"Your daily budget determines how often your ad is shown for your keywords.
To maximize the number of times your ad is shown throughout the day, set your daily budget to the amount we recommend during the campaign creation process."
This little nugget is full of hope but also pitfalls for the unwary or uneducated Adwortiser. Used improperly, or even the way Google suggests, this can lead to a Campaign running like a new sport coupe, filled up with 93 octane, with the accelerator floored, AND the brake jammed on at the same time.
I saw the results of this first-hand last weekend at Drag Race here in Kansas City. The drivers do a "burn out" before the race; gas floored, tires screaming, rubber burning, noxious smoke billowing, engines roaring. And they go a couple feet. In racing, this warms up the tires so they can grip the track better.
In an Adwords Campaign, it can waste your money faster than a Congressman in a pork barrel full of lobbyists on a junket.
Here's why:
According to Adwords Support,
[adwords.google.com...]
What happens if my daily budget is lower than what the AdWords system recommends?
If your campaign’s daily budget is lower than the recommended amount, you may experience the following scenarios:
Your campaign will automatically slow the delivery of its ads to spread your coverage throughout the day. Your ads won’t appear for every relevant search.
If your campaign has already slowed the delivery of its ads, then reaches your maximum daily budget, your ads may not appear again until 12:01 a.m. (Pacific Standard Time) the following day. This is how the AdWords system helps you avoid accruing all of your clicks early on and/or exceeding the amount you’ve allotted for your campaign. In situations like this, your ads won’t show as often as they could, even if they’re relevant. Therefore, you might miss valuable opportunities to reach new customers.
Let me give you a scenario.
I want to spend $100 a day on my "Drag Racing Tires" Campaign so I set my Daily Budget to $100. My only keyword is "drag racing tires". Google has historical data telling them how many impressions/clicks to expect for this keyword on any given day. Say I enter my Max CPC as $1 and this is just high enough to get me the #1 Position.
Google predicts 5,000 searches per day for this word with a 5% Click-Thru-Rate for the #1 Position. That would be 250 clicks for my Ad. But, I've given Google the message that I'll only pay $1 for 100 clicks per day. That's only 40% of the potential/probable/predicted total. So what does Google do?
They still show my ad in the #1 position but only about 40% of the time spaced out over the entire day. If I should hit $100 before the end of the day, my Ad will be disabled until midnight when the process starts all over again.
But it could even be worse. For example, I recently re-worked a Campaign for a client that was bidding $4 to be #1 and had the Daily Budget set at $20. He was telling Google that he only wanted 5 clicks per day. Google predicted an inventory shall we say of 50 available clicks per day so they only showed his Ad about 10% of the time. My client was Burning Rubber and wasting money by spending a lot for a very few clicks and not getting very far in the process.
Here's my solution:
Set your Daily Budget so high that it becomes irrelevant and your Ads show as often as Googley possible. Don't shoot for the #1 spot necessarily. Around Position 4 is OK. This way, almost everybody who searches for your keyword sees the ad. Even if your CTR is lower at Position 4 than Position 1, you'll end up getting a lot better Mileage out of your campaign in the form of clicks for the same amount of money.
Take the Drag Racing Tires example. If in Position 4, I get 2% of those 5,000 searchers to click my Ad at a more modest $.50 CPC I get 100 clicks for $50.
Attention Rocket Scientists!
Would you rather have 100 clicks for $100 with 2,000 searchers seeing your Ad, or would you rather have 100 clicks for $50 with all 5,000 searchers seeing your Ad?
I love this topic. That's why I went on so long.
I have a modest daily budget of $20.00 and a CTR of a average 2% on my ads. Adwords usually gets up to spending $12.00 a day for me. So my question is, should I write more (better?) ads? Add more keywords? I woudl really like to keep my max cpc where it is...
I'm always a fan of continuously testing ad copy to find the best conversion/CPC per keyword per ad. I'd suggest you start with looking at the ad copy.
If there are more good targeted keywords in your area (i.e. your not adding keywords to reach your daily budget, you're adding keywords to reach targeted visitors), then feel free to add these as well.
Set your Daily Budget so high that it becomes irrelevant and your Ads show as often as Googley possible. Don't shoot for the #1 spot necessarily. Around Position 4 is OK. This way, almost everybody who searches for your keyword sees the ad. Even if your CTR is lower at Position 4 than Position 1, you'll end up getting a lot better Mileage out of your campaign in the form of clicks for the same amount of money.
IF you follow the above strategy, be prepared to pay your daily budget. It might not happen, but if it does, then prepare to be charged for these clicks.
