PPC Budget Impact Daily Conversions: –
- Learn more about the relationship between budgets, conversions, and cost per acquisition.
- Budgets can be difficult to set, especially for new campaigns.
- Setting the budget too high or low can lead to unnecessary expenses, machine learning problems, and other account performance problems.
Basic rules of engagement:
- It’s important to remember that daily, monthly, and lifetime budgets behave differently.
- If someone sets a daily budget, the ad network will try to average the daily spend in 30.4 days.
- This can mean that the ad network will spend up to 200% of the daily budget on any given day.
- Monthly and lifetime budgets allow for greater fluctuation in daily spending and, for the most part, will adhere to the stated number.
- They are great for those who need to spend a certain amount in a certain period and can be a useful way to get around the acceleration period for new campaigns.
- Cost per acquisition (CPA) is determined by conversions to designate as “in conversions.”
- This number may increase if too many or not enough conversion actions are included.
- Secondary conversion actions will not be counted in the reported CPA or smart offers.
Budget impact on conversions / CPA:
Actual costs are determined by impressions and clicks.
The CPA and the conversion rate say:
- The sales team/site is doing this when closing the deal.
- To configure for quality or volume traffic.
- The budget supports all the objectives.
There are some unspoken mechanics:
- The advertiser achieved 8.34 conversions per £ 1,000.
- Individual conversions could have been cheaper; however, the overall CPA reported is based on the total cost divided by the total conversions.
- Know how many clicks it took to get all 8 conversions.
- Budgets should be able to support at least 10 clicks in the day, as a 10% conversion rate is really good for search.
- The easiest way to see if someone has enough budget is to look at the percentage of lost impressions due to budget.
- If the budget is too low to support enough site clicks to trigger the conversion rate, the CPA will go up.
- Increasing the budget does not always lead to a decrease in CPA.
- If the quality of the traffic is bad, it does not matter how much fuel the campaign has.
- Starting with a slightly higher budget in the first 60 days of a campaign can help gain statistical significance on the quality of traffic.
- Any budget adjustments are based on conversion volume scale rather than troubleshooting intent.
When to change the budget vs. When to change channels:
- It is important to know when a channel fits well or poorly on a budget.
- Lowering the budget for paid search can result in higher CPAs due to higher costs per click (CPC).
- Carrying a large budget into an awareness campaign (social targeting landing page views, video, etc.) can also lead to higher CPAs due to a lack of transactional focus.
Signs that the problem is not budget enough:
- Top of page impression share is consistently below 40%.
- The average CPC exceeds 10% of the daily budget.
- The campaign is having difficulty spending the budget on a consistent basis (that is, it increases occasionally during the 30.4-day period).
Signs that the problem is the channel:
- The quality of the lead is poor or random.
- The budget increase did nothing to improve the situation of the CPA.
Remove:
- The budget does not guarantee a certain number of conversions or CPA.
- Fuel ad campaigns to generate impressions and clicks.
- A campaign’s budget should only be changed if the campaign cannot meet its assigned goals.
- We highly recommend the use of ad network budget reports, which will help forecast what the budget is capable of delivering.
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