How Bidding More On Adwords Can Stuff Up Your Traffic And Profitability

In this article I will look at some messy misconceptions about Adwords in relation to paying more for traffic.

If you are running an Adwords account, you have probably thought of this yourself after looking at lost impression share?, “well I’ll just increase my bid price” to get more impression share, traffic and that will improve my clicks.

Increasing Bids Can Be A Trap

That thought process is reasonable – especially for a lead generation site, after all more traffic = more leads right and increase bids will produce more traffic right?

But that’s a bunkum in some cases.? This example, from Wordstream, is a case in point. They point to a case where they raised bids and got less traffic.? To some extent this is obvious, if you have a fixed budget and you increase your bids the cost per click will go up and obviously you’ll get fewer clicks.

But, that article does not really address the fundamental issue?

What Can You Afford To Bid?

The big problem with randomly raising bids is this?.how does raising bids impact your cost per lead and cost per sale? For most businesses running AdWords, I?d venture to suggest that they are unable to answer this fundamental question. The very nature of Adwords encourages you to increase bids but many business owners have not worked out the allowable value of a lead and sale and they don?t know the alternative or opportunity cost of generating leads via another channel.

It?s just not possible to sensibly increase your bids unless you track all elements of your sales funnel.

Track All The Important Elements Of Your Sales Funnel

Most Adwords advertisers working on lead generation are well aware of impressions, clicks and landing page sessions. After that it gets a little murky for many business owners

The elements of cost per action

Some other important elements are:

  1. Track calls ? using call tracking? and track events such as enquiry form completion. In doing this you need to retain the information about the enquiry in a contact management system.
  2. Track sales back to source.? It?s important to be able to attribute your sales back to their source.

If you do these two additional steps you will be in a much better position to decide if it is viable to increase your bids to increase traffic to get leads within your allowable costs.

There?s a simple way to do this with Call Tracking systems like that offered by Delacon which interfaces with Sales Force CRM. This type of system brings through relevant information such as caller ID, keyword and ad source into the CRM so it can be tracked back to eventual sales outcome.

If You Decide You Need To Raise Your Bids, Budget For It

There?s not point in increasing bids if you them become limited by budget. This means you should always increase (or decrease) your bids and your budgets in lockstep.? Pushing up? your bid is is no value, if you limit the number by having fewer clicks, ”

Set Up Tracking

So your next step is to improve tracking further down your sales funnel so you can develop, track and manage cost per action measures such as

  • cost per lead
  • cost per sale

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