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Effective Bid Strategies, Part 2: Setting Bids Tutorial

Welcome to the nineteenth lesson ‘Effective Bid Strategies, Part 2: Setting Bids’ of PPC Advertising Tutorial which is a part of Advanced Pay Per Click (PPC) Certification Course offered by Simplilearn.

Let us first look at the objectives of this lesson.


After completing this lesson, you will learn:

  • How to calculate the value of a click

  • How to account for your margins in paid search

  • How to take advantage of ad scheduling

  • The importance of figuring out when people buy from you

So, now let's talk about bid modifiers.

Bid Modifiers

Bid modifiers let manipulate the bids based upon a location targeting and ad schedule, which is a day of the week or time frame within a day or devices. So, you'll still set your bids; whether it's CPA or CPC.

At an ad group level always with CPC based bidding, you can also do them by placements and keywords. That's your base level bid.

Then what happens is you can set a bid modifier to say, if someone's on a mobile device, want bid - 100% lower and also want my bid 22% higher. So the bid-modifier looks at the current max CPC being used and adjusts that bid that's submitted into that particular auction.

-100% Calculation

The basic version of bid modifiers is known as -100%. Essentially, whenever a bid modifier is - 100%, your bid is always set to zero.

So, if you don't want to be on mobile devices, you can make a modifier - 100%. If you don't want to be shown in particular geography, you can make your bid modifier for that geography - 100%.

In the - 100% bid modifier which always sets that target to a zero bid is compatible with every single bid system. Now, alternately, you can set different bids. If someone's on a mobile device, you can bid 22% higher or 19% lower.

These non-100% calculations, these incremental calculations, are only compatible with max CPC or enhanced CPC Bidding as CPA bidding and budget optimizer maximize your clicks.

Google needs control over the max CPC for their systems to run. They don't take bid modifiers into account.

Now, with bid modifiers, the math gets a little complex, so unless you're a stats major, don't do it in your head. For instance, if you have a starting bid of $1 and you say, well someone's in this particular location, and this could be an individual city.

You want your bid 50% higher. But if someone's on a mobile device, the bid will be 50% lower.

Now, when you say well plus 50%, - 50% my final bid should be one. It's not how the math works. These are done on each bid calculation change. So, what happens is, you have a starting bid of $1, and Google you're willing to spend 50% more for this geography. That makes your bid $1.50.

Now, you've got a - 50% mobile modifier. So, $1.50 divided in half which is a - 50% leaves your bid currently at $0.75. You don't have a bid modifier for the time of day, so now your final bid is 0.75, not $1. Thus, a stats major can do this in their head, most people cannot.

Now, CPCs are capped at ten times your starting bid, because you could do a starting bid of a dollar and a 900% geographic bid modifier, and a 300% mobile bid modifier, and a 500% time of day bid modifier. That would make your bid $240. So it's easy to lose control.

Google caps all the modifiers at ten times your starting bid or a max of a 900% bid adjustment.

Now, this is a lot of math, so there is a big calculator right inside your enhanced campaign that you can click on, pick your modifiers, and Google will show you what your final bid adjustment is, based upon the modifiers you're using.

Let’s now discuss Location Bid Modifiers.

Location Bid Modifiers

As you can see in the image given below, all these modifiers are at the campaign level, and some are at the ad group level as well.

location-bid-modifiers-at-the-campaign-levelSo the first modifier is a location bid modifier. With Location bid modifier, you can add a location and then change your bid based upon that location.

Now from within the interface and the modifiers, it's not easy to see all the data necessary to pick what your bid modifiers should be. So often going to the Dimensions tab is easier to understand, your conversion rates and cost per conversions by individual location.

Dimension Tab Information

With the Dimensions tab, it’s easier to see your conversion rates and cost per conversions by individual location. The screenshot given below shows the Dimension Tab Information.

the-dimension-tab-informationSo, in this case, we're looking at geographic-based information at a metro level, and when we look at the data, we see that New York has a $77 cost per conversion, Houston has a $41 cost per conversion.

So we're willing to raise our bids for Houston, or we want to lower our bids for New York so that we can hit our target return ad spend or our target CPAs in all of these areas. Now let's say you're targeting all of the United States and you set up your campaign initially to target the US.

So what happens if you go to the Location bid Modifiers section which is at the campaign level under settings, and all you'll see in the United States and you can't set a bid modifier.

If you want to add a bid modifier for geography, you have to go into your campaign settings and add those geographies individually.

Our campaign is targeting, the United States, New York, and Dallas, and once we've added these as targets, then we can go back to our bid modifier section, and we can say, New York is not doing very well.

We're going to lower our bid by 39% before it is submitted to the auction in New York. Dallas is doing well, so we're going to raise our bid by 22%.

So most companies do have slight changes in CPAs or return ad spend by location. Then you can examine your dimension tab data.

If you see way over-performing areas, you'd like to have higher bids or way underperforming areas you'd want to have lower bids that could be - 100%, don't show there. Then add them to your campaign location targets. Then go to your bid modifiers and adjust your location Bid modifiers.

Your bid is based upon your base bid initially by keyword or placement, wherever you set that bid level, then when the user's looking for New York information the modifier is used, and that's your final bid calculation that's submitted into the auction.

Next, we will look at Ad Scheduling Bid Modifiers which is more than just location bid modifiers.

Next, we will look into Ad Scheduling Bid Modifiers.

Ad Scheduling Bid Modifiers

Ad scheduling at a fundamental level is just turned your ads on or off. So, if you have a business and you only answer your phone from 8:00 to 5:00 and if you're running your ads 24/7, there are times somebody calls you, and no one answers the phone.

In that case, you can just run your ads only from 8:00 to 5:00. With this type of ad scheduling, where your ads are just on or off. This is compatible with every bid option there is. The screenshot for the same is given below.

ad-scheduling-bid-modifiersThe secondary usage of ad scheduling lets you change your bids up or down by a time frame. It could be a day of the week or a time within a day.

Now, the most important thing to first realize about ad scheduling is, it is based upon your account's time zone, not the user time zone. Bing does have this as well as Bing is based upon the user time zone. Bing ad scheduling is easy to do.

With Adwords, often you need to either one, let's say you're advertising to all the US, there are multiple time zones, you need to pick big swathes of time, just say, at 8:00, Eastern yet, 5:00, on the Pacific Coast, but it's good enough, and we'll just start our ads at 8:00.

People go home from work at 5:00 on the West Coast, but that's 8:00 on the East Coast, so we'll just run our ads from 8:00 to 8:00, and not worry about all the incremental time zone possibilities. That's the natural way of doing it.

The hard way of doing it is making a campaign by time zone. That's a whole lot of work because time zones don't follow nice, neat geographic lines. So there are multiple ways of doing it. We're going to assume for right now, just a fundamental way of walking into this.

Ad Scheduling: Advanced

With the advanced version, you might look at your metrics and say, in the mornings our bids are pretty good. But over the lunch hour, that 11 to 2 o'clock range, because we have multiple time zones, we do well. So, let's raise our bids over the lunch hour.

Then people go back to work, and they're not looking at our stuff as much. So let's go back to our basic bids. So, with the advanced versions, you could raise, and you can lower your bids by, either by a full day or by individual parts of the day.

The screenshot image given below shows an advanced setting in Ad Scheduling.

advanced-settings-for-ad-schedulingNext, we will observe one case study to understand Advanced Ad Scheduling better.

Case study: When do babies nap

Almost every company has conversion rate changes by time zone. So, for instance, we did a case study, and we did a quick survey first.

case-study-on-when-do-babies-napWhen do your babies nap and so we mapped out for a whole lot of children under three years of age when most likely times are that they are sleeping? Then we took our total data and mapped out diaper sales.

Now we have when kids nap we have diaper sales information. We layer them over each other, and we see some obvious trends as shown in the graph given below.

layered-results-for-case-study-on-when-do-babies-napMoms buy diapers when they have time to do so which is when the babies are sleeping. So pretty much every industry has these kinds of trends.

We will now discuss some Relative Conversion rates by Industry.

Relative Conversion rates by Industry

Let us first look at Conversion rates in the retail space.

Conversion rates in the retail space

When you look at relative conversion rates by industry in the retail space, they start going up about nine o'clock in the morning, they stay high over the lunch hour, as people start commuting back home from work, they decline again.

Then you have a bump before and after dinner, and late at night, they drop a lot. The screenshot image given below shows the conversion rates in the retail space.


Conversion rates in the travel space

If we at the travel space and a lot of travel queries are weekend based, you see a big spike over lunch hour times. Then commute times back home for the weekday travelers.

Then you have bumps around dinner time or when people are thinking about what travel they may want to do in their leisure time while watching TV in the evenings.

The screenshot image given below shows the conversion rates in the travel space.

search-conversion-rates-by-day-part-in-travel-spaceConversion rates in the Dating space

For dating we see a bump over lunch hour but not a big increase until about 10:00 at night and dating stays in pretty good shape until almost 4:30 in the morning.

Now, at 4:30 in the morning the retail space is anemic in most cases, but dating is pretty robust.

The screenshot image given below shows the conversion rates in the dating space.

search-conversion-rates-by-day-part-in-dating-spaceConversion rates in the Finance space

If we look up B D C finance, huge spikes over the lunch hour, not a lot of searches until lunch hour times, big drop commute time back home. Increase right after they get home after dinner and sometimes late into the evening, but at 4:30 in the morning it's really low.

The screenshot image given below shows the conversion rates in the dating space.

search-conversion-rates-by-day-part-in-finance-spaceSo most people do have some changes in conversion rates by these timeframes.

In the next section, we will look into a B2B Lead Gen Case Study.

Ad Scheduling: B2B Lead Gen Case Study

Take a B2B company, B2B Finance lead generation site. Their goal number one was a whitepaper download, you had to give some personal information, and you can get a whitepaper.

The company had a lot of data, but they weren't managing bids too well. So we benchmarked the data and said all right well let's figure out our conversion rates and our time frame here and this is business to business.

So first graphed out hourly conversion rates. It's kind of what you'd expect to see, a nice peak between 9 and 11, a drop over the lunch hour, a peak again from 1 to 3, drops as people go home and stop working.

The screenshot image given below shows how the conversions rates change hourly for B2B company.

hourly-conversion-data-for-b2b-companyNow that's hourly data. Then we graph the data by day of the week, and we see that Tuesdays and Sundays are perfect days.

weekly-conversion-data-for-b2b-companyNow, whenever you start getting into the data, you always have to make sure you go far enough into the information. Because if we stopped here, we would say 9 to 11, 1 to 3, Tuesdays and Sundays we're going to raise our bids. Except, that's not the true trend.

What happens is Tuesdays, that's an actual trend, 9 to 11, 1 to 3, huge spikes on Tuesdays. Sunday is the peak occurs in the evening, usually around 2 or 3 o'clock on a Friday evening the web just kind of dies. For a business to business items, your email slows down.

The screenshot image given below shows how the conversions rates change on Sunday and Tuesday.

conversion-data-for-b2b-company-on-sunday-and-tuesdayPeople are thinking more about their weekend plans, what bar are they going to, what movie are they going to see, and they don't finish all their work Friday afternoons. So what happens is like Sunday nights is commonly a large B2B research night.

Now, remember time zones matter as well, when we graph this by time zones, significant differences by time frames. The screenshot image given below shows how the conversions rates according to the time zones.

conversions-rates-according-to-the-time-zonesIn some cases, it matters, and in some cases, it doesn't. If you are doing stock-based items, people in the west coast go to work at five o'clock in the morning, because they're going to work based upon an east coast bell on the stock exchange.

So, you will see some differences by time zone.

So now, did a quick reorganization. Bids were changed by ad group, by the time of day, and by day of the week. Their CPAs went from $37 to $12, so they tripled conversions while their average dollars remained the same, just by doing ad scheduling and setting bids correctly.

Because this was for a whitepaper download, there's a lot of conversions on Sundays for white papers. But, if the company had instead taken call base data and they had sold them to a pivot table and graphed out when calls occurred.

They would see a significant peak on Monday morning except people weren't finding them Monday morning.

So they used that schedule and said wow. We get no calls Sunday night; we're lowering our bids. We get a lot of calls on Monday mornings. We're going to raise our bids and then they're going to wonder what just happened to my traffic.

It was the fact that people searched for them Sunday and found them Sunday, and called them on Monday mornings.

So research times versus call times may not always be the same based upon how your activity lays out, and most businesses don't answer the phone on Sunday evenings. So the ad scheduling, it's beneficial to go into your data.

You can run all this information in the dimensions tab, and you can see data by hour of the day, you can see data by day of the week. And then look to see what the trends are for your particular industry.

Let us now look at the third bid modifier Device Bid Modifiers.

Device Bid Modifiers

This is a mobile bid modifier. By default, your accounts are on every single device. Now, you're always on computer and tablets regardless. So those devices are still there, but you can set a bid modifier for a mobile device at a campaign or an ad group level.

If you don't want to be on mobile or your site doesn't work well on mobile or mobile users don't convert well for you, then you can make your mobile bid adjustment - 100%, set your bids to zero. This is compatible with every bid method.

If you do well on mobile or it's not - 100%, then you can make bid adjustments. The screenshot image given below shows the devices option for mobile bid modifier.

a-mobile-or-a-device-bid-modifierNow the easiest way to see how you're doing on a mobile device is to either use your analytics or go into AdWords, and you can segment your data by device type. Now you can segment this data by campaign ad group, ads or keywords.

So you can see keyword conversion rates by device type.

So then what happens is we'll see the segmented based information. We will be able to see how are our campaigns or ad groups or keywords doing by the device.

The screenshot image given below shows how we can examine the segmented data.

examining-segmented-data-in-mobile-bid-modifierSo in this case, when we look at the company's information in computers campaign, they have $168 CPA on computers, but they have a $95 CPA, much less on mobile devices.

In this case, we'd want to go back to our bid modifiers and increase our bids for all mobile devices, because we do a lot better on mobile devices than we do on computers.

The mixed keyword conundrum

What happens in many cases is that when we get into an ad group and let's pretend these keywords are in one ad group. We'll see that some keywords do better on mobile. Others do about the same, mobile versus desktops; others have better CPAs on desktops than mobile devices.

The screenshot image is given below shows keywords and their CPA for mobiles and computers.

keywords-and-their-cpa-for-mobiles-and-computersWith an ad group level bit modifier, you're affecting every keyword equally within an ad group. There is no keyword level bit modifier. So in cases like this, what you'll want to do is break your ad group into three different ad groups.

You'll have one ad group with positive mobile bid adjustments. You'll have one ad group that just doesn't have a mobile bid adjustment because the CPAs are roughly the same. Well, another ad group, the negative mobile bid adjustment.

So, if you're doing mobile based advertising and you get into the keyword conversion rates and keyword CPAs by devices, often, you'll do some ad group segmentation and always do Adwords segmentation based upon the ad that's displayed.

But you'll probably do some other ad group segmentation based upon your mobile bid modifiers. Make sure that your CPAs work out similarly for desktops versus mobile devices.


So to recap all the bid section here:

  • In most cases when you're starting, you're going to start with Max CPC Bidding. You can't start with CPA, because you don't have conversion rates yet. So Max CPC Bidding is a good one to start with.

  • The other option is to start with the budget optimizer, get the most clicks possible. That's better for publishers than it is for most advertisers who are selling goods or services.

  • You can use multiple bidding systems just by using multiple campaigns.

  • Use different campaigns with different bid systems so that all the keywords are reaching the goals you're trying to accomplish.

  • When you have outliers, then use location bid modifiers, and look at your data by time frame.

  • When you have outliers the data is different by time frame, then use ad scheduling bid modifiers and then look at your data by devices.If the data are different, which in most cases it is, then use device based bid modifiers.

  • By picking your bid system and then picking a way, you're going to set bids, and then when you have outliers use bid modifiers. Those three items combined will let you set bids that help your account reach the goals you've laid out for it.


This concludes the lesson on Effective Bid Strategies, Part 2: Bidding Options. In the next lesson, we will try to understand How to Extract Valuable Data.

  • Disclaimer
  • PMP, PMI, PMBOK, CAPM, PgMP, PfMP, ACP, PBA, RMP, SP, and OPM3 are registered marks of the Project Management Institute, Inc.

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