June 16, 2014
No matter your PPC budget it’s important to optimize your account so funds are being spent efficiently to bring in conversions. Even taking this approach, we’ve all been in the situation where clients need to cut spend dramatically. After explaining that conversion volume will drop with the decrease in spend, you need to come up with a game plan on how to spend less while minimizing the impact on conversion volume. In some cases you might need to reduce spend pretty quickly, so we’ll go over some tactics as well as a case study.
Step 1: Pause Non-Converters & High CPA Keywords
First run a placement report and exclude any sites that have spent a significant amount without converting. Also look for placements that have converted at a high CPA.
Yikes, $1,676.95 spend for only 1 conversion.
You also have the option of pausing display keywords that are spending without converting, but usually excluding the placement will take care of it.
Frequency Capping can also be beneficial depending on the account. Pull a reach and frequency report to see how much you’re spending on clicks that aren’t likely to convert (your CTR will also improve if you do this).
Similarly to the display placement exclusions, go through your keywords and pause the underperformers. I like to stick a label on anything I pause to keep track of changes. Pausing poor performers allows greater budget for converting keywords. Here is an example of some keywords that were paused along with the CPA matrix.
These two keywords were both bringing in conversions, but at $614 and $191 CPAs they were exceeding the number of conversions before taking action.
Step 2: Reduce Daily Budgets
Once you’ve paused and excluded all of your non-performers, go ahead and decrease the daily budgets on your campaigns. I like to start cutting spend from high CPA or low converting campaigns first, and then pull from the others as needed. To calculate how much I need to decrease, I look at average spend per day. I’ll then change the budget to x% lower than that amount. It’s always a good idea to project your changes to make sure you’re on target for the month.
Step 3: Double Check Settings
Since you’re reducing budget, you want to make sure you get the most bang for your buck in terms of conversion volume. Double check your settings for ad rotation and set it to optimize for conversions (if you’re not running an ad test). This will let AdWords show the ad that is most likely to result in a conversion based on historical data.
Another setting to check is Ad Delivery. If the 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.
Case Study Results:
For this particular account the client asked us to reduce spend by 50% for the month. Starting on May 3rd we started to make pretty aggressive cuts to reduce spend quickly. This is a fairly new account still, so while most inefficiencies were reduced, there was still a lot of wasted spend to be cut.
Display placements were paused (like the ones shown above) as well as some high spending keywords. Then I reduced daily budgets for the highest spending campaigns, and then over the next few days pulled from campaigns that bring in conversions.
By cutting inefficiencies instead of just hacking daily budgets, the account showed improvements in conversion rate, cost, and CPA. We do expect to lose some conversions, as we still have to reduce daily budgets, but the loss in conversions was small relative to the drop in cost.
Pulling back on budget can be a daunting task, especially if you have to pull back quickly. However, pausing anything that’s not working and spending your budget efficiently will quickly decrease your spend, allowing greater budget for what is working. Here’s a quick recap for those of you who enjoy bullet points:
- Pause non-converters first to increase efficiency
- Pause high CPA keywords/placements/etc.
- Pull back on daily budgets
- Check campaign ad rotation & delivery settings
What are your favorite methods to reducing PPC spend?