Working with an unlimited budget would be wonderful, but since that isn’t the case for anyone I know, I thought I’d share 10 things that we look at when an account is projected to be over budget at the end of the month. By managing your budget throughout the month you’ll be able to stay on top of your spend, and hopefully you won’t be in a situation where you have to completely pause your account.
As you go through the following suggestions, keep these two questions in mind:
Are you spending without converting?
- If you are spending money without getting any conversions, something has to change! Start at the campaign level, then look at ad groups within the problem campaigns, and make adjustments or pause keywords or ad groups as needed to help cut back on costs.
Is your cost per lead (CPL) too high?
- The majority of our clients are leads based (remember a lead doesn’t have to be an eCommerce sale), and we set goals for our CPL as well as our budget. If all of your accounts are converting, find the campaigns, ad groups, and keywords that convert at the highest CPL, and work with those first.
- Identify the “problem” search engine. Most of our clients run on Google, Yahoo and MSN all at the same time, and while it’s easy to focus on the largest spending account (usually Google), by doing so you could be overlooking your biggest problem areas. Even if an engine only spends 10% of your monthly budget, it’s a waste of money if it isn’t generating leads, and you need to start with that account first.
- Lower campaign daily budgets. Look at your campaigns, and identify those that are spending their daily limit. Start with the campaigns that convert the least, and cut their daily budgets back. To make sure you don’t cut back too far, first calculate your estimated savings depending on how much you cut back the budget by. For example: If your average daily spend is $20, it is June 15th, and you want to cut back the daily budget to $15, you will save $75. I calculated this estimate by using the following calculation:
- Calculate the number of days that are left in the month
- Calculate your estimated savings by using:
(Current daily budget * Days left in month) – (New daily budget * Days left in month)
- Sort by CPL. Starting at a high level will help you identify the big issues that need to be addressed first. Look within the interface to find the campaigns that have the highest CPL for the month. Once you have identified those campaigns, look at their ad groups, and evaluate them on the following criteria:
- High CPL – Though your CPL is high, you are still getting conversions, so you want to be sure that you don’t cut out any potential leads. First find the keywords that have a 0% conversion rate for a long period of time (at LEAST 3 months), and pause them. Watch the account, and if costs don’t improve, look at the ad group level, and pause any ad group that hasn’t historically converted following the same criteria you used for keywords.
- No Conversions – If you aren’t converting this month, don’t just start pausing things! Follow the steps above, and first identify the keywords and ad groups that have not converted for a while. If that doesn’t help cut down your spend, start pausing keywords and ad groups that either that have a very low conversion rate, or only have a few conversions per month.
- Run long-term reports. You want to be sure that you always make decisions based on a large enough amount of data. Run 30 day, 60 day, YTD and last year reports to analyze your campaigns, ad groups, and keywords to help find areas of concern. By assessing metrics like your cost, CPL and conversions for long periods of time you’ll be able to spot items that have always been a problem, and should be paused, or items that used to convert that are paused, but can be turned back on after a little bit of optimization.
- Adjust keyword bids. Before you start adjusting bids, remember that you do NOT need to be in position 1 to get conversions. Instead, focus on being on page 1 (to make sure you are seen), and make your bid adjustments based on overall ROI. We typically target positions 3-5, but you will need to make decisions based on your business goals, and what the data tells you is your optimal position.
- Add site exclusions. If you are running campaigns on the content network, make sure you are adding site exclusions. To do this in Google, run a Placement Performance report, and identify the sites that are either spending money without converting, or have a high CPL. Be VERY careful to run this report on a long enough period of time to make sure that you aren’t excluding a site that is typically good, but may be having a slow spell. We also recommend excluding sites based on the URL, not the entire domain when running this report. We’ve found that some pages on various sites will work, so if you cut out the entire domain you will be eliminating conversion opportunities.
If you are diligent about running placement reports on a regular basis, it’s a good idea to go into the interface and look at a minimum of 60 days to double check that there aren’t any domains that are spending without converting. By regularly blocking URLs, when you do check the interface you’ll be more confident that blocking a site on the domain level within the interface will be beneficial, and can help reduce your spend.
- Add negative keywords. Remember to regularly run search query reports (SQR). These will help you identify keywords that you want to block to help reduce irrelevant clicks, thereby lowering your overall cost.
- Pause underperforming ads. Look at your ads on a fairly regular basis to find those that have clicks without conversions. When possible, pause the ads that are underperforming, and you will help increase your quality score, and ultimately lower your bids, which will help reduce spend.
- Pause ad groups that haven’t converted. If you’ve made smaller changes within the account and you are still projected to be over budget, you will need to identify entire ad groups that can be paused. As with any other change you will want to make sure you have enough data to make a good decision.
View all of your ad groups, and sort by CPL. You will then be able to quickly identify the ad groups that have a high CPL with a low amount of conversions, or those that have spent without converting at all. I typically start on the month-to-date view to see which ad groups are currently having problems, but before I pause anything I look back 30-60 days (or more depending on the amount of traffic), and make my decisions based on longer term data. If the ad group hasn’t converted very much over the longer period of time, and it hasn’t converted this month either, it’s fairly safe to say that you can pause it without sacrificing leads.
Tip: Be aware that when you are pausing ad groups within a campaign that you still have the potential to spend your daily campaign budget. If, for example, you have 5 ad groups within a campaign, and one of them is spending 60% of the daily budget but not converting, and the others are only spending 10% each. When you pause the ad group that is spending the majority of the budget the other ad groups will then have the opportunity to spend more, and you may not end up saving any money. As long as you are aware of this, you can monitor the other ad groups, and quickly identify if the campaign daily spend needs to be cut back too.
- Pause underperforming campaigns. After looking at all other aspects in the account, if you need to make some serious cutbacks you will need to look at the campaign level. You will want to focus not only on the campaigns that are spending with little to no conversions, but you will want to identify those that are reaching their daily spend. When you pause campaigns that are reaching their daily spend, you will have a concrete idea of how much you are going to save, and can therefore calculate what your total savings is going to be, and know when you’ve paused enough to come in under budget.
As I mentioned before, at the end of the day you want to make sure that you are managing your budget throughout the month so you aren’t forced to pause the account. The most important thing is that you constantly tweak your accounts, and you don’t try to do all of these things at once. Make small changes first, and focus on the more granular levels. Always be aware of the number of conversions you are cutting out when pausing or decreasing budgets, and be sure to communicate the effects of your changes to your clients. There are some people that would rather go over budget if it means bringing in leads, so by being transparent with clients you can make sure that you are managing the account in such a way that you will help them meet the goals that are their top priority.