Thoughts on Predicting a Paid Search Budget?
I'm trying to figure out a good way to determine the proper paid search budget month to month looking into the future.
I know the short answer: if your ROI is positive, keep spending. The problem for that is when proposing an annual budget and planning for June while still in January, I need to be able to make some estimate of a logical amount to spend based on ROI, search availability, etc.
In my case, there are certain branded terms where the ROAS will always be great, but the search availability is too low to sell at capacity. Meanwhile, generic terms are plentiful, but if we push bids too high, the ROAS is bad and so that becomes a problem. So what to do?
I've thought of a few possibilities, but none of them are satisfying (and BTW, I'm really new to AdWords, so these are just a few ideas that have crossed my mind). 1. Lost Impression Share method
In this method, I look at lost impression share due to budget, figure out how much more budget it would take to reach 100% impression share and voila! I have my number
--- future budget = (current budget) + (extra impressions * CTR * CPC)
The problem is that our IS lost to budget is small, especially for terms with conversions. So to increase impression share, we would need to bid higher, and that would reduce ROAS significantly.
Estimating necessary budget increase to reduce impression share lost to budget: [searchenginewatch.com
Risk of pushing bids to increase impression share lost to rank: [searchenginepeople.com
...] 2. Increased rank method
- Look at keywords that are "below first page bid" and have good ROAS and have lost impression share due to rank.
- Figure out how much you would have to bid to get X conversions
- Find the marginal cost per conversion
- When cost per conversion reaches the threshhold where it's no long profitable, that's your max.
- Use that bid in the KW planner to estimate total budget.
- Time consuming to get all ad groups added to KW Planner... is there a way to automate that?
- Assumes that conversion rate is consistent, but that may not be true. As you saturate people with more ads, you may be getting people less likely to convert.
- Not a single one of our terms that is below the first page bid has a single conversion.... so is there any point in bidding on them? 3. Cost per conversion focus
- filter for keywords with more than 5 conversions in the last 30 days
- sort by Cost per Conversion.
- See what Impression Share is and see if there's room to grow.
- See what happens if you put these KWs in the KW planner at higher bids - how much does another click or conversion cost?
- we only have 3 such terms and their impression share is over 95% for two of them and 72% for another.
- KW Planner says that no matter how high you bid on the 72% term, you don't get more impressions. 4. Number of conversions focus
- 1. figure out how many conversions we want
- 2. figure out how many impressions we need for that many conversions
- 3. use the keyword planner to determine what bid level is likely to get us to that level of impressions (a bit of a guess because the keyword planner does not account for our quality score)
- 4. plug in those bids and arrive at a budget.
This is a lot of work using the methods I know. Is there a quick way to do that and would it yield the kind of info I want?
If you have any ideas/methods/insights... please say!