PPC Without Pity

Back in my agency days, it was always tough to guide new PPC advertisers through the launch of a brand-new account. Without established account history (and historical data to fall back on), it can be hard to prove that a new PPC account is working. Plus, a lot of small advertisers get nervous when they don’t see results right away, and end up making panic-fueled changed to their account that will end up making performance worse. This post is for all you new advertisers out there, and the PPC managers who have to guide them through the account launch process. I want to talk about when you can expect to see results from a brand-new pay per click account or campaign.

Here’s the bad news: you’re going to have to buckle in for a bumpy ride. You will almost never see spectacular results right off the bat. In reality, you need to run your account, waste some ad dollars, and generate some data to help you make better decisions for the long term. It may be pretty painful to blow a couple hundred dollars without seeing results, but the sad truth is that this is what advertisers have been doing for decades. Billions of dollars have been wasted on print, TV, and radio ads over the last century. The difference was, you could never track accurate results on that kind of advertising. In PPC, every penny is held accountable, so you can see exactly how much you are wasting. This sucks in the short term, but having that data to look back on will allow you to filter out that kind of traffic going forward.

So how much time should you run an account before you start panicking? It depends on how much traffic you’re driving, but I usually recommend about 30 days of continuous activity. That will give you four solid weeks of data to illustrate weekly trends, and you should have received a decent amount of clicks by then. Also note that I said continuous. Many advertisers freak out and start pausing their accounts at random times during the day or week to prevent wasting too much money. I understand the reasoning, but not many new advertisers understand how they are thwarting their account. There are a lot of complex calculations that Google does behind the scenes for positioning your ads and determining your impression share. Constantly pausing and unpausing your account messes with these algorithms, and may greatly affect how your ads are served. It’s much better to suck it up and leave your account running constantly so that you can get an accurate read on how your account will perform once you run it continuously.

Here’s an easy formula to help you gauge new account performance. Start with your target cost per acquisition (CPA). Next, estimate your average cost per click, based on data from the Google Keyword Tool. Divide your target CPA by that average CPC to get how many clicks you will need to get a conversion at the price you want (assuming that this keyword will convert). Here it is again in a formula:

Target CPA / Average CPC = # of clicks before you get a conversion

This will also show you if your CPA target is reasonable. If you want to target a CPA of $10, but your average CPC looks like it will be $5, then you’re going to have to rethink your business model because a 50% conversion rate is pretty unlikely. For an account that’s just starting out, a 5% conversion rate is a pretty reasonable goal, although this will vary wildly depending on what your conversion event is, what product you’re selling, your competition, and your customer base.

So in a nutshell, you should run new accounts (or campaigns) for at least 30 continuous days, and don’t pause anything until it reaches your CPA threshold. Eventually, you’ll gather that valuable historical data, and be able to make more informed decisions about what to pause and what to expand. Starting a new account is tough. Don’t give up, be patient with your advertising strategy, and don’t focus on short-term losses. Follow these simple guidelines and you will see success over the long term.