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Effective Bid Strategies, Part 1: Bidding Options Tutorial

Welcome to the eighteenth lesson ‘Effective Bid Strategies, Part 1: Bidding Options’ of PPC Advertising Tutorial which is a part of Advanced Pay Per Click (PPC) Certification Course offered by Simplilearn.

In this lesson, we're going to look at the adwords bid strategy and other bidding options for setting bids.

Let us first look at the objectives of this lesson.

Objective

After completing this lesson, you will learn:

  • How to optimize bidding options according to your needs

  • The pros and cons of each bidding option

  • How to optimize your budget

  • How to bid using enhanced CPC bidding, CPA bidding, and flexible bidding

Bidding Options

We looked at Bidding Options briefly in our introduction to campaign settings. Now we're going to look at them in depth to see which strategy is best for you going forward.

So the basic option to start using is manual bidding for clicks. You will set a maximum CPC and then you will pay up to that CPC. You will never pay more than the max bid that you chose. This is a good option to start with.

A manual bidding for clicks option is shown below in the screenshot image.

a-manual-bidding-option-for-clicksWhen you're first starting out with paid search, manual bidding for clicks is your best option because it gives you the absolute most control.

Max CPC Bidding

We'll look at the advantages and disadvantages of max bidding.

Advantages

Max bidding advantages are:

  • It is compact, be with every other option that Google offers from bidding standpoints which is demographic bidding.

  • It's also compatible with advanced ad scheduling.

  • It gives you full control over your costs per clicks.

Disadvantages

The significant disadvantages of Max CPC Bidding are:

  • You have to set all the bids yourself. So there is more work for you to do when you're using max CPC bidding.

When you use this option, you can set bids at the ad group level, the display network level, and manage placement bid and we'll look through display network items in a future module.

You can set bids at every level possible within AdWords. So this is generally the best one to start with when you're brand new to an account.

Next, we will look at Budget Optimizer.

Budget Optimizer

There's another option under Focus on Clicks called Automatic Bidding to try to maximize clicks for your target budget. With this option you will give Google a max CPC bid, they will take over the bidding completely, in attempting to maximize the number of clicks your campaign receives.

The screenshot image is given below and shows the Automatic Bidding option to maximize clicks for your target budget.

automatic-bidding-option-to-maximize-clicksGoogle does not care which word got the click; they try to get the most clicks possible for your budget and your CPC limits.

Let us look at the advantages and disadvantages of Budget Optimizer.

Advantages and Disadvantages of the Budget Optimizer

Advantages

The major advantages of Budget Optimizer are:

  • Google does the bidding for you. So you don't have to do a whole lot of bid management work.

  • You'll probably get more traffic with this system rather than any other bidding option.

Disadvantages

The disadvantages are:

  • You don't have any control over keyword CPCs, which keywords you can't receive, which place CPCs, you have no control over sending CPCs at any level except the campaign level.

  • It's also not compatible with demographic bidding or advanced ad scheduling.

Both of those options manipulate the max CPC. Since they change max CPC on themselves and Budget Optimizer is trying to change CPCs, these two systems don't work together.

So if you want to do advanced ad scheduling or demographic bidding, you need to use a different bid system.

Knowing your Keyword's Value

The biggest caution about this system is a lot of people look at this and think that they don't have to do any bidding and I'm going to get lots of clicks. The problem is, you don't have control over which word gets the click.

If your keywords look like given in the table below, where you have the word dentist, its cost per action is $100.

Keyword

Cost Per Action

Conversion Rate

Dentist

$100

0.5%

Chicago Dentist

$35

4%

Chicago Dentist that takes insurance

$20

6%

You have the word Chicago dentist; its CPA is $35. You have another keyword, Chicago dentist that takes insurance. It's CPA is $20, in a case like this, you want a lot more clicks for Chicago dentist that takes insurance, and Chicago dentists.

They have a much better cost per actions and conversion rates than a broad word like the dentist. However, the word dentist has a lot more search volume, so if you use the budget optimizer, you're going to get most of your clicks on the word dentist, not on your better-converting words.

You do not want to use this system if you care which word gets the click as different words have different conversion rates. If you don't care what word gets the clicks, you want the most clicks possible, then, the budget optimizer is useful.

In the next topic, we will try to understand PPC Account Structure.

PPC Account Structure

If your goal is to maximize traffic, increase awareness for your websites, do some product branding, or some product awareness traffic, then this is where you will benefit from bidding options.  With bidding options, you can use different bidding options in the same account. Bidding options are a campaign level setting.

Let's say you've looked at your keywords and you've looked at the buying cycle and you're trying to segment out keywords by buying cycle and you have a set of words that you know the conversions.

They convert, and you want to use Max CPC bidding on them, so you know exactly what you're paying for those clicks and those conversions.

You have some other words. They're early in the buying cycle. They don't necessarily convert. However, there are good words that describe your industry. They describe your site, what your company does.

Say you have a little bit larger budget, and you're willing to pay some money just to increase overall brand equity.

In cases like that, what you can do Is create two campaigns. Create one campaign and call this your ROI campaign, your conversion campaign, so forth. The PPC Account Structure is given in the below diagram.

free_resources_article_thumb/the-ppc-account-structureNow, in that campaign, you're going to use Max CPC bidding or Conversion Optimizer and your second campaign called an awareness campaign. This campaign's going to have all those keywords in it that don't directly lead to conversions. Then you can use Budget Optimizer Bidding for that campaign.

What you don't want to do is just put some words in a campaign, turn on budget optimizer and say hey we're branding, our brand's getting more exposure. You want to make still sure those words are helping you out, are helping you reach your goals.

In the next section, we will look at how to set interaction Goals Analytics.

Set Interaction Goals Analytics

When you use awareness campaigns, go into your analytic system and set an interaction goal. Google Analytics screen is shown below. However, most analytic systems have some sort of interaction goal, time on site, or pages per visit.

to-set-interaction-goals-in-google-analyticsSet a goal, then look at how that awareness campaign and those keywords are doing from an interaction standpoint.

If you find that most of the visitors are bouncing off your site, or spending very little time on your site, only looking at one page then leaving, those words are not helping you reach any interaction goals. So change them, or change the landing page, make some adjustments.

If you want to get into more advanced measurements with branding campaigns, while a campaign's running, and wait a couple of weeks for it to get some exposure first, is look at metric changes such as:

  • Unexplained direct traffic changes.

  • Unexplained overall conversion rate changes.

It's not uncommon to see a branding campaign, whether it's a CPM campaign or a budget optimizer campaign. By itself, looks like, people are spending time on our site, but they're not doing a whole lot.

If you only look at the data in a silo, you might think it's a waste of money. However, if you were to take a more holistic look, this branding campaign is running, our overall conversion rates have gone up 0.2%, or we have a 15% decrease in our cost per actions.

We have a 12% increase in brand searches, and you turn the campaign off, and all those metrics go away again, they reset back to default. In cases like that, those branding campaigns are probably helping you out.

So it's another level of metrics you can go to when you're buying CPM, or you're buying budget optimizer keywords. At a minimum, set goals on your sites. Interaction goals, time on site, or pages per visit.

At another level though, look at changes to branded search queries, unexplained changes to conversion rates, unexplained lowering of CPAs and see if that branding campaign is genuinely helping you out in other areas.

Next, we will look at another bid option called Enhanced Cost Per Click, Enhanced CPC.

Enhanced CPC Bidding

Now what this bid system does, is you're still going to set a max CPC like normal. However, if you also use AdWords conversion tracker, Google will look at your conversion tracking data, and adjust your bids a little bit up or down based upon the likelihood they think something will convert.

The screenshot image given below shows Enhanced CPC Bidding option.

enhanced-cost-per-click-optionSo, this Enhanced CPC Bidding option you still have control of setting a max CPC bid.

Google service assists you a little bit, in automatically changing some bids, based on what they think will covert. So you have to use AdWords conversion tracking to use this system.

So when you turn it on, Google's only going to run it first in a few auctions. It won't be every single time your keyword gets displayed. Then what happens is they may adjust your bid up to 30% above your max CPC if they think the word will convert.

They may adjust the bid down by 100%; mostly you're not displayed if they don't think it will convert. You need to give it at least a week to see if it's going to be useful to you.

Let us look at the advantages and disadvantages of Enhanced CPC Bidding.

Advantages and Disadvantages Enhanced CPC Bidding

Advantages

The primary advantage of this is:

  • You still maintain a lot of control.

  • You're still setting max bids, but you're receiving assistance for bidding based upon all the data Google has.

  • It is compatible with advanced ad scheduling and demographic bidding and compatible with some of the other options.

Disadvantages

The disadvantage of setting Enhanced CPC Bidding are:

  • You do need a fair amount of conversions to work well. If you only get ten conversions a month and you have 5,000 keywords, there's not a lot of data points on conversions compared to your keyword numbers for it to work well. So the more conversions you do receive, the better it will work.

  • Sometimes it does not work and that I must stress is some of these features in AdWords where they look at in algorithms and reality they don't always work. If Google starts lowering your bids by 100% a lot, you might lose a lot of exposure, not have your ads shown as much and lose more conversions.

  • You can end up paying more than your max CPC.

So you do need to look at the metrics and do a benchmark. Here's what our metrics look like before we turn this on. You let it run for a week. Here's our metrics now. Did your overall conversions go up? Did your cost per action go down? That's the kind of stuff you want to look at.

Now, it is possible for your average CPC to be higher than your max CPC. If you set a bid at a $1, and Google looks at all these clicks and says, that these are great clicks. We're going to charge you a $1.30 for all these clicks because you can pay up to 30% more than your bid.

All of a sudden your average cost per click could be a $1.30 even though your max CPC is $1.00. So be careful when you see a weird metric.

Generally, your average CPC is higher than your max CPC. It's generally due to either you were looking at the different time frame when you had a higher bid.

You've lowered your bid, and you did not adjust the time frame you're looking in. Or you have enhanced CPC turned on. Google's adjusting their bids a little bit. Therefore your average could be higher than your maximum CPC.

So if you want to lot of control, but you have a fair number of conversions and want just a little bit of help with bidding, this is a good option to use. When you first open an account, you don't have any conversions.

So you can turn on enhanced CPC bidding, but it won't do you any good, yet. That's why it's best just to let your standard metrics run for a little while, get a benchmark, then turn it on, then look at the differences between your initial bids and conversions and the bids and conversions while enhanced CPC was running.

In the next topic, we will look at another bid method that is CPA bidding or cost per action bidding.

CPA Bidding

In the interface, this is known as focus on conversions or conversion optimizer. So with this option, you'll set a target CPA, what you want to pay for a conversion, and then Google will take over the bids for you Attempting to hit your target CPA numbers.

You have to have at least 15 conversions in a campaign in the past 30 days to even be able to enable this option. It usually doesn't work very well with 15 conversions, especially if you have a thousand keywords, leading to 15 different versions. Just not enough data points.

Usually, if you get 30 to 50 conversions per month, it works better. If you get hundreds or thousands of conversions, it works even better. Now, it uses a target CPA method which means your overall average should be near your Cost Per Actions.

Some conversions may cost more; some might cost less. But average should be in the same ballpark. Once you enable focus on conversions, you can set your CPA by ad groups. You could have one ad group with $100 CPA, a different ad group with a $30 CPA.

Next, we will look at the Advantages and Disadvantages of CPA Bidding.

Advantages and Disadvantages CPA Bidding

Advantages

So the real advantages of this system are:

  • You don't need to spend time setting bids.

  • It can often get you even more conversions for the same or lower CPA than you can by manual bidding as Google has so much more data about users than you do.

Disadvantages

The disadvantages are:

  • CPA is not always the target for companies. If you're e-commerce, you might more focus on return on ad spend than CPA.

  • It's often not aggressive enough to take advantage of a really big mobile or location CPA differences.

  • You can't use it with bid modifiers, except -100%

  • It doesn't always work for everyone.

To try it out, you might use it for a couple of weeks. See how it does versus your manual bidding. If it works great, use it. It's a fantastic system when it works. If it doesn't, then you just switch to a different bid method.

Managing Campaigns around CPA Bidding

It's not quite aggressive enough in setting bids, especially at a location level.

managing-campaigns-around-cpa-biddingIf you want to use CPA bidding, and you have enough conversions, you might even look at your overall locations, and say, these locations convert well.

They go into one campaign. These locations convert fairly well, not quite as good. They're the second campaign, and they're not having a low performing campaign.

So now CPA bidding is taking into account your location differences because you did it manually and formed works better. If you've got some dramatic changes especially in location, you can use campaign segmentation as a first step and CPA bidding as a second layer and take advantage of those differences.

Next, we will look at Flexible Bidding strategy.

Flexible Bidding

There is another adwords bid strategy known as flexible bidding. This in itself is not a bad strategy. Your bid strategies are conversion optimizer, CPA bidding, manual bidding, enhanced CPC.

A screenshot image shown below has an option for the Flexible Bidding strategy

the-flexible-bidding-strategy-for-conversions What flexible does, it lets you define your bid strategies. Then you can apply one of those strategies to each ad group.

So, while you enable this at the campaign level, and then you'll choose one of your basic bid strategies, you can then go to your bid strategies and manage for every ad group, a different type.

So you could have enhanced CPC for one ad group, you could have CPA bidding for a second ad group, or you could have maximized clicks for yet a different ad group. So the real power here is using multiple bid strategies in the same campaign.

There are several types of bid strategies you can enable such as:

  • Enhanced CPC: Here, Google will raise or lower your CPC based upon your conversion data.

  • Target CPA: Here, Google takes over your bids in trying to hit a target CPA. Maximize clicks, that's getting the most clicks for your budget.

  • Target search page location: With this strategy, you can set a max bid and then tell Google, try to put your ad on the top of the page, or try to put the ad on at least page one, based upon my max bids.

  • Maximize Clicks

  • Target return on ad spends: Here, when CPA doesn't work you might want to do ROAS bidding, and so you can enable ROAS bidding in an ad group.

Let us now look at the Advantages and Disadvantages of Flexible Bidding.

Advantages and Disadvantages of Flexible Bidding

Advantages

When we look at the advantages of flexible bidding, some big advantages are:

  • You can use a different adwords bid strategy for each ad group.

  • You can automatically set bids on a ROAS basis, not always CPA.

  • You can target page locations automatically, top versus side.

Disadvantages

  • Getting ROAS data into AdWords can be difficult

  • ROAS bidding doesn't always work. So it doesn't always do ROAS great yet but, ROAS is still fairly new in this system.

  • You must be careful of strategy if it's using a lot of ad groups. Because you define a strategy, then you can add that strategy to 100 ad groups. If you change the strategy, it's changed for every single one of those ad groups.

  • With flexibility sometimes comes account management issues, of trying to meet too many different targets.

So if you look at 100 ad groups, you these 50 should use the current strategy, these other 50 should use a different one. You need to define yet another strategy and apply it to just those ad groups.

Always focus on your KPIs first, and then your bidding second. Flexible bidding isn't its bid method; it just lets you use all these different bid methods for each ad group instead of using one at the campaign level, which is all the others are set at.

Bidding Comparison Chart

When we look at the bidding options,

  • Setting max CPC, it's best if you want to use every feature and maintain the most control possible.

  • Conversion optimizer is generally the best option if you want to get the most conversions possible.

  • Enhanced CPC bidding is best when you want a lot of control, but you also want some bidding help based upon previous conversion information.

  • Budget Optimizer is best if you just want the most traffic possible.

The Bidding comparison chart is explained in the image given below.

the-bidding-comparison-chartLook back to your goals, see what you're trying to accomplish and then pick a bidding system.

Remember, you can have different bidding systems by campaigns.

You can have one campaign; you want a lot of control, you're setting max CPC bids. You have another campaign; you tell Google to get the most leads possible, turn on Conversion Optimizer.

You have another campaign; you want the most traffic possible for these brand or awareness words, put them in a Budget Optimizer campaign.

So that's why when you list out your goals and really have an idea of what you want to accomplish then you can pick a bidding option that helps you reach those particular goals.

Summary

Let us now summarize what we covered in this lesson:

  • When you're first starting out with paid search, manual bidding for clicks is your best option because it gives you the absolute most control.

  • With bidding options, you can use different bidding options in the same account as bidding options are a campaign level setting.

  • With Enhanced CPC Bidding option you have control of setting a max CPC bid.

  • You could have enhanced CPC for one ad group, CPA bidding for a second ad group, or maximized clicks for yet a different ad group because you can use multiple bid strategies in the same campaign.

  • You can have different bidding systems by campaigns.

Conclusion

This concludes the lesson on Effective Bid Strategies, Part 1: Bidding Options. In the next lesson, we will discuss Effective Bid Strategies, Part 2: Setting Bids.

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