There is such a thing as over optimization in PPC. In your quest to lower costs you can actually go too far. This article shows the effects of driving down CPC and cost per conversion and a potential solution.
Driving Down PPC Costs
For lower margin products or services, you want to keep your costs under control. In our case, we work for a Green Cab company MIGreenCars.com in southeast Michigan. Each cab ride costs $10-$15 on average, with the airport runs 3-5 times that amount. So a $5 call doesn’t make sense for a $10 ride. One way to keep costs down is to use a maximum CPC bid, say $1 or $1.25. You can estimate your target max CPC looking at the average CPC of previous ads. Problems can arise if you drive the max CPC too low:
- Ad position drops with lower bids
- Conversion rates generally drop with lower ad positions (but not always)
- “Limited” status
We’ve had good success driving the cost per call down using maximum CPC with or without enhanced CPC. Past a certain point however, you may see the dreaded “limited” status (see Figure 1).
In this case, the maximum bid (max CPC) is lower than many or all of the average keyword bids. At the least this will drive down your ad positions, at the worst your campaign will be “throttled” by Google. You can increase your daily budget to compensate, but at lower max CPC levels, this technique may not compensate enough.
Limited Status Can Throttle Your Spend
With max CPCs close to your average CPC, you can compensate with higher daily spend limits. Past a certain point, however, no matter how high you set your daily budget, you may not meet your monthly spending target. In our case we were spending about 60-65% of our monthly target budget with three limited campaigns.
The Solution to Limited Campaigns
The solution, after an approriate number of conversions, is to switch to a smart bidding strategy. By using Target CPA at the recommended level by Google, we were able to keep costs down and avoid throttling the campaigns. More on Target CPA in a future tweak.
Optimizing costs in PPC campaigns is an admirable goal. However, you can go too far in driving costs down. Learn how to avoid the dreaded “limited” campaign status in Google Adwords.
- Michigan Green Cars was the subject of this case study. Thanks again to Greg Tobias for permission to use his PPC campaign as an example.
- PPC Optimization: Abbreviate Ad Text
- Abbreviating key phrases in PPC text ads can lower CPC and the cost per conversion. Our otherwise identical text ad with “Michigan” abbreviated to “Mich” decreased the cost per call by more than 35%, and increased the conversion rate by 33 percentage points.
- PPC Optimization: Ad Text Position
- Leading with benefits can improve PPC text ad conversion rates. We show a case study that improves conversion rates by 1.8X.
- PPC Optimization: Ad Title Tweaking
- Learn how small changes in ad text can make big changes in performance. By varying our Ad Title text we improved ad position from 2.4 to 1.0.
- PPC Optimization: Age Range Targeting
- You can target specific age ranges in Google Adwords to optimize conversion rates. By tweaking the bids on high performing age ranges you can tilt your campaigns to those folks more likely to convert.
- PPC Optimization: Average Income Targeting
- Targeting your desired audience within particular geographic area using income is a powerful tool you can use to improve your conversion rates. Average household income is just the first demographic that Google has rolled out for that purpose. Coming soon are gender, age, and parental status which could be used to further refine your campaigns.
- PPC Optimization: Be Specific
- Using specific copy in your PPC ad text can improve conversion rates. Giving searchers ad text that more closely matches their search queries gives them results that more closely match their goals.
- PPC Optimization: Call Only Ad Extensions
- Adding ad extensions to Call Only campaigns can boost click-through and conversion rates.
- PPC Optimization: Display URL Expansion
- By including keywords or calls to action in your display URLs you can boost text ad performance in Google Adwords. This article shows a real-world example of display URL optimization.
- PPC Optimization: Early Warning
- In Google Adwords, you can use phone call metrics as an early warning system to optimize text ad conversion performance. Avoid scary PPC ad spend using fast-reported phone calls.
- PPC Optimization: Experiments in Punctuation
- By varying the punctuation and plurals within your text ads, you can optimize their conversion rate and cost per conversion. This article shows a case study of call only text ad optimization.
- PPC Optimization: Gender Targeting
- In Google Adwords you can optimize conversion rates using gender targeting. Learn how to squeeze more leads out of your PPC spend by targeting high performing demographics singly or in combination.
- PPC Optimization: Strange Attraction
- Learn how using strange attraction in your ad text can lower CPC and boost CTR and conversions. Grab attention with letter and symbol combinations to optimize PPC campaigns.
- PPC Optimization: Wordplay and Humor
- Humor and wordplay can make your advertising stand out from the crowd. Unexpected word combinations and humor attract valuable attention and can garner higher PPC click-through and conversion rates.
- PPC Optimization: ZIP Code Targeting
- Learn how to add ZIP code targeting to your PPC campaigns to boost conversion rates. By optimizing the performance of individual demographics and locations, you can improve conversion rates to squeeze more leads out your AdWords spend.
- Supercharge Your Call Only Ads with Ad Extensions
- Google shows which ad extensions can be used with Call Only ads.