Much like writing a compelling ad copy, or selecting distinct keyword matches to drive your SEM campaigns, a flexible bid strategy plays a very big role in the success of your Campaigns and Return on Add Spend (ROAS). Coming up with a bid strategy can be rather difficult to gage when building your keyword lists using the Adwords Keyword Planner, or selecting the first page bid suggested next to each keyword in your Adgroups keyword list that Google will give you. Ideally you want your ads to appeal to the visitor as soon as the results show. So what does that mean? Aim for the number 1 spot and get those clicks before your competition does, right? Not necessarily. Below is an image that contains a heat map for clicks drawn to paid ad results (curtosy of website-design.it)
Interestingly enough you see that the top 3 spots acquire a majority of the clicks, so bidding for top spot is not always the best option. That being said, if you craft a campaign that obtains a high quality score, ad rank, and high CTR, you may end up there regardless.
Before implementing your bid, you should understand what may affect what your average cost per click is going to be when you kick start a campaign.
Keyword matching and relevancy.
Keyword matching and research is an entirely different topic altogether that is covered across many search engine marketing and search engine optimization blogs. However, how you match your keywords, and relate them to your ad copy will determine your CPC according to your bid. Remember, what your bid is not necessarily what you end up paying per click. If the words you bid on are not relevant to your ad copy, or on the landing page, the likely hood of lowering your CPC is very low, but lowering your CTR is relatively high.
On highly competitive keywords, Google will have suggestions based on “first page bid estimates” next to your list of keywords. Most advertisers (including myself) will set the bid to the suggested bid. Sometimes this could be a difference of $0.25, or it could be an additional $2.00 – $10.00 (depending on the keyword).
This could actually be beneficial because it gives you a chance to increase your quality score and CTR. Bid popping is the idea of setting higher bids to obtain a higher ad position, and then lowering your bids based on click through activity and ad quality score achieved after a test run of the campaign. This is a simply strategy to start if you have a set budget and again are concerned about initially getting clicks and driving traffic to the site. But it could result in a high CPC to start. As much as that may be off putting, this gives you a head start in setting up a bidding war, so you can scale back your bid once you get a feel as to what your CPC’s are in the position in which your ad is showing. This can give you an idea of how to optimize your ads bid strategy based on what it is you are paying.
Basically, a bid strategy unfolds as your campaigns run. You can have an initial strategy in place with target return numbers, budgets (monthly, quarterly, annually) but at the end of the day, as the data comes in, your strategy can change. Google Adwords has tools for maximizing your potential ROAS based on some performance metrics (mainly conversions).
This strategy places automatic bids to keep your ad at the top of the page. Ideal for advertisers who want to stay in that top spot to get first dibs on the search result. That being said, as we looked back at the previous heat map, any of the top 3 ad positions are fair game for clicks.
While this option still requires you to enter a maximum cpc, the enhanced feature tells adwords to make adjustments to your bid during opportune moments that are most likely to result in a conversion. There are some hold backs on this strategy that requires previous conversion data for Adwords to indicate when to make bid adjustments.
A personal favourite of mine, Target CPA allows you to enter either a target CPA, or a maximum CPA (gives room for flexibility). This option is enabled once an adgroup hits 15 conversions within a 30 day window. Once that option is enabled, you can go back and calculate what your cost per acquisition was on those conversions, and set your bids accordingly. A few things to consider with this option are:
Bids to low may result in less impressions
Current bid adjustments are not used due to real time technology.
Much like Target CPA, this strategy requires previous conversion data in order to effectively implement bids based on maximum cpc’s while targeting clicks most likely to convert. Adwords won’t guarantee hitting the exact targeted ROI, but it gives a ball park estimate on the returns the advertiser is aiming for. This strategy can’t just be pulled from a hat, it requires a good sample size of data (months, years) in order for the advertiser to enter a realistic number. Take a look at high converting campaigns, and review that data in Google Analytics to get an idea of what to bid. Some months, you may see an ROAS of 500%, and others around 400%. A bid of 450% may fit in perfectly, or reduced the number of clicks because of the difference from the previous month.
Which strategy works the best?
This one I leave up to you. Default Adwords Settings will have you enter a maximum bid. From there it all boils down to campaign performance metrics from the data you collect over a sufficient time sample. Whether that is days, weeks or months, bid adjustments are a continuous effort into building a complete Search Marketing Program.