2 AdWords strategies for a limited budget

If you are considering using Google AdWords to advertise you have probably heard some stories about how expensive AdWords can be. This can make advertisers with small advertising budgets very nervous so I wanted to go over 2 different strategies you can use that will protect your budget while still providing you with the opportunity to build a foundation of success using AdWords.

First of all, a few quick details regarding AdWords billing. Currently Google does not have an option in AdWords to set a monthly budget, at least not directly. AdWords allows you to set a daily budget so you will need to divide your monthly budget by the number of days in the month to set your daily budget. So if you have allotted $500 per month for AdWords then your daily budget for a month with 31 days would be roughly $16 per day (500 divided by 31).

AdWords is also set up on a 30 day billing cycle. AdWords bills you every 30 days. If your first bill is processed on the 12th of the month you will be billed again 30 days from the 12th. This can be a little frustrating for advertisers who have become accustomed to paying bills according to the calendar month. You can find a more detailed description about the AdWords billing process in the previous article “AdWords Billing”.

Here are 2 different strategies you use with AdWords for a limited budget.

1. AdWords Strategy

Choose a very specific targeted keywords and set high bid amounts in order to rank near or at the top of the Search results when those keywords are searched.  This will generated fewer impressions but a higher CTR and usually a higher quality score. Since quality scores build at every level, from account level to keyword, it makes since to start off with the highest quality scores possible and this will help.

To clarify let’s use an example. A website that sells mountain bikes is creating an AdWords campaign and has an AdWords advertising budget of $500 per month. To use this strategy he would set his daily budget to $16 per day.  Now when choosing keywords to bid on, this website will find that mountain bikes in broad match generates about 27,000 searches per month in the United States with a suggested bid of $1.15.You can find this information using the Keyword Planner.

Keyword Reasearch

Keyword Planner Results

In broad match the keyword mountain bikes could trigger your ad to show for any search related to the word mountains or the word bikes. This can lead to a low CTR and a lot of low quality clicks which will eat up your budget. Using the strategy listed above, the advertisers would instead choose the keyword

[trek mountain bikes] in exact match which is would limit his ad to be eligible only for searches for that exact phrase or close variant of that phrase.  That exact phrase may only be searched for about 5,000 times and not the 27,000 of the broad match, but your ad will be showing to a much more targeted audience and have a much better CTR and hopefully a higher conversion rate as well.

Using this strategy builds your will help build good quality scores, keep your cost down, and get higher quality traffic for your site. The down side is that you will receive significantly less traffic so you need to have a good idea of who your target audience is and what they might be searching for.

2. AdWords Strategy

This strategy is almost the opposite strategy of the first. Using this strategy the same advertiser would choose a few general broad match keywords such as mountain bikes and cycling. This generates a lot of impressions and a lot of clicks but you can bid less per click and you will receive a lot of traffic but this traffic will most likely not convert as well or be as valuable. The purpose of this strategy is to build data over a few weeks in your Search Terms report which you can then use to build a more targeted keyword list and a more expansive negative keyword list. This strategy works best for those advertisers who may not be sure who their target audience is or have products that may not be largely known about or searched for. This strategy is geared towards collecting data fast and then making adjustments over time to optimize your account.

In the first strategy you might divide your daily budget by 8 when determining your max bid amount. This might limit your clicks to about 5-10 per day. Using this strategy you should see higher quality scores and you will see a higher impression share.

When using you might divide your daily budget by 25 or 30 to get your starting max bid mount. You might get the 25-30 clicks or more a day then and you should keep that up a few weeks to give you a good foundation of data to work with. The downside of this second strategy is that your traffic may be lower quality, your quality scores might suffer in the beginning but this strategy will also help you uncover some very good keyword from your Search Term report that you might not have found any other way.

I personally use the first strategy if possible but sometimes I have started with the first strategy and found that I receive no traffic at all which defeats the purpose of using AdWords. I would suggest blending the 2 strategy throughout multiple campaigns and ad groups until you find the right mix for your website. Every website and business is different and perform exactly as you might have predicted. Keep your daily budget and bids under control until you figure out what works best for you.