← The Paid Search Podcast | A Weekly Podcast About Google Ads and Online Marketing
The Paid Search Podcast | A Weekly Podcast About Google Ads and Online Marketing
The Budget Bulls-Eye Principle (Episode 469)
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Chris Schaefer
Foreign hello and welcome to the Paid Search Podcast. My name is Chris and today we're going to talk about the Budget Bullseye Principle. This is a critical principle that you must understand. If you're concerned about spending too little or too much, when should you increase the budget? When is the wrong time to do it? When's the right time? This is a important principle that I have created, an illustration to try and help you remember why budget matters and win it matters. So this is a Google Ads podcast. If you're interested in learning about Google Ads, getting more through education about strategy, from keywords to ads to bidding. That's all I talk about here. I do it every week, a new episode every Monday. So be sure and subscribe if you're interested in hearing more, wherever you're listening or watching them on YouTube or in any major podcast platform. So let's get into it. I have the Budget Bullseye principle I'm going to discuss and this is brought to you by my sponsor, Opteo. It is the best Google Ads management software, period. If you are the kind of person who listens to a podcast like this, that is why I'm telling you about Optio. Because it can help you get more out of your Google Ads account. Because by giving you structured strategies to help you improve your campaigns, you have questions about the right bidding strategy. You have questions about the best keywords, whether you should change your negative keywords, add negative keywords, remove some, change your ad copy. Or you want a alert system to tell you when something goes wrong, conversion tracking has broken, or the the website is down, or some ads are disapproved, or the impressions are lower than expected, or you're underspending for the month. This thing helps you from one end of Google Ads management to the other. It is a phenomenal tool that you can try for 28 days for free. That is twice the time that you would get with just signing up at Optio. But if you go to opteo.com PSP you can try the tool for 28 days for free. Wonderful tool, Highly recommend it. I guarantee you'll enjoy your time using it and stick with it because it improves the performance of your Google Ads campaigns. All right, let's jump into it. The Budget Bullseye Principle. So there's an issue with Google Ads that I find often upsets me and that is when people say, hey, you're having trouble with Google Ads. Spend more. This is particularly upsetting because I find that it is a way overused strategy. Spending more does not equate to Success. In fact, spending more might mean that the campaign does even worse. If you're running a smart bidding strategy like max conversions and you double the budget, you might find that your cost per click accelerates, doubles, triples. It might go absolutely crazy on you. You might find that consistent performance. Even with target CPA doubling the budget, tripling the budget could cause unexpected consequences. Budget shifts are strategic in the way that they should be applied. And what I'm going to talk about is hopefully something that sticks with you about why budgets matter, when they matter, and how they affect your performance. So let's get into it. I'm going to give you an illustration about a dart board, essentially, and how it applies to your keywords. So walk with me through this. Imagine your keywords are darts. What I mean is, you know, the kind that you, you, you hold in your fingers and you throw at a dart board, you know, a few feet away from you, okay? So you have 10, 15, 20, 100 different darts, and each day you can only throw so many because each dart costs money. All right? And when you throw the dart, you're trying to hit the dart board. The. The dartboard represents your target market. These are the people that you want to advertise to. And when you hit that target market, that's a success. You've taken a keyword and triggered an ad to someone that is likely to purchase or at least be qualified to see what it is you're selling. Now, the bullseye right in the middle, that dart board, I would call a sale, a conversion, some type of monetary success. Okay? Now here's what happens. Some darts that you throw hit the dart board, but not the bullseye. So you hit the dart board, you at least hit your market that you're looking for. Some darts that you throw miss the board completely. This is usually my experience. I'm not very good at it. And they hit the wall or they go bouncing off the wall, or, you know, who knows where they land in a corner somewhere. They weren't even close. They didn't even register. It's not even qualified as far as the person who clicked on the ad. Totally unqualified, way off in left field. All right? So a small percentage, a small percentage of all the darts you throw, you hit the bullseye. Now, this can happen no matter your skill in Google Ads. You might throw a dart and hit the bullseye very quickly. And it absolutely happens, and it's wonderful. But here's the problem. Inconsistency is the issue here. You can start throwing darts, and in your first few days you hit a conversion and you think, wow, I've really got this figured out. Let's throw a bunch of money at it. This is a bad idea because inconsistency, especially whenever laced with high spend, can lead to massive fluctuations in performance. So here's the bullseye principle. The budget bullseye principle is this. The more darts you throw, the more opportunities you have to hit the bullseye. So if you have a hundred darts and you throw them, and there's a chance that some of those are going to hit the bullseye, no matter how skilled or unskilled you are, you have a higher chance of hitting it due to the repetition of throwing them. Now you have less. You're going to have less opportunity. So what this means is that your campaigns, your keywords, are going to be directly affected due to how much you're spending. So this principle explains why a $400 monthly budget may never work for you, but a $4,000 monthly budget could be successful. And I'm going to show you why you may be throwing too few darts and your margin of success is so small, you will never see success. I'll explain why that's the case. Let's take situation A, where advertiser a has a $400 a month budget. The average cost per click is $3, and their conversion rate is 0.5%. Okay, 0.5%. So that means they're going to get about 133 clicks per month. And it would take, with a 0.5% conversion rate, about six weeks to see a conversion. So one conversion every six weeks. Now, many people are not going to ever see that conversion because after three weeks, they're going to get frustrated and change things. And when you change things now, it might have been changed for worse, it may have been changed for better, but it may have been changed for worse. You don't really know. But now perhaps the. The situation has changed. Maybe it's gotten worse, or the conversion, you know, theoretical conversion rate has gone down. And you do another three weeks and you try something completely different. You never actually get to the point of reaching six weeks of this consistent strategy that you've been using. So you never get a conversion. Now, situation B, Advertiser B has $4,000. So in the same situation where they're spending $3 per click, same kind of keywords, same conversion rate, 0.5 conversion rate. Now, this advertiser could see six conversions within a month. So they might see, you know, in the first week, one or two conversions, and that's simply because they have thrown more darts at the board, there are more opportunities for those darts to hit the bullseye. Now the fact is, is that just as many may hit off the board, just as many may hit on the board and just as many may hit right at the bullseye. But because this is happening on a shorter time scale, because they're able to get 10 times the clicks, because their budget is 10 times higher, they're able to see and adjust quickly. So additional budget leads to more opportunity, more opportunity leads to the ability to adjust and make changes to your Google Ads account quickly. So that's a situation where a higher budget actually leads to success. And proof of success, even, you know, advertiser A may never see a conversion. They may stop and say Google Ad does. Google Ads does not work for me. You know, I gave it, I gave it five weeks. I never got a conversion. You know, I spent $500, $600, I never got a conversion. I quit. But advertiser B spent that money, moved much faster and saw that, and was able to improve and move on. So you might say, Chris, that's kind of crazy. You usually don't talk about budget leading to success. Well, I'm not talking about the budget leading to success. I'm talking about the volume of opportunity increases, right? So because the volume of opportunity increases, one advertiser is able to make adjustments faster and reach success at a quicker pace. But this must come with some kind of process. And I'm going to step you through four steps that you must apply to this principle, this budget bullseye principle in order to make it work. You can't just spend more. You have to take it through a four step process in order for this principle to apply. Otherwise, just increasing the budget won't give you what you want. So let's talk about those four steps. And before I do, please remember, Visit my sponsor, Opteo.com PSP for a wonderful tool to help you accomplish more in your Google Ads account faster. Helps you perform changes and maintenance and adjustments at a faster pace than you can without it. Guaranteed. I can tell you that from personal experience. That's O P-E-O.com PSP all right, so here we go. Step one. If you're going to approach this, the first step to applying this principle is you must know your first throws will be bad. They will not be successful largely. Maybe none of the darts that you throw will even hit the dart board at all. Maybe you'll completely miss entirely in your first through few throws. This might represent weeks Perhaps a month. There is no set time scale for step one. Step one happens until you're not in step one any longer. There is no guarantee that step one is going to be six days or six weeks or six years. If you continue to make mistakes and make the wrong assumptions, you could stay at step one forever, where you continue to throw the darts poorly every single time. So because of this, step one must always be a consolidated budget. It must be limited on how much you spend in Google Ads. You should not start out with the assumption that, oh, Chris said, if I spend more, that's more darts, I'll get more conversions. Let's double, triple, quadruple. No, no. You don't start with the assumption that more means success. You start with the assumption that you're going to miss and you can improve over time. Budget increases the speed at which you can measure it does not increase the likelihood that you're going to succeed. All right? So keep your budget low in order to limit your wasted money during this phase. Now, let's get out of step one. Step two is this. When you're in step two, you improve and some of your darts hit the board. Maybe one or two even start hitting the bullseye. Now, this is great, because now you have two levels of success. You have the success of, oh, that's the kind of traffic I want. Great. And then you have some successes where, oh, people made a purchase or people called me or people booked an appointment. Right? That is two levels of success. So you should study those successes. You should figure out how did that get accomplished. How can I repeat that? And you should make changes to limit the misses that did not bring in that success. So analyze all three points. The parts of the campaign that brought in a loss, right? The complete misses. The ones that ended off, uh, didn't even hit the dartboard. Figure out why, you know, what was wrong with those. That's the wrong kind of traffic. Let's figure out how to limit that and then look at the areas of success. Which ones did bring in the kind of traffic that I want? And then the ones that hit the dead center, those are the ones you really try and double down on. So let me explain what that means in Google Ads. When you do get a success. Did it happen on a weekday? Did it happen on a weekend? Do you notice anything about the time of week or time of day? I mean, there's some analyses you could make. There are absolutely times when people are more likely to make a purchase. Sunday nights, people might be desperate to go ahead and knock this off their list. Or Monday morning they might sit and they walk into work and like, I got to get this done. They do a search, you know, or, you know, the home services industry sees this all the time where people have some kind of issue over the weekend. And then Monday morning the phones burn up, you know, boom. People are searching, they're trying to find that solution to get it solved first thing Monday morning. It might have to do with the devices. Perhaps there's certain devices that are more successful. Maybe you find that certain search terms have provided a better time on site or interaction rate for your website. Perhaps even certain conversions are coming from certain search terms. Find these successes and try to duplicate them. Try to point the campaign towards those, okay. So that you can increase your likelihood of generating a conversion again and again and again. So once you've done that, you're now going to be moving towards step three. Step three is wonderful because now each time, time you throw, it almost becomes predictable. Yeah, I know I missed the board on those last two, but when I throw 10, I know 80% of the time I'm going to hit the board. And then another 10% of the time, one of those is probably going to hit the bullseye. Predictability with Google Ads is where most people are just happy to stay as long as it is within a certain margin of success. And it's a predictable, risk, repeatable margin of success. Most people can work for that. That is something they can be happy with. And now is the time to increase budget, you know, increase the volume of your spend and try and maximize as much as you can from this time. Slowly turn up the budget, measure the effect on that margin of success, and perhaps you can repeat this successful process more and more and more. Now you might slip back down into step two, but hopefully you're gonna stay in step three. But I'll tell you right now, very few of you are going to step into step four. Step four is the most difficult level to reach because step four is your successful dart throws are now expected to a certain level. You can now it's not only predictable, but it is expected that you're going to hit this number every time. And you want to maximize the amount of time. Now you just need to start grabbing as much of that as possible. And now you absolutely increase budget and you expand. Now you start looking around and there's other dartboards that you haven't tried. You've been narrowing in on this one. What have you learned here that you can translate to this other dartboard, this other entirely different vertical in Google Google search that you had not tried before. What if I target people that are searching this way? What if I target this way? What if I try this? What if I try these other angles? So you take that success and scale up from there. This is, this is a situation where you're going to really do a lot of testing. There's a lot of work involved here and you absolutely can slip back down into step three. So be prepared. You know, most people don't stay in step for forever. It's, it's usually a situation where you're testing and you find failure, right? You're trying new darts, you're trying new boards and you might have success and failure, but that's fine. You work your way through that and hopefully you maintain that predictability of the performance and you're able to scale up from there. So that is my budget bullseye principle is that the more darts you throw at the board, the faster this is going to happen. And you might have found that Google Ads is not successful for you because you just didn't throw enough at the board. And hopefully you realize that your success is not just in the simplicity of just throw more, but it's a step one, step two, step three, step four process where you can learn and grow and bring your campaign up. So any of you that have listened might have caught on to what your it is that I'm really describing here. This is not really anything new. It's just another illustration to try and hone in on a principle that I came up with two years ago called Phases of Success. So if this is something new to you, it's essentially something that you can go back. The 10 principles of Google Ads begin at episode 385. And I go through each of those principles and discuss them. And this is Phases of Success. This is number two. So Phases of success is essentially using this budget bullseye principle, but it's applying one little factor and that you can manage your success and turn up and turn down the intensity of your testing and the speed at which it happens by adjusting your budget. Your budget controls the speed at which those darts are thrown and success and failure happen at the speed implicated by the budget. So hopefully this is useful to you. If you'd like to reach out to me, discuss your budget, your campaigns, how I could possibly help with management or Google Ads coaching, you can find me@chris schaefer.com otherwise I'll be right here next time and you can find me. Be sure and subscribe so you can catch next week's episode. I have a special treat for you guys. I'll see you then.