Paid promotion: how much is too much?
Can you have too much of a good thing? Well, I guess that depends on what you’re talking about…
While having ‘too much money’ may not strike you as one of life’s big problems, there is an argument that when it comes to digital marketing, and PPC in particular, having too much money can, in fact, put you at a disadvantage. But how much is too much?
That’s what we’re here to talk about, with the help of some of our in-house PPC know-it-alls. Paid promotion is all about finding that sweet spot – the spot where you’re spending enough to generate traffic and profits, but not so much that you’re oversaturating your searches and, as a result, throwing money away.
The sweet spot
Depending on the industry you’re in, or the type of business that you run, the sweet spot can mean a lot of different things to a lot of different people. Kathryn, one of our senior search account managers, says that the industry can make a huge difference – to how expensive the targeting is (e.g. cost-per-click), how much competition there is, and how much physical traffic is actually out there to capture. “If you are already capturing 100% of the impression share, then there aren’t additional impressions out there for the keywords you are targeting – and so increasing the budget will make no difference,” she explains.
There’s also an argument for having ‘too much budget’ if your account isn’t performing at its best, according to Max, one of our senior search account execs and all-round PPC nerd. If you’re not getting your audience right, your targeting is too broad, or your account just generally isn’t optimised, then increasing the budget won’t do anything for your success metrics. In fact, you’ll just be spending more money on irrelevant, if any, traffic.
Pushing the budget boundary
That doesn’t mean that you should feel limited. Kathryn says: “As a general rule, it would make sense to scale up budget all the time there is available traffic and campaigns are profitable.” However, she goes on to explain that increasing the budget doesn’t always mean the second part will be true; this relies on maintaining a consistent level of conversion rate, so simply spending more won’t always equate to more success.
Max agreed, saying that correlations on spend and success will vary – with it all coming down to what information the data is giving you. “When you have an optimised account converting well, there is always scope to add more, whether that means capitalising on what you already have (i.e achieving higher positions over competition) or widening your targeting to capture further users,” he explains.
When it comes to higher spends, it’s largely tied to the quality of traffic you are able to maintain. You can usually judge available traffic by checking impression share metrics, and also looking at whether campaigns are limited by budget or not; Google will often suggest the budget it recommends when campaigns are limited. For Kathryn, the preference is to scale up budgets gradually – although the budget assigned to paid media spend within a client’s marketing plan doesn’t always allow for that.
How low can you go?
Naturally, if we’re talking about how much is too much, then it makes sense to talk about how much is too little. After all, there are two sides to the sweet spot. Minimum budgets are a tricky one to generalise and again can depend heavily on competition in the industry. As Max put it simply – “it depends what your goals are, how many keywords or audiences you want to target, and how competitive the industry is.”
There are however some tips and tricks you can use to work it out for yourself. “We would usually do some forecasting based on average monthly search volumes and suggested click costs from Google. The Keyword Planner tool provides some stats on this that can help when planning a campaign, recommending a budget for a particular set of keywords,” says Kathryn.
Keep an eye on performance, and on the CPC, and make adjustments based on what you’re comfortable with – and what works for you as a business. That may mean splashing more cash, or changing tactics and pushing a more organic strategy. No two sweet spots are the same, so be prepared to make adjustments based on your individual requirements.
Can’t find your sweet spot? Don’t worry, you’re not the first to have that problem. Get in touch with our super smart team of PPC wizards for some help, or check out the PPC courses offered by our sister brand, Giant Campus, if you want to learn how to find it yourself.
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