The Finch Blog

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Published on Monday, 26 September 2011 02:33

Written by Bjorn Espenes

I often run across prospects and clients who are reluctant to increase their advertising budgets with Google AdWords when their daily max spend frequently gets exhausted. This brings up an interesting discussion, and I will offer an alternative perspective.

To be upfront, my position requires that you know your own metrics (cost of revenues and/or sales funnel metrics) and are tracking conversion performance correctly.

So, this brings me right to my point: If you know that you are making a profit from each conversion in your Google AdWords account, why would you not want more? I have come across a number of reasons:

• Maybe we can get more budget next month
• The management doesn’t understand online stuff
• We are using all the budget the company can allocate
• The company wants to prioritize other channels
• We are rebuilding the site
• A lot of other equally irrelevant reasons

Here is how I look at it:

1. If you are making money on a conversion, take as many conversions as you can get
2. If you cannot finance the conversions (time between ad spend and revenue collected), reduce the target cost per conversion to get more conversion for the current spend
3. Don’t ever, ever run out of your daily AdWords budget; it means you are leaving cash on the table

Why would you possibly turn off a sales channel because you don’t want to pay more sales commissions (which is, in effect, what your advertising spend really is if set up right) when each sale makes you more profits? The only valid reason is limited cash flow, which should then be addressed by lowering the cost per conversion/revenue targets. Just don’t ever, ever run out of your daily budget!