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:

  1. 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.

  2. 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.

December 17, 2007

David Wallace is CEO and founder of SearchRank, an original search engine optimization and marketing firm based in Phoenix, Arizona. He is experienced in search engine optimization and marketing, pay per click and pay for inclusion management, directory submissions and web site design usability. David is a frequent contributor to various search engine related forums, an active editor of popular directories such as, Joe Ant and Zeal and has had several articles published on industry related sites. Since 1997, David along with his company have helped hundreds of businesses both large and small increase their search engine visibility and customer acquisitions.


You've apparently left 9 cents of client's $600 ad spend untouched. :)

What you're doing is leaving the big money terms to the folks with deep pockets who don't bother with the long tail stuff, and getting your clients better converting , better targetted traffic, more of it, and at a cheaper price. IMO it's how the small guy has to compete in competitive industries. Way to go - nice to see someone publicly taking the time to mine down that deeply for someone with smaller budgets. Money well spent on their part I expect. And doubling the CTR, well, that's just going to do wonders for their campaign as well as kill off any competitors.

Thankfully, the big players don't normally mine down this far, leaving plenty of opportunity for everyone else.

The only other thing I've noticed in similiar situations is that some folks use the big money terms for 'branding' and don't really care about click costs specifically or even conversions. They just want their name there. I prefer to focus on results instead, and smaller clients tend not to care, but it's sometimes why there are high bids on competitive terms.

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It is always smart to test the max bid amount by dropping that amount you are willing to pay just to see where you fall. In this case, not very far at all considering the overall cost benefits. Also, in my experience, I find many ads pull better CRT's and lower costs by being right under position three and just above the last ad on the page.

Test. Test. Test.

You hit on exactly what everyone should be doing with their campaigns if they have any interest in increasing performance rather than just spending money.

I'm willing to bet if you run that one key phrase assuming most of your money through some keyword tools, you'll find similar phrases that won't be as expensive, and will give you even more clicks for the same amount of money.

Also, if the term has multiple words in the phrase, don't forget to bid on other word orders. For example, if your site is selling a "red dress", you should also bid on the term "dress red" in a phrase and exact match. This is very beneficial if any portion of your targeted audience speaks English as a second language, since most romance languages (including Spanish), say the adjective AFTER the subject instead of before.

I'll be having this and similar topics on my new blog starting after the holidays at

What about conversions? Visits could be anything :-)

>> What about conversions? Visits could be anything.

In the case of this client, they are primarily interested in increasing their visitor count as they sell advertising based on that. They are not necessarily selling a product so it is more difficult to define a conversion.

I'm slightly concerned that you're lauding the 'long-tail' keyword approach whilst only having 60 keywords. In every campaign I have ever run we measure keywords in hundreds or thousandd not tens. Perhaps a bit more keyword research may be of more use.

Also, its a 'click through rate' not 'ratio'

What about all those companies that don't have even a $600.00 a month budget? This is a very large group. How would you suggest we help this group? I would suggest a well developed site that is optimized, and updated daily!

Interesting article David, this is exactly what we have done for a client recently and our results were just as astounding as yours. I would recommend to anyone running an Adwords campaign to look at their max CPC and look to tweak this. The savings are incredible for very little difference in placement. Furthermore, Google have given you a helping hand with their 'Quality scoring' context menu which gives you the quality score on keywords. A keyword with a high quality score could keep its placing even by reducing the max CPC considerably.


This definitely works. Good article exposing this.

My industry, Real Estate in the Atlanta Metro, is unbelievably competitive on the net. The good part is the web traffic available is also unbelievably high.

However, the big traffic terms like "Atlanta Real Estate" and similar are big bucks per click.

So, I decided to forget those terms and instead focus on hundreds of more targeted terms with less traffic.

I designed 50 individual neighborhood "portal" pages on my site and set up 50 matching Adword campaigns. Each lands on it's respective page. Each Google ad is specific to each neighborhood.

So, by the time someone has searched, seen the ad and landed on the portal page, they are pretty "qualified" at least as far as being interested in that particular neighborhood.

I'm doing excellent numbers at about .25-.50 cents per click through. My CTR is near 2% and my conversion rate (defined as obtaining a registered lead) is all over the map, literally from 0% to 25% on any given day.

But regardless, the divide and conquer using keywords under the radar is an excellent suggestion and it works.

Rob M

You major mistake was intially bidding $10/click. Especially when your client is focused on visitors and not conversions.

Setting up a campaign with a goal of attracting max visitors with 60 keywords, a $25/budget and $10 bids is just horrible PPC management.

Search Engine Guide > David Wallace > How Can Small Business Compete in a Highly Competitive Paid Search (PPC) Market?