Improving your return on investment on AdWords through budget optimization is not necessarily synonymous with increased costs, but it’s more within the perspective of strategic spending. Firstly, it is crucial to understand the relationship between cost and quality. To optimize your return on investment, you should try different budgets and bids to see what works best, then use your performance data to find out where your investment has the greatest impact.


Better understand the relationship between cost and quality

Before proceeding to the optimization of your budget or your bids, you must understand how a good quality AdWords account can maximize your spending strategy. The higher the quality of a keyword is, the lower the cost per click (or actual cost per click) is and the better your ad position.

Also optimized quality levels affect your costs in several ways:

  • Each click on a high quality keyword is cheaper.
  • The position of high quality ads is better without costing more.
  • Your budget can absorb more clicks if the CPC is lower and your ad can be shown more often.

For poorly performing ads and keywords, changes related to quality can have a greater impact than changes in spend. Improve your quality by optimizing your campaign: eg check that your ads and keywords are relevant and tailored to your products and services. Also be sure to work and improve factors like the CTR and the quality of the landing page. By optimizing these factors, you can avoid problems with quality and take the most of your budget and bids, which can help reduce your costs.


Monitor the return on investment (ROI)

When you invest in an advertising campaign, you hope to recover more than your initial investment. It is important to understand that you can get a complete and accurate report on the performance of your advertising investment. If you intend to make a profit, take the time to track your campaigns and your return on investment.

The most important aspect of a keyword or an ad is the value that it generates compared to its cost. To determine the profitability of a keyword, you can track the conversions from that keyword using one of the free tools available in your account:

Conversion Tracking: Use the conversion tracking tool to determine the profitability of a keyword or ad. This tool allows you to monitor the conversion rate and cost per conversion. The cost of each conversion must be less than the amount you receive for the conversion. For example, if you earn €10 for each sale, but the clicks that generate sales cost you €21, it may be wise to optimize your conversions to improve your ROI.

Google Analytics: Google Analytics allows you to perform a thorough analysis of your ROI. Besides the basic operations of conversion tracking, Google Analytics provides detailed conversion ratios and a thorough analysis of the conversion funnel. With this data conversion, you are able to identify keywords and ads that are unprofitable, then you can optimize or delete them.

Remember that you need to track your AdWords campaigns to be sure that they are ROI positive.

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