Effectively allocating a client’s budget is arguably the foundation for a successful pay-per-click advertising strategy. There’s a delicate balance in determining how to invest across the account. It’s crucial to properly invest funds to the right keywords in order to make optimization decisions and generate conversions. If we can link engine conversions to the return on the client’s investment, we can distribute budget where it will be most effective.
There’s no silver bullet in determining how to invest. But here are some tactics, along with some gut checks, to help to help you make smarter decisions with a client’s investment.
Here’s a high level backstory on our sample client: They initially budgeted across campaigns based on the number of brick-and-mortar locations each campaign covered geographically. Additionally, our client was able to provide data to tie our pay-per-click campaigns to conversions at their brick-and-mortar locations. This afforded us the ability to determine the conversion value and efficiency of each campaign.
Going into managing the account, it’s easy to quickly think,"Cool. Cut and dry distribution of the budget. Sweet lead tracking! Ok let’s go." But—being the analytical beasts we are—we found holes in this quick evaluation. Specifically, these three:
1. Leftover budget
One of the biggest challenges was spending the entire budget allocated to each market while meeting our cost-per-lead target. This is a problem because anytime there was budget left over, we were leaving potential leads out in cyberspace. But, if the cost-per-lead got too high, the client was understandably concerned with their investment. Different geographies will always spend differently due to differences in population, number of store locations, brand awareness, and approximately one zillion other variables. However, the biggest challenge was low search volume in markets with high budget. With a budget allocation based on store count, we couldn't spend the full budget and keep the cost-per-lead on track.
2. Misused budget
Dollars were being spent regardless of in the inventory of each location. This presented a big problem in areas with high competition or search volume and low inventory. It resulted in a low conversion rate and high CPL. We were wasting budget when we couldn’t provide enough product to support the users’ needs.
3. Limited budget
Limited budget was the biggest challenge in geographies with only one store location. The allocation sometimes didn’t even reach a click threshold to generate any conversions. Even if we saw conversions come through, it wasn't enough data to reach a level of significance on which to make optimizations. I believe they call this "ye old rock and hard place" scenario.
To strike a balance between optimizing the spend and cost per lead, we transitioned the budget strategy away from the client’s initial plan. The new strategy invests across all markets weighted by the efficiency of each campaign.
- Distribute a portion of the budget across all geographies. Everybody deserves love. We allocated funds to each market with enough weight to support testing and data collection.
- Allocate the remaining budget based on efficiency. Now it’s time to determine your definition of efficient. We focused on conversions and CPL over a set time window at the keyword level. We adjusted keyword bids when we saw significant data. If we struggled to accrue significant data, we implemented predictive bids based on similar keywords in other geographic areas. Consider your key performance indicators, seasonality, and lead cycle to help determine what will work best for you.
- Share the love. And we all know love is synonymous with money, so we took a little extra funds and distributed it to stores with extra inventory, low brand awareness, or high competition.
Budget done. Time to to pack up and go home.*
*No, no, no… In addition to budget allocation and smart bidding, we have to leverage ad scheduling, ad copy testing, keyword expansion, and then some to support the budget distribution. Forever. An analyst’s job is never done! Oh, and don’t forget to periodically audit your budget strategy!
We’ve been using this model for about a month. In that time, we successfully met the spend goal of the client, increasing the spend 108% from the prior 30 days. As we continue to collect data in the account, we will continue to use supporting optimization tactics to meet the CPL goal while continuing with smart investments.