOILCOM
    How much of a monthly budget is optimal for Google Adwords? It does not make sense that a larger advertising budget is not getting you more business.
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    • Profile picture of the author SEOMystery
      This is a puzzle that I am trying to figure out for long time!
      It feels like AdWords is cheating to prevent you from dominating share impressions (without of course paying insanely high price).

      I think it is all about their profits.
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  • Profile picture of the author Dreamz Group
    What is Your category of Business.? is you use Affinity Marketing in Display marketing it will spend your budget and you get ROI.
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  • Profile picture of the author LucidWebMarketing
    This makes sense. Look at it logically.


    You had a 50% impression share. I'll assume since your QS are great that the missing share was because of budget.


    You then increased the bids by 3x. Doesn't mean your actual CPC will be 3x higher but that's a big jump so let's say your CPC was 2x higher.


    If the average search volume is 1000 per day, you reached only 500 of those. Increasing the bid means you likely increased your positioning. Your relative CTR thus also increased. So say you were in 5th position before and now average the 2nd and that it doubled your relative CTR, let's say from 5% to 10%. Say also you paid $1 before but now pay $2. Before, you spent $25 which was all of your budget. Now, you spend the same (same budget) but for half the number of clicks since it costs twice as much per click. Your budget is being spent faster thus leaving less opportunity to target the same search volume. That's why IS% has gone down. Your changing to Enhanced CPC likely also had an effect.


    The solution of course is to increase the budget as well, not just increase bids, to regain all or more of that share. I tell clients to have a budget that would cover 100% of the volume. That's why you are advertising after all. You'll probably never get 100% but can get close. I have clients in the high 90s.
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    • Profile picture of the author SEOMystery
      I mentioned that I already increased the budget when I increased my bid, I even tried to increase the daily budget for one of the campaign 10x times to see what happen.. nothing changes IS stayed at 30%

      I think Google just wants me to increase my bids even higher !
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  • Profile picture of the author LucidWebMarketing
    You say for ONE of your campaigns. What was the IS for that one before and now? If you increased the budget for one out of many campaigns that has low volume, it's not going to budge the IS too much. We need more info but it seems from what you are telling us that all is normal.

    I did not address your statement about higher bidding leading to lower conversion rate. My question about that is, how long ago did you make those changes and what is a normal time before a visitor converts? On this last point, Adwords now has a report which could be eye-opening.
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    • Profile picture of the author SEOMystery
      IS was 50% then I increased both Bidding & Budget, IS went down to 30% (that was 3 days ago I will wait more time to see)

      For the high bidding that lead to lower conversions, I made test in the past several times, but everytime I only wait 1 week before changing back.
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  • Profile picture of the author DURABLEOILCOM
    What was your original monthly budget for the PPC campaign?
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  • Profile picture of the author DripRevenue
    The absolute worst thing for any Adwords campaign is broad match lol. Broad match = bankrupt.
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  • Profile picture of the author keywordtech
    I'd recommend using Facebook ad campaigns. If done right, (and I mean studying your target audience and choosing them wisely) you can get a nice ROI.

    I haven't had the best success with Adwords either, so I feel your pain.
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