Chapter 9: Performance

Chapter 9: Performance

You can track virtually everything that happens in your AdWords account. Due to the detailed level of tracking, none of your ad budget should be wasted because you can stop running ads that aren't working for you.

Scaling

If you make $2 for every $1 in advertising spend then you can scale your ad campaign as long as you can handle more customers. It's wise to capture all the profitable traffic available. Set your daily ad budget to a reasonable amount so that even if something unexpected happens, you can still pay it.

If you're starting a campaign with the goal of achieving a positive ROI and scaling to receive all possible traffic then the average daily budget setting can help limit your costs and exposure while you're working toward achieving maximum profitability.

The criteria of campaigns that scale with performance include;

• The ability to estimate conversion value.
• That you know how much time is needed before profits are available to reinvest.
• Your costs of servicing new customers remain stable or decrease.

No matter how unlimited your campaign budget is, the amount of traffic available for the keywords you're targeting will always be a limiting factor.  In contrast, if your campaign consistently meets its daily budget than you will miss out on potential ad impressions.

Growing a Profitable Campaign

A few facts about bidding when trying to maximize performance (there are always trade-offs):

• Decreasing bids generally results in fewer conversions at a lower average CPA
• Conversion rates don't vary much with ad position
• Increasing bids generally results in more conversions at a higher average CPA
• Increasing bids while limited by daily budget generally results in fewer conversions at a higher average CPA.
• A lower CPA may also have lower sales volume, which will reduce your overall profit.

Maximizing Profit

You must understand how to figure out if a campaign is making or losing money. Your value per conversion is the amount of expected profit (also known as value) you gain from each conversion. CPA targets can be helpful for establishing or maintaining profitability.

You can figure out your CPA by using conversion tracking. Getting to a profitable campaign starts by looking at everything at the conversion level. Try to make every keyword profitable and that will lead to an overall profitable campaign.

If something's not profitable, compare its CPA with your expected value per conversion and adjust your keywords, ads, or CPC bids to a profitable point (or drop it if it's not possible to make it profitable).