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Bidding Best Practices

Digital Marketing Lessons

Paid Search
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Digital Marketing - Study Notes:

Bid simulator

To help us see where we actually sit compared to the competition, we can use a tool in Google Ads called a Bit Simulator. It collects and analyzes data from ad auctions on Google all the time. And so it looks back broadly about seven days, and it considers information looking like the quality score of your ads, your competitors’ bids, your product data, and it will tell you how many clicks you might receive for a certain bid, how many conversions you might receive for a certain bid, the traffic. There’s different metrics it will give back to you based on different bid levels over time.

The bid tool is quite useful because it’s automated, and it takes a bit of the guesswork out of where you need to be bidding to drive the results you want. It gives helpful insights at how bid changes could potentially affect your results.

So, if you reduce bids, what would that look like? If you increased bids, what would that look like? Rather than just taking a shot in the dark, it gives you an estimation. It’s again a forecasting tool to see where and what might happen if you changed your bids. And it’s a good predictor of what could potentially happen with an increased budget.

Bear in mind that not all keywords have the Bid Simulator available. It appears over time when there’s enough historical data. There’s a little graph just to the right of the keyword and you’re able to click on it. That will open the Bid Simulator, and that’s where you’ll see the screen. It’ll show you the different options available to you, and the different levels, and the outcomes.

Best practices

Now, some best practices on deciding on bid levels.

There’s a number metrics that we can use to decide on bids.

Impression share

An important one here is impression share. Impression share is the number of times that your ad shows up when someone searches. So, for example, if you have 100% of impression share, you show up 100% of the time when someone looks for that keyword. If you have 50% you only show up half of the time. Ideally you want, for any keywords that convert, you want them to be showing up in the high 90s in terms of impression share. You do want your high conversion, low cost per conversion keywords showing up as often as possible, and we’ll go into it a little bit of that in the optimization piece.

Estimated metrics

The other way you can decide on bids is using the estimated metrics. There are two metrics available to us in Google Ads:

  • Estimated first position bid
  • Estimated first page bid

One is at the top of the page and one is just to be on the first page. And this will just give you an idea of what ideally you need to be bidding to be in those positions. Now even if you are bidding, you still won’t spend any higher than 20% of your daily budget, so there is that flexibility built in there. And you know what that means is that like any kind of bidding strategy does have an openness to the amount you can actually spend. Also, there are other bid strategies available to us, so we do have target CPA, we do have manual bidding, optimize for traffic, optimize for conversions, and different things like that. Testing each against your KPI is essential to understand how best to set your bid, bidding strategy, not just your levels.

Timing

Don’t rush into making your decision. The first few hours of launching a campaign or even a test can give very different results than if you run over a longer period of time. So, ideally you want a minimum of 1,000 impressions, and a statistically significant level of clicks. Don’t run a test for shorter than three weeks. You need to test for at least three weeks and drive well over 1,000 impressions for low volume campaigns.

For high volume campaigns, you need hundreds of thousands of impressions. But a good three-week period gives you almost a month’s cycle. If you can test for a month, do a test for a month, because then you have the natural monthly cycle of getting paid, moving through the purchase process, maybe people are light on conversion once in the middle of the month because funds are running dry, and then coming towards the end of the month they start researching again. So you do get the full cycle of consumer thought process around a monthly test.

Bid options

There are several automated bid options available to us.

  • CPC bidding: The standard is just your manual CPC bidding. It focuses just on driving traffic, and it optimizes for traffic.
  • Enhanced CPC (eCPC): You can add an enhancement to which will use your conversion data. This is called enhanced CPC bid. It tells Google Ads to raise your bid by up to about 20% if it believes that using your historical data that you’re likely to get a conversion from this click. So it allows you to just automatically bid a little bit more aggressively if there’s a likelihood of a sale, or a download, or a contact quest, or a conversion from this click.

There are more automated bidding options, and these are getting quite advanced at this point. There’s a lot of artificial intelligence being built into Google Ads.

  • Maximize conversions: This will obviously try and maximize the number of conversions you can get based on historical data.
  • Maximize clicks: This is just driving traffic. If you’re in any way conversion-focused on your site and you do want to drive sales or contact requests or phone calls, maximize conversions is a better strategy than maximize clicks. If you just want to drive traffic, it’s good. But if there’s an additional goal around conversions that you’re really optimizing towards, maximize clicks doesn’t always work as well on that.
  • Target CPA: Over time, you have your target CPA bid which will, when you build upon enough conversion history, try and optimize your ad serving and your bidding to drive conversions at a certain cost. So, while Maximize Conversions just drives as many conversions as possible, target CPA drives conversions, as many conversions as possible at a certain cost.
  • Target ROAS: Further to target CPA, when you’re an e-commerce site you have target ROAS, which is return on ad spend. It will work towards how much sales you expect to get from your budget. So target ROAS is very much e-commerce driven. It works great over time if you’ve got a very high conversion campaigns and definitely one worth testing.
  • Target search page location: This is an automated bid strategy to drive as many impressions as possible in the first position. So you’re just appearing in the top results as often as you possibly can for your daily budget.
  • Target outranking share: This is an automated competitor bidding type that tries to optimize your ads to serve higher than your competitors in as many possible ways and many possible auctions over the day for your daily budget as you can.

The last two are less effective bid strategies. Ideally Maximize Conversions, Target CPA, Target ROAS, and manual bidding are the standard, top performing bid strategies within Google Ads.

Quality score

Linked very closely to your bidding strategy is your quality score. You always want to have a high-quality score because it just makes your bidding strategy more effective.

Here are some tips for improving your quality score:

  • Write better ads.
  • Refine the type of traffic you’re getting by adding negative keywords.
  • Improve your landing page as always.
  • Test those bid thresholds.

Increase your bids by a couple of cents for a few days or reduce by a couple of cents for a few days, up and down, and just test those bid thresholds to see what your impression share looks like over time.

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Cathal Melinn

Digital Marketing Manager @ Digital Marketing Institute

  • 13 years’ experience in search and display
  • Worked at Yahoo! Search in 2005 as a Senior Search Strategist for the UK Financial Services vertical
  • Moved to the world of agency in 2010 as Head of Search and Online Media for five years 
  • Currently working at the Digital Marketing Institute as a Digital Marketing Manager
  • Previous clients include Apple, Vodafone, Expedia, Virgin, Universal Music Group, Amazon, Compare the Market, and HSBC
Cathal Melinn

Data protection regulations affect almost all aspects of digital marketing. Therefore, DMI has produced a short course on GDPR for all of our students. If you wish to learn more about GDPR, you can do so here:

DMI Short Course: GDPR

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ABOUT THIS DIGITAL MARKETING MODULE

Paid Search
Cathal Melinn Cathal Melinn
Skills Expert

This module begins with the key concepts of paid search and demonstrates how to set up a Google Ads account and create a paid search campaign. It explains how to manage a paid search campaign budget effectively and outlines the different methods that can be used to optimize your paid search campaign. It also covers how to measure and report on the success of a paid search campaign.

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