Why is AdWords ignoring my daily budget?

Is there a rule of thumb for determining a meaningful Google Adwords daily budget when running an experiment?

• Before getting too deep into all the possible combinations & permutations of Ad Groups paired to landing page(s), we'd like to test just one set and are wondering what Daily Budget would provide relevant metrics for a local search startup.

• Answer:

  Your question is an impossible one to answer as you do not define your local market, what the metrics would measure and how you would know if something was relevant.  SEM is about finding the correct keywords for your topic and then adding descriptors to those until you filter out random clicking. You need to focus on Long Tail Keywords (i.e. shiny red car with broken fender) as opposed to Head Keywords (i.e. car).  These words will cost you less and will ultimately drive in more interested leads. As for how much to spend, you need to do the math.  How much do you value a lead/sale (sales are easier - how much of the sale would you devote to marketing)?  For leads, how many leads do you estimate it will take to land a sale or a client?  There are no firm numbers here but cheaper products tend to take less leads to convert (perhaps 5 leads to a sale) whereas expensive items like, say, a car can take 25-50 leads to generate a sale. Again that all figures into your equation.  Say you to spend 20% of your revenues for online marketing and all of that on SEM.  Your anticipated revenues for the month are, say, $10K - so $2K goes for marketing.  Now you haqve the amount to spend per month but how about the CPC value? To generate your revenues, how much do you need to sell?  Suppose your average price is $100 thus you need to sell 100 units to make your projections.  Dividing 100 by 31 days means you need to aquire 3.26 sales per day and, if it takes 10 clicks to get your sale, you need 32.36 clicks per day.  Divide the clicks into your daily spend ($2K/31 = $322) and you get your CPC of  $2.