Christmas is fast approaching, in fact many of the online retailers we work with are already seeing the start of the Christmas rush with many reporting rapidly increasing sales. It wouldn’t be beyond the realms of possibility that this festive season could be the best ever for online retailers – in fact, it’s pretty likely.
Earlier this year I wrote about the new Google Product Listing Ads and what this meant for online retailers and sure enough the majority of e-commerce websites using PLA’s and AdWords as a whole are benefiting hugely compared to the pre-PLA days.
The Set and Forget Mentality
It NEVER works. The problem is, many online shop owners make the mistake of setting up their AdWords campaigns (Including their Product Listing Ads) and leaving them to run resulting in them never reaching their full potential. Even those that do regularly optimise their AdWords Campaigns sometimes miss one important point: Budgets.
Why an Unlimited AdWords Budget is a Smart Option
It’s always hard to throw more money at advertising but Google AdWords makes it incredibly easy to make informed decisions about how much budget you should apply to your campaigns.
If ROI is positive, then why not continually increase your budget thus making it unlimited?
Let’s look at some real figures from one of our clients.
- Average Sale Value = £300
- Budget Per Day (Limited by Budget) = £50.50
- CPA (Cost per Acquisition) = £1.36
- Conversion Rate = 11.72%
- Click Through Rate = 7%
- Search Lost IS Budget = 38.99%
Let’s look at these figures more closely: We can see that the clients CPA is £1.36 and their average sale is £300 , so in other words, for every £1.36 they spend on AdWords they make a £300 sale: Not to shabby!. We can also see that the clients budget is “Limited by Budget” which means just what it says – with more budget the client would get more impressions / clicks and conversions.
We can see that the client is losing Impression Share due to budget (39%) so in a nutshell the clients AdWords adverts could show 39% more if there was a higher budget. Remember, the client converts nearly 12% of all visitors from AdWords so 12% of the extra clicks coming from the additional impressions will become customers and convert at the same CPA: £1.36.
With all other things equal, more budget = more impressions = more clicks = more clients. No matter what the clients budget, they are still going to convert 12% of these extra visitors to clients and we can see from the average sale value and CPA that each conversion is well within the clients profit expectations.
In scenarios such as these the worst thing a client can do is not raise their budget – it’s literally just throwing conversions in the toilet.