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Are You Wasting 25% Of Your PPC Budget? New Study Says You Might Be

Danny Goodwin
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A typical small business advertiser spends $1,200 per month on PPC, but wastes 25 percent of that spend, on average. That's according to a new analysis of 500 small and medium business Google AdWords accounts.

WordStream, who conducted the study, found a number of reasons for this missed opportunity and wasted spend by small advertisers in PPC. Among them:

  • Keywords that have nothing to do with their business (due to poor keyword selection).
  • Clicks that occur outside their target market.
  • Suboptimal ad relevancy and quality score.
  • Lack of time and/or expertise to optimize for best PPC performance.

Wasted budget also means missed opportunities, according to WordStream.

Annual Cost of Wasted PPC Spend

For example, if a bed and breakfast advertiser wastes 25 percent of its PPC spend, that's potentially cost them 367 guest inquiries (based on typical 2013 CPC and conversion rates). Or for a shopping company, that means 569 product sales may have been lost.

WordStream's study compared the performance of AdWords advertisers with static budgets over various lengths of time, and identified the top five high-impact areas of PPC optimization focus for small and medium-sized businesses.

5. Get Active - Spend 20 Minutes a Week Optimizing

The study revealed that 53 percent of small business advertisers optimize their ads only once per quarter. Just 1 percent optimized their ads once a week in the last quarter.

PPC advertising is a dynamic, constantly evolving space; if you're sitting still while you're competitors optimize, you're being left behind, according to WordStream.

4. Find Your Best Keywords.

Long-tail keywords can help you find lower costs per click, more qualified clicks, and less competition. Still, one in four small business advertisers rely exclusively on broad match keywords, while one in five don't use a single negative keyword.

WordStream recommends using all of the AdWords features available to you and use smarter keyword research to help you find better targeted, more cost-effective terms.

3. Improve Ad Relevancy

Improved relevance helps improve your click-through rate (CTR) and quality score. WordStream's research showed that businesses with lower quality scores saw their cost-per-click increased by up to 400 percent, with a 64 percent increase in cost per action.

Improved relevancy through tighter, more targeted copy can help advertisers increase their quality score; as the score moves toward 10, advertisers saw their CPC lowered by 50 percent on average, according to WordStream.

2. Create Killer Landing Pages

This is another great opportunity where many small businesses are missing the mark. The study found that over 25 percent of accounts send all of their PPC traffic to the same landing page, while 20 percent sent ad traffic directly to their homepage.

Additionally, less than 50 percent of small business landing pages have conversion tracking installed. WordStream said this is an absolute must-fix in order to not only get the right eyes on your page, but to convert them and understand the value of your campaign as a whole.

1. Follow Mobile PPC Best Practices

Having a call extension on your campaigns can increase CTR by 10 percent, yet very few small business advertisers use them; 19 in 20 don't have call extensions set up on all campaigns, according to WordStream.

With people now spending 141 minutes per day on mobile devices, advertisers must optimize for mobile if they are to maximize their ROI. WordStream noted this is arguably more important for small, local businesses, whose customers may be searching for them on the fly.

You can see the full study and accompanying infographic here (and also enter to win $25,000 in Google AdWords budget).


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