How to Scale PPC Budgets by Performance for Profit and Growth
For example, a real estate investors AdWords campaign that scales by performance can work within advertising goals. Goals such as:
- Generating leads for their real estate investing business.
- Driving sign-ups for a monthly blog or newsletter.
- Campaigns that scale with performance usually meet conditions such as:
- Estimation of a conversion value.
There is an understanding on how much time is needed before profits will be available to reinvest. Example, you know that house sales leads convert to deals in two months.
Costs for serving new customers remain constant or drop as your growth increases. Basically, the more clients that you gain, the lower the cost of supporting each new client. Your knowledge increases and process becomes more fluid.
A couple of conditions that make it difficult to scale with performance include:
- Cash flow limitations.
- Sales/Lead tracking limitations. Such as offline transactions.
Customer service limitations. As you grow, you can’t handle the amount of new traffic, so your customers service decreases.
Don’t wait. Get a free SoaringSEM Pre-PPC audit.
Basics of Bidding for Performance
When a campaign is focused around performance, it’s vital to understand how adjusting bids can impact metrics.
The following rules are important to remember:
- Increasing bids generally result in more conversions at a higher average cost-per-acquisition.
- Decreasing bids generally result in fewer conversions at a lower cost-per-acquisition.
- Increasing bids but limiting daily budget generally results in few conversions at a higher average cost-per-acquisition.
Since SoaringSEM is managing campaigns for clients, we understand the bidding trade offs involved so we set clear expectations with our clients.
Metrics to Use to Maximize Profit
Value-per-Conversion is the amount of expected profit you acquire from each conversion. An estimated value-per-conversion is a useful benchmark to define the upper limit you can invest in advertising before it becomes not-profitable.
Cost-per-acquisition targets are helpful to establish or maintain profit. Targets are usually set below value-per-conversion.
Example” If a real estate investor house flip is worth $2000 profit and any cost-per-acquisition (this could be represented by many conversions that lead into one deal) below that is profitable, a $1000 ($50 cost-per-conversion x 20 leads before a sale) target can help achieve a $1000 profit.
A simplified, automatic cost-per-click bidding option for cost-per-acquisition targeting is to use AdWords conversion optimizer bidding.
Stages of Growing a Profitable Pay-Per-Click Campaign
Stage 1: Be sure to continuously test your campaigns ad text, bid strategies, and keywords.
Stage 2: Achieve customer reach by increasing AdWords campaign budget while leaving your cost per click keyword bids the same. By increasing your campaign budget over time, you can reach a point where exposure limits will no longer be an issue.
Stage 3: If costs don’t reach your daily PPC budget and you are still profitable, then you have successfully scaled up to the available traffic.
Characteristics of stage 3 look like:
- Budget is high enough to show at all times, so you are not missing eligible impressions.
- Daily costs, profits and sales rise and fall with fluctuations in search volume.
You must know how to accurately assess a campaign in order to make sure it’s making money instead of losing. If determined that a campaign is not achieving profit, you can compare cost-per-acquisition with expected profit-per-conversion and adjust keywords or bidding strategies to a profitable point.