Ever throw ads in the online world, feel, as if you’re throwing money into a black hole? No, you’re not the only one. Many businesses are burdened with Pay-per-click (PPC) advertising. Precious hard-earned dollars are wasted on campaigns that either work just under or not at all. But it doesn’t always have to be that way.
PPC curve is one such very useful technique that you can use to optimize ad spending and maximize returns on investments. Once you understand the relationship between expenditure and return, it is much easier to decide where to put the best out your dollars for effectiveness. So, let’s dive right in!
Understanding the PPC Curve
Consider the PPC curve as a map for your ad budget; it tells you how your conversions (sales, leads, etc.) change when you increase your budget. Understanding the main ideas behind it can completely change your views toward PPC.
What is the PPC Curve?
In simple terms, the PPC curve is the graph that plots your ad spend to your conversions or income. The X-axis states how much money you’re putting in to make this work, while the Y-axis shows the number of conversions resulted from your efforts, as that would analyze effectiveness.
Usually, an increase in expenditures is going to produce many higher conversions. That gets to a point where the more you put in, you’re going to get less. This is when this curve flattens. There are diminishing returns shown. This is called a point of saturation.
Here’s an example:
Conversions/Revenue
^
| * Saturation Point
| /
| /
| /
|/ Diminishing Returns
|\
| \
| \
| \
| \
| \
| \
| \
| \
| \
|/_________________________{> Spend
Key Components of the PPC Curve
The PPC curve actually has three main parts. The very first of those is the stage of initial growth. Here every dollar you spend brings you enormous increments in terms of conversions. You go into saturation, which means that expenditure will result in very slow growth in conversions.
Finally, you have diminishing returns. Little or no more conversions will occur from spending. Many things will determine how your curve will shape itself. These may be crucially your Quality Score (Google Ads rating assessing your ads), how tough competition is, and whether the landing page has relevance to your audience. Good landing experience is absolutely essential.
Data Collection and Analysis for Curve Generation
The next thing is to collect the relevant data so that you will have been able to plot a useful PPC curve. By this data, it will show the results of how your campaigns are performing, which are very important for a good plotting to be accurate.
Identify Key Metrics
Measure these parameters when analyzing your PPC curve: impressions-how many times your ad shows up, clicks, and conversion rates-how often clicks turn into sales. Cost per conversion (CPC) and return on ad spend (ROAS) are also critical.
All these are reports one gets through Google Analytics and Google Ads. In Google Ads, go to the “Reports” section and create a custom report with these metrics. Google Analytics can track conversions and behavior by users.
Data Visualization Tools
You can use, for instance, tools like Google Sheets, Tableau, or Python. These tools can visualize the data and curve creation. For instance, you can create a basic scatter in Google Sheets to create your PPC curve.
To do so in Google Sheets:
Enter your spend and conversion data into two columns.
Select both columns of data.
Then go to Insert–>”Chart.”
Select the “Scatter chart” option.
Customize the chart titles and labels.
Optimizing Bids Based on the PPC Curve
The PPC curve will guide your bid adjustments. The position of the campaign on the curve is the basis for the adjustment. It ensures your budget is spent in the right place.
Identifying Optimal Spending Levels
To find the point at which marginal cost equals marginal revenue, that is the cost of one more conversion equal to the revenue that comes in from that conversion. You’ve reached peak efficiency.
Calculation would thus be: Optimal Spend = (Total conversions/Total Spend)*Target ROAS. It thereby determines what spending level is needed to reach target ROAS.
Bid Setting
You can change bids automatically or manually. Simply put, automated bidding refers to a type of bid adjustment in which algorithms set the bids for you depending on the goals you tell it. Manual changes are those regarding changing the bids based on PPC Curve analysis.
Take an example of Company X, which based its PPC curve study on bids for optimization. Previously, they were spending $10,000 a month for 500 conversions. After making the changes in bidding strategies after analysis, the company spent $8,000 and got 600 conversions. The cost per conversion decreased and it was a much better ROI.
Advanced Strategies for Using the PPC Curve
To get even more from the PPC curve, use these advanced techniques: Boost PPC results with these kinds of strategies. These can involve:
Segmentation and Granular Analysis
Segment your campaigns into smaller parts. Create separate PPC curves for difference groups, keywords, and locales. That way, you can see what does best in each segment.
This is how to segment campaigns:
Create new campaigns in Google Ads based on the themes (for example, “Brand,” “Generic”).
Within each campaign, set up ad groups for keywords that are closely related.
Track the performance for each ad group separately.
Then plot the PPC curves by segment.
A/B Testing and Iterative Improvement
Always be testing. A/B test your way to better PPC curves over time. Test different ad copy, landing pages, and bidding strategies. Conversion rates will go up with increased ROI.
For example, set up an experiment by testing two different versions of your ad copy. Separate half of your traffic going to one version and half to another. Monitor which version gets the most conversions. Use the one that performs better in your campaign.
Final Word
The PPC curve helps you spend well on ads. Use data to make smart decisions.
