AdWords Bid Strategies
Most people, when they begin using Google AdWords, only focus on the cost per click bid strategy. The fact is that there are a number of AdWords bid strategies that can be used within the current AdWords platform and I would like to speak about what some of the other options.
When creating a new campaign in Google AdWords you will asked to select a bid strategy for that campaign. Your first strategy option for a Search Network only campaign will be focused on clicks. You will have the option of manually setting your bids or to allow Google to automatically adjust your bids for you.
While there are positive aspects to both options, I normally recommend setting your own bids. You can use the Keyword Planner to give you an idea of what you might expect to pay for a click and I would suggest starting with a higher bid combined with a low daily budget. The reason for this is that you want to start off with a higher ad rank which gives you a better chance for a better ad position and higher CTR. This will help you get off to a good start as far as quality score goes. You can then make adjustments to your bids and budget as you begin to get clicks and collect data.
If you feel you need to get traffic to your web site fast, you may want to let Google automatically set your bids. The system will then adjust your bids to get you the most clicks without going over your daily budget. When using this bid strategy you still want to start with a lower daily budget until you begin to get an idea of what clicks are going to cost you. For very competitive keywords, you might find that automatic bidding will use your whole budget for just 1 click so starting with a lower daily budget gives you some protection against spending more than you can afford per click. You also have the option of setting a maximum bid amount for Google when using automatic bidding and I strongly suggest you do so if using this strategy. To set an automatic bid limit you will want to click on advanced options after selecting the “adwords will set my bid” option.
If you have selected a Display Network campaign you will have the option to focus on impressions instead of clicks known as CPM bidding. CPM stands for Cost per 1000 Impressions. With CPM bidding you do not pay for clicks but for every 1000 impressions your ad receives. This type of bidding is only available on the Display Network. I have yet to come across a campaign where this type of bidding would be beneificial. The CTR on the Display Network is normally very low and CPC bidding normally costs you less than CPM, but in theory, if you have a high CTR on the Display Network, you might save money by switching to CPC. Also, if you are focused on a branding strategy then CPM might be the right choice for you.
Another AdWords bid strategy is CPA bidding. CPA stands for Cost per Acquisition. Acquisitions are conversions. To use this bid strategy you must have created and enabled conversion tracking and have had at least 15 conversions in the last 30 days so that AdWords has historical data to base this bid strategy on. I have seen advertisers get confused by CPA bidding. With CPA bidding you are still paying per click but the AdWords system is estimating how many clicks it will take for you to get a conversion and setting the bids accordingly. If you meet the requirements to use CPA bidding I strongly suggest you begin by using the recommended CPA bid amount. Google recommends that amount based on the historical data from your past conversions and I have seen advertisers who start by setting an amount that is lower see their number of conversions drop dramatically. Start with the suggested CPA bid and every time you get 5-10 more conversions you can lower the CPA bid amount a little and see what happens. Over time you can bring your cost per conversion down.
The flexible bid strategy is relatively new feature in AdWords but it shows a lot of promise. If you select the flexible bid strategy you will be asked to create a strategy in your AdWords shared library and a link there will be provided.
Create New Bid Strategy
Once at the shared library you will see a red button to create a new bid strategy. Once you click on this button you will see a drop down menu of flexible bid strategies.
Enhanced CPC bidding will adjust your bids at the keyword level to bid more on keywords with a history of leading to conversions.
Target search page location automatically adjusts bids to help get your ads to the top of the page or the first page of the search results.
Target CPA is something we discussed earlier.
Target outranking share is the most interesting option. This strategy focuses on beating out a competitor by listing the domain url you wish to beat. I have consulted on many AdWords accounts and many advertisers are interested in beating out the competition.
Maximizing clicks will try to get you the most clicks within your daily budget.
Target return on ad spend or ROAS is another option that requires conversion tracking. You can think of it this way. If sales are what you consider a conversion and every sale gets you $10 of revenue then this option will work very similar to CPA bidding. If you have different revenue amounts for different sales than this strategy will focus on getting you the most revenue as opposed to the most sales.
You can see that Google is focusing more and more features to help advertisers gain conversions and revenue, not just clicks. Read my articles on Conversion Tracking as well as the article on Google Analytics. I cannot stress how important these 2 tools are to the success of your business and if you have any questions or need any help please contact me through the AdWords Services page.