There are times where it can be difficult for small business to compete in the paid search environment. As the cost of targeting keywords on venues such as Google AdWords continues to increase, many small businesses are finding it difficult to keep pace. They either have to accept the fact that they can afford only a very small slice of the pie or abandon paid search marketing altogether.



We recently encountered a scenario like this with a client's Google AdWords campaign. The main keyword phrases they needed to target had become so expensive that not only were they only realizing a very small portion of actual traffic that could be had, they were paying exorbitant prices for each visitor. We encouraged them to increase their overall AdWords budget, however that was something they could not afford to do at the time. So how could they continue to get the best value out of their AdWords campaign while maintaining a small budget?



While I cannot mention the company by name, I will provide as much information as I can to demonstrate how we more than doubled the effectiveness of our client' AdWords campaign by making two simple adjustments .



This particular client has a budget of around $600-$700 per month which is considered small for the industry they are in. They are targeting about 60 keyword phrases total which are grouped into 7 ad groups. The daily budget is set to about $25 which typically places us where we need to be at budget wise at the end of each month. (Tip: It is a good idea to set your daily budget a bit higher than what you actually expect to spend. You can always reduce this towards the end of the month or even pause the campaign if you have reached your budget.)



In October of this year, Google recommended that they set their daily budget to a little over $600 a day, that is if they want to take advantage of all the traffic that Google and their search partners can send them (this does not include contextual, mobile, radio ads, etc.). That's about $18,000 a month which may not be a large sum of money to most companies but is extreme for many small businesses. Because their budget is so small in relation to their competitive industry, they were only receiving 3% of the actual ad impressions that were being served. If they could increase their budget to what Google was recommending, they would have the opportunity to increase their click-thrus by 2,798%.



In that same month, they received a total of 182 click-thrus on their ads which were displayed a total number of 7,361 times giving them an average click-thru-ratio (CTR) of 2.47% and at an average cost of $3.31 per click-thru for a total of $602.34 spent. A click thru ratio of 2.47% is pretty good and the average cost per click-thru is not exceptionally high. However 182 visitors for the month is pretty low. Because increasing the budget was not an option, how could we increase the number of visitors while staying in the same budget range?



The first thing we looked at is where the majority of the budget was being spent. In the case of this campaign,

$394.16 went towards one very competitive keyword phrase. They received 135 click-thrus at an average cost of $2.92 for that phrase. Add to that fact that we had set the highest amount we were willing to pay for a click-thru to right around $10.00 in order to obtain ad placement in the 2nd to 3rd position range. The problem with this particular phrase is that it left only $208.18 to be spread out for the remaining 59 keyword phrases they were targeting.



Therefore we decide to make two adjustments:

For the phrase that was eating the majority of our budget, we lowered the maximum CPC we were willing to spend from $10 to just $1. This may cause us to lose our ad placement of 2nd to 3rd position but it was a move we had to make in order to have a chance to increase total click-thrus.



We increased the maximum CPC for some of the less competitive "longer tail" types of phrases.

Here are the November results of that experiment.

569 total click-thrus

10,328 total impressions

5.50% average CTR (click-thru ratio)

$1.05 average CPC (cost per click)

$599.91 total spent.

We more than doubled last month's traffic, cut average CPC by more than half and saw CTR increase by more than 3%.



What about the keyword phrase that was eating up the majority of our budget? You would think that we received little to no traffic related to that phrase, right? Wrong. Lowering the maximum CPC from $10 to $1 still gave us an average position of 3.2, generated 399 click-thrus from ads that displayed 5,013 times, giving us a CTR of 7.95% at an average cost of $0.50 and spending $199.71 total on this phrase. We did not expect these results at all but there they are. Whereas one would think that the more you are willing to spend, the better a phrase would perform, the exact opposite was true in this case.



So, the takeaway from this case study -

If you are finding it to expensive to compete for that highly competitive keyword phrase or phrases, try cutting back on the maximum you are willing to spend for click-thrus and concentrate your efforts on "longer tail" or less competitive keywords. The results may astonish you.

Of course this does not negate the fact that you should monitor your campaign closely to ensure that the keywords you are generating traffic by are producing a good return on your investment in the post click environment (after you get them to your site). However it does show that it is not always the best strategy to chase after high dollar keyword phrases, especially when you don't have the budget to effectively compete.

