Daily budget vs. cost per click...

[Durtdawber]

I am decently new to Adwords (been using them for about 1 year). I have had a horrible time trying to get my website ranked up in the search engines so I started using the PPC model.

I run an image hosting site called Image4U, http://www.image4u.org. I use a very low daily budget for my keyword campaign and have always wondered about the following question.

"Which is better, low daily budget/higher CPC or higher daily budget/lower CPC?"

I know that higher on both would be best but I'm trying for champagne on a beer budget. A low daily budget confines my overall cost and a higher CPC increases my position. On the other hand, a higher daily budget/lower CPC increases the number of impressions per day thus leading to more click throughs.

As with everyone, I'm trying to maximize my investment. Any thoughts?

[cline]

"Which is better, low daily budget/higher CPC or higher daily budget/lower CPC?"
Neither. Knowing what a click is worth to you is best. Once you know that, then the issue of budget becomes largely irrelevant.

Budget is only relevant to control spending for tests, serve as a stop-loss for dramatic changes in market conditions, or for firms that are so thinly capitalized that they cannot afford to invest appropriately in their businesses.

[AussieWebmaster]

There are exceptions... inventory... if you have a limited amount to sell you need to stay on top of it so you are not looking for sales after being sold out.

The zero sum game is reality... if you know what the price determinates are then you can stop only when the CPC exceeds it.. to do this you need tracking codes and an ROI program... if you are using Google they offer a free one... use it to start and get a good feel for your numbers...

Basically you need to know how many clicks it takes to get a sale... if the CPC times number of clicks per sale is lower than the margin between selling price and your cost you have profit... how much profit is then determined by how many items you can sell and thus you want as much traffic as you can buy... working on tweaking the creative to improve CTR which will help lower cost... then work on landing pages etc and improve your conversion rates...

Welcome to the world of SEM and ROI

[Jeff Martin]

Hi Durtdawber,

You got some good answers, but let me offer this up.

I've read many reports and surveys and they all indicate that your ads need to be top placed in order to be seen. Its the same concept as natural results, but ads, depending on the search engine you use, can get even less visibility.

I prefer to be in the top 3, which are syndication spots. Ive operated on $5 a day budgets and still gotten results. Have you thought about only showing your ads during certain days or during certain times of the day? Your web logs will tell you what days and hours you get peak traffic. Thats a great place to start. Maybe your visits are maxed Mon-Thu, 10am-4pm, why not target that time frame and get your ads in one of the syndicated spots?

Do make sure your tracking conversion. Both Google Adwords and Overture offer them freely as AussieWebmaster said. Conversion will let you know what it is costing you per sale, and if your cost is higher than your profit margin then its time to consider making some changes. Some changes might include 1)Rewriting your ads to disqualify users before they click 2) investigate more relevant lower cost keywords 3) modify your pricing structure.

It is possible to start on a very low budget and work your way up. Dont be discouraged!