Optimizing AdWords – Lowering CPC to Find the Sweet Spot
January 12th, 2009I recently did an experiment in Google AdWords with one of my client’s accounts to see whether we could lower her CPC (cost-per-click) bid and actually generate more traffic. She was hitting her daily budget limit and couldn’t afford to increase her budget. So we tried an experiment to see if lowering her CPC bids could increase clicks. Read more to see the actual results.
The client’s daily budget was $7.00 per day. She was hitting this budget before the end of each day, and therefore her ads would stop showing. We decided to run a two week experiment in the first half of November and cut all her bids in half. Then in the second half of November, we raised the bids up to halfway between the current amount and the original amount. Here’s an example:
Oct 1 – Oct 31Â bid was $2.00
Nov 1 – Nov 14 bid was lowered to $1.oo
Nov 14 – Nov 25 bid was increased to $1.50
This should give you the general idea of what we did. Of course each Ad Group had different bid prices, but we followed the same algorithm of cutting in half, then raising halfway.
Here are the results:
A comparison of the total cost for the three time periods. You can clearly see the budget being hit in October, and then it not being used in early November because we had set the bids too low. When we raised the bids up in mid November, we again were able to use up our daily budget.
Next we’ll look at a comparison of the cost per click (CPC). See how the average CPC was lower in early November, higher in later November, and still higher in October.
Now for the final comparison numbers. This chart compares two weeks of the baseline period Oct 1 – 13, to the final two week test period, Nov 14 – Nov 25. Notice that the final period had 17.1% more clicks yet the total cost was reduced by 11.9% and the CPC was reduce by nearly 25%! Let’s repeat that, we paid 25% less but got 17% more clicks.
Amazing isn’t it? So if you’re hitting your daily budget, you can try this yourself.
Lower your bid prices by some amount that you think will actually cause you not to use up your daily budget. For this experiment, I picked 50%, but your case may be different. Then, once you’ve lowered the prices too much, raise them back up and do the comparisons for equivalent time periods. If you’re fortunate like we were, you may be able to find a sweet spot, where you actually get more clicks but are paying less for them!
Jill--------------
J. Olkoski
Aldebaran Web Design, Seattle
Jill Olkoski has a BS in Engineering, a BS in Computer Science and an MA in Clinical Psychology. She delights in using her advanced technical, psychological and interpersonal skills to help small business owners develop cost-effective and successful websites.
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February 5th, 2009 at 9:50 pm
Your experience seems to sound great to me. However, the question is, how much competition do your keywords have? Because if you are bidding to keywords that have no or little competition then your suggestions can work well to others as your bid will not go lower from the minimum requirement. In my case, it’s different because I need to check the minimum bid requirement from time to time as it becomes higher each day otherwise my ads will not appear on the paid ads portion of the engine.
And by the way, how many keywords do you have in your campaign? These needs to be shared so we know that your experience is worth doing to our campaigns as well.
What do you think?
February 5th, 2009 at 9:57 pm
Due to confidentiality, I am unable to share the keywords in this campaign that was part of the experiment. To answer “how much competition” is a very relative question – but the bids were all between $1 and $3, if that gives you a range. And the number of keywords was between 50 and 100. So we’re not talking about very cheap clicks, or super expensive clicks. Yes, if you’re in a very competitive market, and you find that you are continually being out bid and need to raise your prices, you need to keep up. But this was not the case with this client at all. The problem is not that we were being out bid. We were running out of budget. A very different problem.
But the point of this article, was to encourage people to do the experiment for themselves if indeed they were hitting their budget every day to see if they could get more traffic for less money. It’s not a guaranteed thing – every single Ad Words campaign is different, everyone needs to run their own experiments.