How to Identify When You Are Wasting Your Adwords Budgets

Some advertisers may attribute poor campaign performance to bad luck. But most often it is the result of attracting irrelevant clicks and delivering poor user experiences that are limiting campaign success.  In this post, we look at how you may be wasting your budget and 6 tactics for minimising budget wastage and maximising profitability.

Let’s kick off with an example. Say your goal is to increase your weekly ROI from $1000 to $ 1500 in the shortest time period. You are faced with two decisions:

1. Increase your spending by allocating 50% more budget to your campaign.
2. Optimise your current campaign to reduce irrelevant clicking and improve user experience.

These two scenarios can be tabulated as follows:

Scenario 1: Increase your spend (The easy, stupid way)

In this scenario, we are increasing our budget by an additional 500 dollars to drive more traffic. At the current conversion rate, this delivers an additional 1000 dollars in revenue, resulting in a profit of 1500 and our ROI remains the same at 100%.

Scenario 2: Optimise your spend (The clever way)

In this scenario, we do not change our 1000 budget. Instead we focus our efforts on optimising the current campaign to produce a higher conversion rate.  This results in a 20% increase in revenue, providing a profit of 1500 and a 150% ROI (50% more than before).

As you can see, with a bit of effort, scenario 2 is the producing the same amount of profit, but with a better ROI than scenario 1, as the budget remains unchanged.

Optimising your spend can be as simple as determining how you are wasting your budget and modifying your campaign structure, ads and landing pages to attract better clicks and deliver better experiences for searchers. 

How am I wasting budget?

Ultimately, if you are not converting visitors, you are wasting your budget. This comes as a result of either attracting irrelevant clicks and / or providing a poor user experience.

1.     Attracting Irrelevant Clicks

This typically happens when:

• You are targeting irrelevant keywords
• The messaging in your ads and does not match your landing pages
• Your ad extensions and sitelinks are not relevant to the search query

2.     Offering a Poor User Experience 

This typically happens when:

• Landing pages are unfocused and broadly themed.
• Landing pages are cluttered with too much choice – such as drop down navigation and multiple calls to action.
• Users are forced to do a lot of reading to find to the info they want.  

How to decrease wasted budgets

1.         Setup conversion tracking

Having conversion tracking is essential for knowing which of your keywords, ads and landing pages is revenue generating. To get this setup, follow the instructions at the Adwords help centre. Ensure that you name your conversions quite specifically to avoid confusion down the line.

2.        Optimise Broad Match

If you are determined to use broad match, be mindful that Google can show your ad any time part of your phrase is used in a search query. For instance, the ads you have setup for the keyword ‘Lady’s Clothes’ may show for the search query ‘Men’s Clothes’ – attracting irrelevant clicks and reducing your CTR.  Therefore, it’s recommended to get the most from broad match to include (1) negative keywords and (2) a broad match modifier (+Keyword).

Otherwise, stick with the safer phrase or exact match types.

If you don’t understand match types, read about them here.

3.       Actively Seek Out Negative Keywords

Statistics show that 25% of advertisers do not use negative keywords, which is odd as negative keywords are one of the simplest and most effective ways to reduce budget wastage. To include negative keywords:

1.)    Review the search query report (under campaigns / keywords / details)
2.)    Identify irrelevant keywords.
3.)    Click add as a negative keyword.
4.)    Select either the ad group or campaign level
5.)    Edit the negative keyword
6.)    Hit save.

Repeat this process at least once per week. For new accounts repeat this daily for the first month.

4.       Revise your campaign settings

Go to your Adwords account, select a campaign, click the settings tab and review the following:

• Networks:  Unless you are deliberately targeting users on the display network, ensure that only search (and search partners) is selected. 
• Devices: You can choose to adjust your bid for mobile. If you mobile conversions are low consider adding a mobile bid adjustment to reducing the portion of budget used for mobile.   
• Locations: Use the advanced search feature to add targeted locations to your campaign. Be specific and use radius targeting to ensure you include only areas that represented your target audience. 

 5.       Optimise your Ad Groups & Bid Strategy 

• Ensure each Ad Group caters for a specific theme that is represented by its keywords, ads and destination URLs.
• Go through your keyword lists. Pause any irrelevant or low quality keywords. If they are worth keeping but fall outside the ad group theme, move them to a new, more specific ad group with its own ads.
• Your bid management strategy is essential for maximising the profitability of campaigns.  Decide how much you are prepared to pay for each conversion and stick to this for a set timeframe.
• Review the conversion rates of your keywords. For, keywords that continually attract clicks but fail to convert consider adding these to new ad groups or pausing them. Increase the bids for keywords with high ROIs.

6.       Landing Pages 

• Ensure you have a landing page for each ad group.
• Ensure is has a single, focused message that ties in directly to the ad text.
• Reduce navigation and multiple calls to actions.
• Make it easy for users to convert – prominent buttons and simple forms.
• Reduce text to the bare essentials.

In this post we have outlined the two main causes of budget wastage – namely irrelevant clicks and poor user experiences – and provided you with 6 tips to optimise your Google Adwords campaigns for increased profits and a higher % ROI. Consider implementing all of these tactics, before increasing your budget.

By Anthony Coe

Image Credit: By 401(K) 2012 under Attribution-ShareAlike 2.0 Generic Licence.