An ideal daily budget is one that runs from 12:00 am and runs out at 11:59PM.  Of course that almost never happens since the day to day variations in internet traffic are as difficult to predict as the Lotto numbers.  So the next best thing is to arrive at a number using scientific, financial and statistical data, and then add an extra $500 on top, just in case.

The reason is clear, your advertisements should never stop showing due to lack of budget.  Yet e-commerce newcomers, due to their lack of experience, tend to lean in the direction of caution and have extremely low budgets.  What most non-industry people fail to understand is that too low a number of clicks will never yield a conversion.  It is like throwing money out the window.  What you actually need is critical mass.

PPC Critical Mass

It is a given that on average, a certain amount of impressions are necessary to get a click and a certain number of necessary clicks will yield a conversion.  Your AdWords campaign must generate enough relevant impressions to get enough clicks to give your campaign a chance at a conversion.  But what if you only get a handful of clicks per day because your budget is too low?  Let’s look at an example:

A new website has no conversion data and an average cost per click of $1.50.  The very cautious business owner has set the daily budget at $10.  What will happen?  Let’s be generous and give the site a 2% conversion rate.  The numbers would shape up as follows:

1 conversion every 50 visitors
CPC = $1.50
Daily Budget = $10.00
Number of visitors per day = 7

With seven visitors per day, this site will get few if any conversions. The critical mass number to get this site converting is 50 visitors per day, at a bare minimum.  The daily budget should be set at $75.  This will theoretically yield one conversion per day.  Any significant change in the CPC or conversion rate will immediately affect budget.  But this is not the best strategy to use.

A better strategy

By being aggressive and having a daily budget sufficient for three or four conversions you will gain:

  • More query information to develop new keywords and negative keywords.
  • An improved quality score.
  • More conversions per day.

The greater amount of negative keywords due to higher volume and the improved quality score will lower the CPC, something that would not have happened with a $10 per day budget.

It is however, extremely important to closely monitor the campaign when this strategy is first begun, just in case traffic estimates are way off.

Adjusting the PPC bid

What if there are simply no funds for a larger budget?  Then the only option is to lower the cost per click.  Yes, by doing so PPC advertisements will show at a lower position on the SERP, but if the advertisement is still within the top six spots on page one, it will still get some clicks.

CPC price variations between the first and third position can vary widely, but it may still be possible to reduce the CPC by 50% and still show at the number three position.  That’s a huge savings in cost and perhaps not a big reduction in clicks.  Every case is different so experimentation is a must.


Setting a daily budget for an Ad Group is a more complex decision than it first appears.  There is a definite relationship between the average CPC of the Ad Group, the conversion rate and the daily budget.  By setting larger daily budgets the campaign is getting a better chance to convert.  Conversely, a very low budget will yield few or no conversions and may be worse than no budget at all.