The Most Important Daily AdWords Metric:

What Is The Most Important Metric To View First Thing Every Day?

For many small business advertisers with very limited budgets, the most important metric  of your AdWords account to view everyday may very well be total cost. You know advertising with AdWords can have a great benefit, but unlimited money is not a luxury many of us have. 🙂 It’s an ongoing process to try and get the best value for your advertising dollars, and can also be a bit of a  juggling act. Some days you may have to raise your bids and budget to maximize your exposure, some days you may have to reduce your bids and budgets to bring the costs in line. You won’t know where you stand today, this week,  or this month without keeping an eye on your budget.

Why Can Cost Be The Most Important Factor For Small Business?

The adwords system may accrue up to 30% more cost on any given day than your maximum daily budget. Depending on your  overall financial situation, a 30% increase in costs over several days or a week, could be an cause for great concern. Is that also the week payroll goes out, vendor bills come due, or a costly emergency pops up? Pausing all your advertising to temporarily reduce costs may drastically reduce sales, compounding the overall short term cash flow issue. If you check your budget and spend daily, you will be more likely to stay ahead of the game, and not have to stress over playing catch-up when you are already over budget.

When Should You Adjust Or Optimize Your Bids And Budgets?

While it’s important to know where you stand regarding your budget at least several times a week, it may be counter-productive to make too many changes, too quickly. If you’re 10% over budget, perhaps reduce your daily budget by %10 to keep costs inline, but think twice before drastically reducing your bid in the short term. Keep your impression share metrics in mind.

If you are losing more impression share due to budget than position, any reduction in budget will mean a decrease in overall traffic. Ads that show in a higher position typically have higher click through and conversion rates than ads that show in lower positions. Even if you lose some traffic, try to maintain as much relevant concerting traffic as you can with a reduced budget. You may get more clicks for the same daily budget in a lower position, but f those are not profitable clicks (lower conversion rate), you will continue to spiral further into the red. Why pay for “bad” traffic, no matter how much you get for your available budget?

Tips For Estimating What Your Daily Budget Should Be:

If you do have a conversion strategy in place, and a value formula, then you know whether or not your ad buy is profitable. The impression share metrics are crucial metrics to establishing how much more profit you could make, for how much more cost. If you are only reaching 50% of your potential impression share due to budget for a profitable campaign, how much more revenue could you earn by increasing the budget? There is a point of diminishing return, but typically that point is around the 90+% mark. If the more you spend the more you make, in the long run, try to find a way to move more resources into your advertising. Consider your ad buy an investment, not just a cost of doing business.

If you are reaching 100% of your available impression share with your current budget, but still losing a significant impression share due to rank, raising your bids alone may not be the most effective approach. Yes you are more likely to get clicks and conversions for ads which show in a higher position, but the point of diminishing return can be much more drastic when it comes to bids than budget. If your return per click is $.06, and your average cost per click is $.05, any increase in bid will erode your current profit margin.

The opposite can be true if you lower your bids too much. An average CPC of $.04 may reduce adrank to a point where you lose the more profitable position, to competitors with a higher overall ad rank. Spend more make more, spend less make less – as a rule – is not always true, but is always a possibility that should be considered. From the first thing in the morning, to the last thing at night, knowing where you stand regarding your costs and profits is the key to knowing what you should be spending on AdWords, at any given time.