- September 19, 2016
A Fiat dealership was having difficulty competing in a rural new vehicle market and needed to decrease their expenses while shifting their focus to used vehicles. They asked Workshop Digital to decrease their advertising budget while maintaining as much lead volume as possible.
The phrase “decrease advertising budget” makes most marketers cringe instinctively, but at Workshop Digital we have a different approach. Unlike Workshop Digital, many digital advertising agencies are setup to charge management fees at a percentage of the advertising spend. While this makes sense in terms of account scalability, it does not translate into keeping the client’s true best interests at heart.
My coworkers and I often joke that the industry seems to answer every digital marketing issue with some variation of “spend more money and you will get better results.” This can be extremely misleading because in almost every situation, there is a point of diminishing returns in which a client will get less back for each dollar spent. At Workshop Digital we aren’t afraid of that point—we seek it out so we can make more informed decisions.
Reduce AdWords Spend and Increase Leads
Workshop Digital examined the advertising channels and worked with the client to decide on an AdWords budget reduction of 50% and to pause all Facebook advertising. The client’s goal was to maintain as much lead volume as possible and due to the stronger lead generation capabilities of search for this particular client, we supported the decision to cut Facebook advertising as it was in the client’s best interest.
The next step was to reevaluate the account to make sure our objectives were aligned with the client’s short-term and long-term goals. We shifted budget and account structure to focus more heavily on used vehicles while maintaining a new vehicle presence. We also reset our Key Performance Indicator goals to give us a new benchmark to work towards with this shift of focus in mind.
We refined the account in every channel possible and focused on the top performing areas with the remaining AdWords budget. We also continued to look for new areas we could still expand in and implemented some successful YouTube advertising to highlight special sales events.
Increased Leads with a 77% Decrease in CPL
Our main goal was to minimize the loss of leads after a 60% budget decrease. Over time, we were actually able to increase leads from paid search despite the substantial cut in the AdWords budget. This resulted in a huge 77% decrease in the cost per lead as the number of leads increased.
Reducing your digital advertising budget doesn’t have to cause decreases in account performance. Strategic budget cuts can make your advertising more efficient – helping your client get more bang for each remaining buck. To cut budget successfully there are five considerations that you should not overlook:
5 Actions to Successfully Cut AdWords Budget
1. Refocus on the client’s short and long term goals
Behind every budget cut there is a story; try to find out yours. Has there been a reordering of priorities or a change in focus? Use whatever information you can uncover about your client’s future business goals to inform how you will structure your account. In this case, Workshop Digital’s client wanted to focus more heavily on used vehicles with the main priority of bringing in leads. We used this information to shift the budget and AdWords structure to support used vehicle sales in areas where we could achieve the lowest cost per lead.
2. Refine your remaining marketing campaigns
When you are working with a smaller budget, any possibility of frivolous spend is that much more damming. You should take some time to go back through your account to ensure that your remaining advertising efforts are as refined as possible. Keep your new performance goals in mind. If you are trying to make your budget more efficient, the chances are some areas that used to perform well for the account are now too expensive to justify.
3. Continue to explore new areas
Even if you have to cut budget from or eliminate a channel, there are still other areas that could be beneficial and plausible within the new budget. Consider your pricing structure. Are there areas within the existing account that you could open up without increasing budget or fee? This could be in the form of a new AdWords search campaign, an expansion to Bing or the Google Display Network, or, like in our case, YouTube advertising for a promotional video to gain awareness of a sales event. We were able to run this campaign within the existing AdWords account and generate views for less than $0.10 per view.
4. Reevaluate performance metrics
If your budget is changing, so should your key performance indicators. You have to try to forecast how your budget change will impact your performance metrics, and simply decreasing your goals in proportion with the budget decrease is a short-sighted way to approach it. You have strategically removed budget from the areas that are least likely to affect progress towards goals. Estimate what the effects will be and then adjust your goals accordingly. The next few months will be telling so monitor your progress towards these new goals carefully.
5. Keep testing
Don’t forget that after the budget cut dust settles it is still going to be business as usual. Continue with standard account maintenance and optimization and continue to test new things in the account. Using AdWords Experiments, you can test different methods of your budget cutting madness by evenly splitting traffic between two versions of the account for a predetermined period of time.
Keeping these five considerations top-of-mind, we were able to crush the goals of our client and provide them a more cost-efficient AdWords structure. Remember that cutting your AdWords budget doesn’t mean your account performance has to suffer, so long as it is strategically planned and implemented correctly. Comment below with your own tips to effectively cutting AdWords spend!