PPC budgeting guide 2024: stop wasted ad spend [webinar]

2023 was a year of PPC budget cuts and cancelled launches.

So if you can’t outspend your competition this year, it’s time to outsmart them.

According to Gartner’s CMO Spend and Strategy 2023 Survey, 86% of surveyed senior marketers agree their organisation must undergo significant changes in how they work to achieve their goals next year. Gone are the days of pumping more budget into ad platforms until revenue targets are hit.

Brands that find creative ways to tighten their belts will surf through this ongoing wave of disruption, while those that don’t will struggle to stay afloat. So what processes, practices, and technologies can you put in place to deliver maximum value with your 2024 PPC budget?

We set out to answer this question and more in our recent webinar. Speakers included Abraham Moreno-Riano, Paid Media Manager at DeVry University, and Jasmine Collins, Customer Success Manager at Lunio who works closely with DeVry. The conversation was hosted by Lunio’s Content Manager, James Deeney.

As well as answering questions on PPC budgeting for 2024, Abraham also shared insights on how DeVry achieved the following results in 2023 by blocking fake clicks and invalid traffic:

13% increase in on-page conversion rate
11% decrease in CPA
7% decrease in cost per lead
75k+ invalid IPs excluded from campaigns

You can check out the full context on how this was achieved via the link below:

Watch the full webinar here

Key takeaways from the webinar:

PPC budgeting: doubling down on what works

The starting point for making your 2024 PPC budget work harder is diving into your historical performance data. The more accurate and cleaner that data is, the more effective you’ll be. But even if your past performance data isn’t perfect and has some holes in it, you can still get a lot of valuable insight from it by interrogating it closely.

You essentially want to work out where your PPC budget has previously delivered and where it hasn’t. Going ahead without a clear grasp on this is like swimming in the dark.

Specifically you want to dive into channel and campaign level data on metrics such as profitability, revenue, average order value, cost per lead / cost per sale.

Once you’ve got a handle on these metrics, then ask – what does PPC need to succeed in 2024? Is it a specific number of new customers? Is it a profit margin? Is it a revenue number? Is it a certain cost per cost per sale or cost per lead target? You should know what your north star is in terms of the metric goals you’re working towards.

Don’t cut spend on harder-to-attribute activity because it might look like it’s underperforming at first glance. Take a more holistic view. For example, if you stop investing in brand activity on social and SEO you can obviously save money in the short term. But you’ll likely see a dip in PPC performance three to six months down the line.

Each channel has its own performance forecasting tool to help you gauge a rough estimate of what you might get in return for a specific budget (e.g. Google Performance Planner). Use these tools to estimate what’s possible with your 2024 budget.

Be mindful of the law of diminishing returns in PPC. After a certain point of investment, your campaign performance will plateau and eventually drop i.e. the extra sales you generate will be worth less than the ad spend you invested to achieve them. This is called reaching the “demand ceiling” for a particular product or service.

The early warning sign that you are approaching the “demand ceiling” or point of diminishing returns in PPC is rising CPCs. This indicates the market is highly competitive and there is a limited number of clicks that you can meaningfully compete for.

In response to reaching the “demand ceiling” for a particular product or service you should explore new channels and campaign types to invest in. The PPC landscape is evolving all the time and you need to find where your growth areas are.

As well as doubling down on what works, it’s also important to set aside a certain portion of your PPC 2024 budget for testing new channels and campaign types where it’s harder to predict outcomes - and this needs to be factored in from the outset.

Landing page and conversion rate optimisation

Avoid the trap of spending all your attention and budget on Google Ads while neglecting your landing pages and conversion rate optimisation (CRO). Not spending enough on CRO causes you to waste a significant portion or your PPC budget through inefficiency i.e. you end up paying for lots more clicks that don’t convert.

For optimal results in terms of conversion rates and CPA, you should aim to devote 25 - 30% of your PPC budget to landing page optimisation and CRO.

Think very carefully about the contextual relevance of your landing pages. Is this what the user expects to see when they search for a particular term? If your landing page isn’t a perfect fit for the initial search intent, your conversions will suffer. Your copy needs to speak to a very narrowly defined group of people, showing how your product / service solves a very particular problem they experience.

Avoid vague, generic statements. And don’t try to speak to multiple different audiences via one landing page. The more granular you can be, the better.

Place special emphasis on A/B testing copy and visuals that appear “above the fold” on your landing pages. This is crucial for reducing bounce rates.

Helpful tools to optimise landing pages include Crazy Egg and VWO. These allow you to see what’s resonating with users by analysing their on-page behaviour.

Enhancing your exclusion targeting criteria

The more thought and effort you put into your audience exclusion criteria on each channel, the less ad spend you’ll waste.

To save thousands in ad spend, exclude poor performing cities from your Google Ads campaigns. To do this: open up your locations in Google Ads Filter by city > Sort by spend > Check any cities that have 0 conversions with high spend or high cpa > Exclude and monitor.

You should also exclude audiences that are unlikely to convert. This includes current employees, job seekers, current customers, fake users profiles, and more. We’ve created a comprehensive guide on how to exclude 11 different types of non-converting audiences to Google Ads and Meta campaigns.

Use Lunio’s 100K exclusion list for Google Display campaigns to eliminate thousands of low-quality websites, irrelevant YouTube channels, and junk mobile app placements that simply aren’t worth spending money on.

Use AbuseIPDB.com to help with the exclusion of fraudulent IP addresses in Google Ads. It crowdsources IP addresses that have been associated with malicious activity online and provides a central blacklist to cross reference against.

Eliminating wasted ad spend on fake traffic

Invalid traffic is defined as website visits that don’t come from a real person with genuine interest. It can include bots (both good and bad), fake users, misattributed accidental clicks, malicious clicks from competing advertisers, and otherwise invalid visitors that have zero chance of converting to customers.

The main signs of invalid traffic marketers should be mindful of when looking at campaign analytics include high bounce rates, spikes in traffic with significantly lower than average conversion rates, fake lead submissions, and unexpectedly high CPAs.

If you commonly experience 90%+ bounce rates with an average session duration of <5 seconds, it warrants further investigation to determine how much invalid traffic is hitting your landing page.

The advent of tools like ChatGPT has made it much easier for individual bad actors to create bots with very limited coding / technical ability. This is a contributing factor leading to increased prevalence of invalid activity online.

Fake and invalid clicks are generally cheaper than legitimate ones. This can create a negative feedback loop whereby automated campaign types (e.g. Performance Max) continue to seek out more and more junk conversions which never translate into revenue, simply because the acquisition costs are lower.

At DeVry invalid traffic rates came down sharply across paid search within the first four months of using Lunio, decreasing from 8.42% to 1.05% (shown below). Over time the downstream benefits of this were reflected in DeVry’s key performance metrics, including a 13% increase in conversion rate and a 7% decrease in cost per lead.

Over the course of 2023, the amount of money DeVry spent on clicks from invalid sources each month decreased by 536%.

Download a free copy of Lunio’s 2024 Wasted Ad Spend Report (no form fill required) for more information about average IVT rates across all major marketing channels including Google Ads, Meta, LinkedIn, TikTok, and more. The report also constraints average IVT rates broken down by industry and region.

How to reduce CPCs on LinkedIn

For LinkedIn website-visit based campaigns with a click-through-rate (CTR) of greater than 1% you can reduce your CPCs by up to 50% by switching to impression-based bidding.

The higher your CTR is above 1% on your website-visit based campaign, the better this tactic performs. If your CTR is 1.1% - 1.2% then you’ll need to carefully monitor performance to ensure your click volume doesn’t drop.

We’ve recently experimented with this at Lunio as well and found it to be effective in reducing advertising costs on LinkedIn. On the campaigns we tested it on this cut our average CPC from $4 to $2 which was a great result.

LinkedIn also has a very high average invalid traffic rate of 24.64% (it was the worst performing channel in our 2024 Wasted Ad Spend Report). So running campaigns without IVT protection in place will result in significant amounts of wasted ad spend.

The average cost-per-click on LinkedIn can range between $10- $50. This is much higher than the average Meta benchmark, which sits at around $5 for B2B brands. As a result, financial losses due to fake ad engagement add up far quicker on LinkedIn compared to other channels.

In addition to fake sales profiles, scrapers and engagement bots also contribute to the high levels of invalid activity on LinkedIn. Scrapers take all available information from profiles including name, job, company, education, contact data and more. Engagement bots are typically used to perform actions like connecting with users, liking posts, leaving comments, and other spammy activities in an effort to promote products and services.

2 key Google Ads trends for 2024

Google has been encouraging advertisers to use broad match more now than they ever have. The reason behind this is their confidence in smart bidding and AI’s ability to learn and optimise for results over time. However, uncautious use of broad match can result in significant amounts of wasted as spend.

One area where broad match can be useful is in query mining i.e. discovering new relevant keywords that are valuable to your business.

For example, a broad match for “conveyancing manchester” could make your ad eligible to show for “conveyancing stockport” and “conveyancing oldham”, both of which might generate valuable leads. You can then add them to your campaign as exact match keywords to reduce overall campaign costs.

However, broad match could also display your ad for “conveyancing training courses in manchester” or “what is conveyancing”, neither of which are likely to add much value. Keep a close eye on your spend to keep the costs of your chosen broad match keywords under control.

Google has begun rolling out Tracking Protection, a new feature that limits the use of cross-site tracking by deprecating third-party cookies by default. Part of Google’s broader Privacy Sandbox initiative, this change already affects 1% of Chrome users globally — about 30 million people.

Google’s progress toward cookie deprecation redoubles the requirement for privacy-minded marketing strategies that ensure that customer data is ethically sourced and used. Maintaining the status quo is not an option. If you haven’t already, now is the time to start testing new approaches and get your first-party data strategy in order.