Fine-Tune and Optimize Your E-Commerce Ad Spend for Continuous Improvement
If you’re running a small e-commerce shop, tossing $1,000 a month into ad spend isn’t just spending—it’s investing. But because those first campaigns are live, you can’t just sit back and hope for the best—you have to continue optimizing. The key to maximizing your return on investment (ROI) is by focusing on the right strategies to optimize ad spend, from refining keywords to scaling efficiently. Today, we’ll look at how small-sized e-commerce companies can optimize their ad campaigns, drawing on internal experiences, real-world data, and hypothetical projections.
The Basics: What $1,000 Looks Like in Cost-Per-Click Ads
Let’s get some perspective. Suppose you’re aiming for high-intent, bottom-of-the-funnel keywords like “buy [product] online” or “[product] discount.” According to a 2024 analysis of cost per click for different industries, the average CPC for e-commerce is $1.16 for search ads and $0.45 for display network ads. Also, while we can’t know for sure the numbers on clicks per month due to a lot of fluctuating factors, we can ballpark a calculation based on the provided CPC data:
- At $1.16 per click (search ads), a $1,000 budget would yield approximately 862 clicks.
- At $0.45 per click (display ads), a $1,000 budget would yield approximately 2,222 clicks.
Hypothetical Example:
- CPC for search ads: $1.16
- Monthly Budget: $1,000
- Estimated Clicks: 862 clicks
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According to a 2023 report from Adobe, the average ecommerce conversion rate is 3.65%. So, with that, it translates to around 31 sales per month (on the high end, if all goes well). In order to optimize ad spend and improve these numbers, we need to optimize the ads effectively.
Optimizing Ad Performance: Strategies to Lower CPC and Boost Conversions
Once your ad campaigns are live and you’ve gathered enough data, it’s time to start optimizing for both cost-per-click (CPC) and conversions to ensure you're getting the most value from your ad spend.
1. Refining Your Keyword Targeting
After you’ve run your ads for a few weeks now, you can use historical data to assess which search terms are bringing the most conversions. Tools like Google Ads Keyword Planner or even SEMRush can help uncover long-tail keywords that are highly specific yet less competitive.
Example Optimization: Shift your focus from generic keywords such as “buy shoes” (known to have a higher competition and a higher CPC) to more targeted phrases such as “best eco-friendly running shoes under $50” (a lower CPC and a higher conversion potential). Don’t just take it from us. Wordstream states that advertisers can lower their CPC when they focus primarily on long-tail keywords.
Example Optimization: Shift your focus from generic keywords such as “buy shoes” (known to have a higher competition and a higher CPC) to more targeted phrases such as “best eco-friendly running shoes under $50” (a lower CPC and a higher conversion potential). Don’t just take it from us. Wordstream states that advertisers can lower their CPC when they focus primarily on long-tail keywords.
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2. Implementing Ad Extensions
Ad extensions such as sitelinks, callouts, and structured snippets not only provide more “real estate” on the search engine, but they also increase click-through-rates (CTR).
Example Optimization: A/B test different extensions to see which ones drive more clicks that are converting. Sitelink extensions that show off your product categories or customer testimonials can be effective for e-commerce companies.
Example Optimization: A/B test different extensions to see which ones drive more clicks that are converting. Sitelink extensions that show off your product categories or customer testimonials can be effective for e-commerce companies.
3. Fine-Tuning Your Ad Copy
Don’t underestimate the power of words. Ad copy plays a large role in driving clicks. If your initial campaign isn’t delivering the expected results, try to revisit your messaging. Focus on pushing the emotional buttons we have as humans and blend in offers such as free shipping, limited-time discounts, or product benefits.
Example Optimization: Instead of the “Shop Eco-Friendly Shoes Now” message you might toss into the headline box, test a message like “Save 20% on Sustainable Running Shoes – Limited Time Offer.” When you add some sort of urgency to your ad copy, you can increase conversions. One little test done by the popular Booking.com found that mentioning “Only 2 rooms left!” increased conversions by up to 134%.
Example Optimization: Instead of the “Shop Eco-Friendly Shoes Now” message you might toss into the headline box, test a message like “Save 20% on Sustainable Running Shoes – Limited Time Offer.” When you add some sort of urgency to your ad copy, you can increase conversions. One little test done by the popular Booking.com found that mentioning “Only 2 rooms left!” increased conversions by up to 134%.
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Stretching Your Ad Spend: Efficient Scaling Makes All the Difference
Once your ads have been optimized to boost conversions, scaling becomes the next priority. However, we have to keep in mind that since we’re working with an e-commerce ad budget of $1,000 per month, this scaling has to be incremental and calculated. Here’s how to stretch the value of ad spend:
1. Leverage Audience Segmentation
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Use Google or any other ad platform’s audience targeting features so you can create different segments for your ads. With this, you can tailor your marketing campaigns to make them more relevant to potential customers. Our two cents: Combining a remarketing campaign with the right ad types to maximize ROI, which allows you to target and serve ads to people who have previously visited your site, with dynamic ads can show them products they’re already familiar with considering they’ve engaged with them.
2. Optimize Your Bidding Strategies
When deciding how to optimize your bidding, work on using data-driven bid adjustments to increase bids for the higher-converting audiences or specific devices. If mobile users are outpacing desktop, allocate more budget to the mobile users.
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3. Ad Scheduling and Device Targeting
Our previous example said to target those using a mobile device. You can do that by using your analytics to figure out when traffic and conversions peak as well as by what device. Small businesses will see better results by narrowing ad delivery to specific times, days, and to specific devices (mobile,desktop). For example, if your data is saying that conversion rates peak between 6 -10PM, you should consider increasing your bids during this time. Want our two cents? Set negative bid adjustments during the off-hours so you can conserve that budget.
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Key Metrics To Track
Anyone can say they’ve optimized a campaign, but it really comes down to the data—you need to keep tabs on the campaign to ensure it has been successfully optimized. Outside of the optimization, it’s still a best practice to track your key performance indicators (KPIs) beyond just CTR and conversion rates. We always look out for:
- Cost Per Conversion (CPA): This metric is also known as cost per acquisition and it references how efficiently you’re acquiring new customers. A good rule of thumb is to aim for a CPA that allows you to remain profitable and scalable.
- Return on Ad Spend (ROAS): While it seems relatively self-explanatory, sometimes it gets lost within the tsunami of data we receive day-to-day. This metric is calculated by dividing the revenue generated from your ads by the amount you’ve spent on the ads. For e-commerce companies specifically, a ROAS of 4:1 is considered a good goal to set for yourself. With the e-commerce industry, you have an advantage, as according to Nielsen, the average ROAS across industries is approximately 2.87:1.
- Bounce Rate: Bounce rate isn’t something directly linked to your ads, but it could be when we look at high-intent buyers. A high bounce rate on your website or landing page can show a disconnect between ad messaging and the content on your site. Make sure your landing page or your homepage reflects the promises made in your ad.
Takeaways
Taking your $1,000 monthly ad spend to the next level isn’t about just crunching numbers – it’s about making each and every dollar count.
For small businesses, the right mix of thoughtful keywords, compelling ad copy, and smarter bidding processes can be the difference between breaking even and building a consistent flow of sales.
It’s less about throwing your money at the problem (if there is one) and more about making good with what you’ve got. Remember, when putting a focus on continuous improvement, scaling becomes a natural outcome – not just a bigger expense.
