How campaigns can benefit each other

[roodle]

Hi,

I'm relatively new to Adwords so please bear with me if this is obvious. I've read a few things recently that are making me question the following. I have 2 campaigns running for the same client. For argument's sake, one is about Blue widgets and the other Red widgets, so widgets is the common theme. The Blue widgets campaign has a significantly higher CTR and has a lower CPC than the Red. But, my client says that they'd rather not spend money on the Blue campaign as the ROI is much less for what they're selling. So my question is, even though my client doesn't want to spend money promoting Blue widgets, is it beneficial to keep the campaign going, albeit with perhaps a lower daily budget, since its quality affects that of the whole account?

All comments welcome. Thanks in advance.

[after_hours]

If the sole objective of this campaign is to sell widgets then everything should be determined on a ROI standpoint. Having a low CPC and high CTR is great, but if it doesn't produce conversions, that money is better invested elsewhere. The cost/benefit of keeping a campaign for the sake of Quality Score impact is too low.

[RhinoFish]

"The cost/benefit of keeping a campaign for the sake of Quality Score impact is too low."
I concur, and add that it's not even close to reasonable. While account history is a factor, you can see from the spread of QS for individual keywords that specific performance then relevance of the keywords is the main factor in play.

What I'd suggest (after_hours said it too), is to treat each campaign's ROI separately. With a lower margin on the blue widgets, you can determine the goal CPA (cost/conv) and drive the campaign towards that goal - same thing with the red widgets, though with higher margins, it's CPA goal may be a higher one.

Point being, the goal is to maximize total profit / ROI, the path to that isn't picking out which product has a better margin, but optimizing each toward it's optimal performance, allowing the aggregate volume and it's controlled ROI to be your net reward.

Imagine is everyone in the industry was focused on the higher margin item, instead of optimizing both... there'd be less competition and lower costs on the lower margin item's PPC... though the unit margin is lower, it's aggregate CPA might top the higher margin blue widget.

[roodle]

Thanks very much for your replies.

Let me clarify that when I said the ROI for Blue campaign is less, I meant that the actual profit margin for the company from selling Blue widgets is lower than that from selling Red ones. I hope I wasn't confusing you. These are actually a very low-budget campaigns (£5 per day total) but nevertheless I presume the principles are the same irrespective of budget.

I suppose what really interested me was the question of one campaign's quality affecting another. If you say that's a very small effect then that's my question answered!

[RhinoFish]

right, i understood you correctly on profit margin, hope you understood me. profit margin doesn't determine the profit of a campaign by itself, the ad costs and conversion rate are also factors. it's quite possible to have a higher net profit on a lower margin product. further, if controlling via CPA, you wouldn't pick one over another, you'd optimize both individually and the gross aggregate profits would exceed what either one by itself could produce. so don't let profit margin stop you, it's the balance of margin, conversion rate, and ad costs that really determines the campaign's profit level - the item's margin doesn't by itself.

:-)