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Overcoming Diminishing Returns: A Guide to Expanding Your Active PPC Channels

Updated: Sep 21, 2023

Overcoming Diminishing Returns: A Guide to Expanding Your Active PPC Channels

All good things must come to an end.

You’ve no doubt heard this expression (or one like it) before. You probably haven’t heard it in the context of PPC marketing, though.

Overdramatic? Maybe. But it still rings true—no matter how effective your channel strategies become over time, they will eventually reach a point of diminishing returns.

Rather than continuing to throw more and more resources at a plateaued channel, you need to think outside the box and explore new ways to scale your campaigns. And in this PPC Live UK guide, we’ll be discussing ways you can do just that.

Let’s dive in.

Understanding Diminishing Returns in Active PPC Channels

The goal of every PPC campaign is to exchange upfront value (money) for greater long-term value (converted leads, revenue, brand recognition, etc.).

But this equation isn’t linear.

At some point, your campaigns will reach a crucial tipping point—you’ll increase your investment, only to see your conversion rate fall and your CPA increase. To put it simply, there comes a point where the increase in profit from your investment levels off, even if everything else stays constant.

Why does this happen? There are a few common reasons:

  • Your ad is being served to the same people repeatedly due to limited channel reach.

  • Your ad copy is becoming stale or irrelevant.

  • You’re being forced to overbid due to competition.

How to Calculate the Point of Diminishing Return

Calculating the point of diminishing returns is pretty simple. To illustrate, here’s an example based on two months of ad spend:

Let’s say you launch a Google Ads campaign with a CPA target of £60. In the first month, it generates 10 sales at a total cost of £600 (£60 per sale). In the second month, you double your Ad spend to £1,200. This results in 15 sales at a total cost of £1,200 (£80 per sale).

Since £80 per sale exceeds your £60 CPA target, those extra sales weren’t actually worth it. If this trend continues, it means you’re spending more for each sale and getting less in return.

Signs and Symptoms of Diminishing Returns

The phenomenon of diminishing returns can be seen in a range of common PPC metrics. Here are a few to watch out for:

  • Cost per conversion has plateaued.

  • Conversion rate has declined.

  • Impressions are not leading to clicks.

  • Click-through rates (CTR) have decreased significantly.

  • Your ads are displaying in less relevant positions with higher CPCs and no conversions.

The good news is that you can often identify issues before it's too late. When you do, it’s time to explore solutions (like the ones below).

5 Strategies to Overcome Diminishing Returns

In a rush? No worries—here’s a rundown of the 6 key strategies to overcome diminishing returns in PPC:

  1. Revisit Old Ideas

  2. Refine Your Targeting

  3. Think About Your Funnel

  4. Think About Your Industry Vertical

  5. Go To PPC Networking Events

Now, let’s dive in.

1. Revisit Old Ideas

Sometimes thinking outside the box means returning to channel strategies you’ve moved on from in the past. Whether you’re running a new PPC campaign or optimising an existing one, take the time to brainstorm ideas with fresh eyes.

Look at old campaigns or channels that may have been forgotten and consider reviving them. Alternatively, think about completely new tactics you could try out such as different ad formats or targeting strategies.

2. Refine Your Targeting

Your targeting strategy can heavily influence the performance of your PPC campaigns. To ensure your ad budget is being used effectively, refine and narrow down your target audience. It’s important to consider different types of targeting such as:

  • Demographic

  • Geographic

  • Psychographic

For example, have a look at the age of your target audience and consider if narrowing it down (or expanding it) could help improve results.

3. Think About Your Funnel

Analysing user behaviour across the funnel helps to identify new channel opportunities.

Consider areas where people leave the funnel and try to understand why. Are you missing out on any potential traffic sources? Could you be targeting different platforms or channels? What about introducing new keywords or ad formats?

Making small changes can make a big difference to your PPC performance. Take the time to review and optimise your campaigns regularly, so you’re always getting the best returns from your budget.

4. Think About Your Industry Vertical

This is a big one. Rather than relying on generic best practices, you should be researching and understanding the unique challenges of your industry.

Find out what works for competitors in your sector and use that to inform your campaigns. Think about how different platforms can help reach potential customers and how to tailor messaging accordingly. Pay attention to trends, seasonal opportunities, competitor activity, and customer preferences to get ahead of the competition.

5. Go To PPC Networking Events

This last suggestion might seem like a stretch, but we promise it’s effective.

PPC networking events like the ones we host here at PPC Live UK are designed to teach professionals all the tricks of the trade, as well as give them access to some of the leading minds in the industry.

Attending these events can provide invaluable insight into how others are tackling their PPC campaigns, what strategies and techniques they’re using, and what works best in different industries. It’s a great way to stay on top of the latest trends and gain inspiration to help tailor your campaigns.

Plus, you’ll get to meet some of the leading players in PPC marketing who can provide valuable advice for your business.

Don’t Let Diminishing Returns Get You Down

Diminishing returns are a fact of life in the PPC game.

And while it can be annoying to scrap or adjust a favourite strategy or channel, the exercise can lead you to even better opportunities.

At PPC Live UK, we believe networking and education are the keys to advancing the PPC industry. We regularly host networking events, forums, and events designed to educate and inspire.

Get your tickets for the July event and come learn from industry leaders.

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