There’s a lot of unknowns when you first start a campaign:
- You don’t know what the search volumes are (even if you’ve got estimates from the Google Keyword Planner).
- You don’t know what your ad position will be for your given bid price.
- You don’t know what your click-through-rate (CTR) will be for your given ad position.
- You don’ t know if your CTR will be better than your competitors in the same ad position.
- You don’t know if Google will reward you with a discounted cost-per-click (CPC), or punish you with a higher CPC.
- You don’t know if Google will reward you with a higher Impression Share, or punish you with a lower Impression Share.
- You don’t know what your click volumes will be, since it’s determined by the search volumes, your Impression Share, and your CTR.
- You don’t know what your conversion rates will be, and your earning-per-click (EPC).
- You don’t know what your return-on-investment (ROI) will be.
Yep, lots of unknowns!
Forget estimating these metrics. You’ll be wrong, and you could have got a campaign running and got the answers in the time you’ve just spent asking the question and created some complicated Excel model.
The only way of finding these out is to LAUNCH AND LEARN.
At the start, when you are gathering your metrics, it makes a lot of sense to cap your spend by putting a daily budget on your new campaign. If you hit a rich vein of traffic then you’ll hit your budget quickly and your ads will stop showing for the rest of the day. This prevents your costs spiralling out of control.
But the big newbie error is to cap daily spend AFTER you’ve gathered all your stats.
This is especially true if you’re getting a positive ROI. If you found a box at the bottom of your garden that returned $2 for every $1 you put in, would you limit your spend for the day to $10? I think not. You’d put in as many coins as you could find. You’d get a loan from the bank and put that money into the box too.
If you’re positive ROI, then set your budgets a bit higher than your max daily spend. You don’t want to limit any incoming traffic, and you just want a budget set as a fail safe in case someone accidentally forgets the decimal place when amending bids, or accidentally removes your landing page.
If you’re negative ROI and are hitting budgets, then keep dropping bids until your daily spend hits your daily budget to buy data, or until you get profitable. You’ll get more clicks for the same cost, and each click will be cheaper and lose you less money.
DON’T BE LIMITED BY BUDGETS
(unless you’re buying data)