For an ecommerce site selling printers, what is the better method for one ad group? Set high CPC for better coverting keywords or make CPC the same for all keywords. Will there be a high cost for making CPC the same?
To start the campaign, all the keywords can be set at the same bid. Once you determine which keywords are keepers and which ones are not, you can adjust your bids. Figure out your maximum spend per keyword first, so you know when to pause it or keep it running more. For example, if a printer sells for $100 and your profit is $25 per sale, then you know you can spend up to $25 per keyword to make one sale. You probably want to do a bit better then that, so say you're satisifed with $10 profit per sale, (after adwords expenses), so you now you can spend $15 per keyword to get one sale. If a keyword reaches $15 in costs and doesn't make a sale, then you pause it. If it does, then you keep it.
For the begining, start bidding the same on each keyword, after a day or two check wich keywords work and which don't and adjust. If you wanna go with high bids, chances are that you might be getting more sales, but the profit margin per sale will be lower. If you set a low bid, you might be getting a lower volume of sales, but then this leaves you time for trial and error, and make the best adjustments.
start all keyword bids high to gain traction and establish conversion ratios. Then adjust each keyword to maximum ROI. Check out my past posts for CPC bid optimization formulas which tell you exactly what to bid. Each keyword should be bid on individually, nothing should be applied to all exact when starting your campaign from scratch. @PPC-Coach - You methodology is incorrect. If the max you can spend is $15 a sale and you spend $15 with no conversion does not mean you just delete it. It may just need some optimization.
If a conversion is worth $25 per sale (profit), you definitely don't want to pay on average $25 per sale on a keyword. $15 is about the right level, though even this may not be optimal. Suppose you get 100 clicks per day, with a cpc of $2.50, and a 10% conversion rate. Result: 10 conversions per day, for a spend of $250 - average CPA = $25 Or, you can cut your bids a bit: 90 clicks per day, cpc = $2.10, 10% conversion rate. Result: 9 conversions per day, for a spend of $189 - average CPA = $21 Or some more: 70 clicks per day, cpc = $1.50, 10% conversion rate. Result: 7 conversions per day, for a spend of $105 - average CPA = $15 More? 60 clicks per day, cpc = $1.20, 10% conversion rate. Result: 6 conversions per day, for a spend of $72 - average CPA = $12 Which should you do? Spend $250 to make $0 profit? Spend $189 to make $36 profit? Spend $105 to make $70 profit? Spend $72 to make $78 profit? Personally, I'd lean towards the last one. It'll vary from case to case, and $15 may be the right figure for PPC-Coach, but you need to calculate it for your campaign... I've covered it in more detail in an old blog here: http://www.epiphanysolutions.co.uk/...-your-bids-to-move-up-the-search-results.html
All of that said, if a conversion is worth $25, you shouldn't pause it after $25 of spend. As Robert says, it's too soon - the performance may be down to random fluctuations...
Yes, the objective is to maximise the ROI. Overtime, we can get an idea of the optimum CPC. Then again there can be other factors like selling price, competition etc.
No it isn't. In general, yes, though you shouldn't be trying to maximise it. You should be maximising your profit, not your ROI. You can always increase your ROI by reducing your bids. Assuming a lower position on the results doesn't mean a lower conversion rate, your cost per conversion will fall when your cost per click falls, so every time you reduce your bids, your ROI increases. A campaign designed to maximise the ROI would generate virtually no profit. You want to maximise the conversion rate on the website, but this should not be the objective of the PPC campaign. Again, you could keep throwing out the worst-converting keyword, and so increase your conversion rate, until you have one keyword left (the best converting one). Again, you're looking at very few sales, and little profit. You need to maximise conversions for your spend (or processed demand if you have the order values) to optimise your campaign. Then you try reducing your bids to see if a lower position is more profitable (i.e. find the sweet spot) until you maximise your profit. Then look to improve your campaign further (advert, landing page, keyword list/grouping etc) and recalculate your sweet spot.
I think the there are two different approaches of an affiliate & an ecommerce website owner to a PPC campaign. For an affiliate any profit is a profit. An ecommerce website owner it is the percentage of profit that matters.
I don't think that you should optimise with ROI in mind. I'd rather spend £10 and make a £10 profit than spend £1 and make a £2 profit. ROI should be used to determine where you spend your money. As long as your ROI is sufficient to justify the spend, then you should be looking to maximise your profit, surely?