I recently read about a very interesting and often overlooked topic in the PPC world – budget settings and how they affect conversions. Many people see budget settings merely as a way to stop your campaign from overspending.

A stable conversion rate is not enough
The topic is well described on PPC Discussions through the simple example of a campaign that was almost perfectly set up and was generating stable conversions with a good ROI, but then simply stayed that way. A stable conversion rate is good but ultimately you want it to keep increasing - especially if you have a ROI based campaign. Often you’ve tweaked the campaign so much that there’s not much left to do in terms of creativity. So what next?

Up the budget
It’s quite simple - increase your AdWords daily budget and set your ad delivery to “accelerated”. Increasing your daily budget allows your ads to show for a greater percentage of impressions. So if you’ve got your budget set at R50 a day, you will only be getting R50 worth of clicks and however many conversions come out of that. So upping your budget to R100 a day, will double the amount of clicks and conversions. Pretty obvious isn’t it?

If you’ve set your ad delivery to “standard, show clicks evenly over time”, you’ve most likely reached your daily cap at the end of the day and there may very well be additional search volume after or between the times ads are shown. Setting it to “accelerated” gets you all potential clicks and conversions as quickly as possible and there is more chance of your ads showing for 100% of impressions.  This way you won’t miss out on any valuable traffic. So if you’ve got the budget to work with, increase your spend. 

This won’t work for all campaigns
Having said that, I don’t advise doing this if your campaign is not performing well, unless it is a new campaign and you are trying to figure out which campaigns/keywords are stable convertors - and if you have the budget of course.

Customise your budget
What if you don’t have the budget to work with? This is also something that I think some Adwords advertisers miss. If you have several campaigns running in your account and only have a limited budget, don’t give them all equal daily budgets. Inevitably some campaigns will perform better than others and you should be putting what budget you have into the campaigns that perform the best. If, for example, you have three campaigns running and one is generating the most conversions at the lowest cost, then you should increase your daily budget for that campaign and lower it for all the others. This way you’ll be spending money on the keywords you know achieve results and not wasting clicks (and money) on those that don’t. 

This strategy I find works well when you have top performing campaigns that are a little more competitive than others. They often have higher CPC bids and therefore cost you more. By increasing the daily budget, you’ll be able to get more clicks. Just keep an eye on your cost per conversion. You want to increase conversions, but not cost per conversion.

What not to do
Don’t increase your daily budget if your campaign is not performing well with your current list of keywords. This is most relevant to campaigns that are very competitive and have high CPC bids and if you have a limited budget. If your bids are high then you would usually need more budget to get enough clicks. Rather revise your keyword list and find keywords that are less competitive and have more potential of converting.