“AdWords is a money pit”. I hear that a lot from people who are cynical about their experience with AdWords. They spend a lot of money yet do not see any sales as a result. And I agree that it can be a money pit when it’s not monitored closely. Advertisers who set up an account, then barely look at it will find themselves maxing out their budget very quickly with little to show for those dollars spent. But when your Adwords Budget is monitored and optimized, AdWords has the potential for great results for advertisers - both for online and brick and mortar store. The major concepts to learn and manage so AdWords does not become a money pit is the daily budget, bid strategy, keyword costs, and conversions.
The highest level is your campaign budget. A simple account for a small company may have only one campaign because they do not need to account for variation in geographic locations or language. Others may have a separate campaign for each country or each product or service. Note that you are setting a budget by campaign. If your total spend for the month is $5,000 and you have five campaigns, you might set each campaign at $1,000. If it was one campaign, then you set the one budget of $5,000 for that single campaign. Start here when determining your maximum spend for the month.
Ad Group Budget
Next you can set a budget for each ad group within a campaign. In the below example for a florist, they bid slightly higher on their “Brand Name & City Name” ad group because it produces the most revenue. Less money is spent on RLSA (remarketing lists for search ads) because the return is lower. If you are just getting started, there is no need to make edits yet at the ad group level. You may want to first collect data on how your ads perform in each group.
You can also manage bids for keywords. Below you see a slighter higher bid for the keyword phrase marketing conference compared to a business conference so this advertiser is bidding based on the return each of these words provides. The expectation is that searches on the phrase marketing conference will result in more ticket sales than business conference. If you are just getting started with AdWords, bidding at the keyword level may be more granular than you need initially. Unless you are confident that some keywords will produce a higher ROI than other keywords, allow some time for your account to collect data, then come back and adjust bids at a later date depending on how the words perform.
Now that you have the basics of budgeting down, it’s time to track performance on your ads. While getting a click on an ad is generally a good thing, you do not know how good of a thing it is unless you measure what happens after the click. Previous articles on this blog talk about the importance of tracking conversions and how to set it up.
In Part II, we’ll review bid strategies which are a more advanced option for bidding.