Why Your Budget Might Be Too Low to Use for Max Conversions Bid Strategy
It probably happens about once every other month or so where a local business in a competitive niche like roofing or plumbing comes to me complaining about their Google Ad Campaign and how it’s not producing any leads.
Then I come to find out they only have a $30/day budget and they’re using Maximize Conversions Bid Strategy. Of course they are complaining about CPC being too high and lack of leads coming in. They always want to know if there are any cheap keywords that will bring in good leads. They’re hyper focused on the CPC, obviously because their budget is so low.
So what’s the issue here? Are they just not targeting the right keywords? Is their budget too low? Are they using the wrong bid strategy?
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It probably happens about once every other month or so where a local business in a competitive niche like roofing or plumbing comes to me complaining about their Google Ad Campaign and how it’s not producing any leads.
Then I come to find out they only have a $30/day budget and they’re using Maximize Conversions Bid Strategy. Of course they are complaining about CPC being too high and lack of leads coming in. They always want to know if there are any cheap keywords that will bring in good leads. They’re hyper focused on the CPC, obviously because their budget is so low.
So what’s the issue here? Are they just not targeting the right keywords? Is their budget too low? Are they using the wrong bid strategy?
First off, it’s just a matter of fact that some industries and keywords are going to cost a lot of money per click. The highest I’ve seen CPCs go is around $200 and that was for the roofing industry.
Why are CPCs so high for some industries and keywords? Quite simply because Google Ads is an auction, which means the more businesses you have competing in the auctions for a given keyword, the higher the average CPC is going to be for that keyword.
It’s a little more complicated than that, but that’s the gist of it. That’s how all auctions work, the more people bidding for specific inventory, the higher the cost goes up.
So why are so many businesses willing to bid so much money in Google Ads for just a single click? Because those clicks have a lot of value for the businesses bidding for them. For a roofing business for example, it could result in a customer/client worth anywhere from $10-90k. How much would you pay per click if you could potentially get a job worth $90k?
For these types of industries, if you’re wanting to run Google Ads using an automated bidding strategy, you’re going to need a substantial budget. Why? Because these automated bidding strategies need a certain amount of conversion data every month to learn from and run efficiently. If your budget is too low to generate, say a minimum of 15 conversions per month, then you’re going to have to stick with manual cpc or maximize clicks bid strategy.
For a recommended budget, I always aim for a minimum of 10-20x what the average CPC is for your target keywords. So if the average CPC is $50 your daily budget should be $500 - $1000/day. You can get this CPC data using Google Ads Keyword Planner.