Digital Marketing - Study Notes:
What is the Bid and Budget Simulator tool?
To help see what changes to bids and budgets might deliver in terms of traffic and conversions, you can use the Google Ads Bid and Budget Simulator tool. The Bid and Budget Simulator constantly collects and analyzes data from Google ad auctions to help make forecasts. Using the Bid and Budget Simulator tool, you can review information for how many clicks or how many conversions you might receive for a certain bid or budget.
Using the Bid and Budget Simulator tool
To use the Bid and Budget Simulator tool, simply click on the small graph icon, when available, beside the campaign daily budget or keywords operating on manual bidding. You can now begin exploring how certain changes to your bids and budgets may impact your clicks, cost, impressions, and conversions.
The tool is useful because it is automated and takes some of the guesswork out of determining the spend levels necessary to drive the results you want.
Use the Bid and Budget Simulator tool to get an idea of:
- How to set budget thresholds
- How best to optimize bids towards conversions, and…
- How best to optimize to improve your Quality Score, overall.
Bidding best practices
When it comes to deciding on your bid level and testing your bid performance, there are a number of best practices to adhere to.
Use estimated metrics
One is to use estimated metrics. In Google Ads, we can use estimated first position bid, which is ranking at the top of the page, and the estimated first page bid, which is just to appear on the first page when someone searches to help us decide on bid levels for manual bid strategies. These metrics suggest what, ideally, you need to bid to serve your ads in those positions on the SERP. By setting a manual bid between these two estimates, and settling on a level you are comfortable with, you can try to determine where your ads feature on the SERP.
Be aware that campaigns can spend 40% higher than daily budgets
It’s also important to remember that you won't spend more than 40% higher than your daily budget on a particular day. Google will spend more than your specified daily budget if there is a spike in clicks or conversions on a day so you can capture the additional traffic and sales. Also, remember that this will be reduced on other days to balance the overall budget and ensure you don't spend higher than your expected monthly average over 30 days.
Test bids for a number of days
It’s important to test bids for a number of days, and ideally up to three weeks, to see if there is a positive impact on KPIs, such as the number of conversions you’re seeing, the CPA, or traffic to your site.
Don’t rush into making a decision
And finally, don't rush into making your final decision on a course of action. Often the first few hours or days of a test give quite different results when compared to a sustained period of testing. This is why it’s better to run tests for a longer period of time before making a call on your strategy. For high-volume campaigns, you might even need hundreds of thousands of impressions to have enough data to be sure.
Try to do a test for a month, because then you will have the natural monthly cycle of customers, that is search, consideration, and getting paid their salary, which frees up disposable income, and helps to move them through the purchase process. It’s important to see the whole cycle from start to conversion.
Bid options
When it comes to bid options, there are several available, ranging from standard to advanced. Furthermore, each of these have varying degrees of automation depending on the approach you take.
Manual CPC
Manual CPC is the manual bid type on Google Ads. With this bid strategy, you will set the bids yourself for your keywords or Ad Groups. It can take time, but it gives you full control over the bid levels you set.
Enhanced CPC
Enhanced CPC, or eCPC, tells Google Ads to raise your manual bids if it believes, through historical data, that you are likely to get a conversion from this click. In other words, eCPC allows you to automatically bid a little bit more aggressively if there is a likelihood of a sale, a download, or any desired conversion from this click.
Automated bidding types
Maximize Clicks, Maximize Conversions, and Target CPA are automated bidding types, where Google Ads uses historical data to drive as many clicks and conversions as possible for your daily budget. Google will recommend switching to Target CPA when you have enough historical conversion data to do so. When recommended by Google, the Target CPA bid strategy is particularly effective for high-conversion, single-keyword Ad Groups because the full focus of the bid strategy is on a single keyword’s performance, rather than a range of keywords, so it tends to perform quite well with this structure. Just to note, it’s worth waiting to build up some historical campaign performance data and switch to target CPA when Google recommends it to you. Otherwise, there might not be enough data to allow the algorithms to function effectively.
Choosing your bid type
Different bid types will also have different costs, performance levels, and areas of focus. So, if your focus is purely driving traffic, for example, Maximize Clicks or manual CPC bidding are the best.
If your goal is to drive a lot of conversions or sales each month, you can test Maximize Conversions or Target CPA. By doing this, you can see if Google’s automated bid algorithm delivers lower cost per conversion, or more total conversions at a similar cost each month. It’s usually best to start on manual CPC, and test other bid types to see if you get better performance as time progresses.
Example: Fintech company
But it’s also important, over the long term, to strike a balance between bid automation and manual bid strategies when running paid search campaigns. A high-growth European fintech company at “tech unicorn” level, operating in the area of B2B financial compliance, increased its visit to lead conversion, or conversion rate, by 156% by using automated Target CPA bidding strategies. The application of this bid strategy required a solid account structure, sufficient historical traffic data, and conversion history to enable the automated bid functionality to work effectively.
This was achieved by structuring the campaigns with single keyword ad groups, or ad groups with just a few keywords. For example, they used between one and five closely related keywords per ad group. These groupings were decided based on the historical performance of those keywords in relation to driving conversions, so keywords that drove lots of conversions historically were recreated in an Ad Group of their own. Next, highly specific ads were written for these single-keyword Ad Groups and then on a phased basis the original keywords were paused and the new Ad Groups were set live.
Since Target CPA bidding has been applied, total conversions for the business increased by 50%, conversion rates increased by 156%, while the cost per lead reduced by 66% for generic searches and 40% for brand searches.
Applying this practice
You can do this too and it’s a really great structuring strategy that consistently performs over multiple sales, leads, or conversion metrics. Follow these steps to create single keyword ad groups from your best performing keywords:
- Using keyword conversion filters, identify your top keywords by conversion metrics in your account and download them from the Google Ads interface with editable columns enabled for a bulk upload.
- Open the spreadsheet and copy the data from the keyword column into the Ad group column, so your ad groups are all named exactly the same as your top-performing keywords. Remove the Ad Group and keyword IDs in the spreadsheet for your new structure to allow the bulk sheet to upload without errors
- Go back to Google Ads and add a label to the top-performing keywords that are currently live in your account so you can pause them as you upload the new structure.
- Upload the new keywords in batches in Google Ads over a few days, or weeks, to transition smoothly to the new structure. Don’t forget to pause the labeled keywords as you upload your batches to avoid keyword duplication.
- Test setting the bid strategy for these single-keyword Ad Group campaigns to Target CPA when Google recommends this to you after a few more days or weeks.
Cathal Melinn
Cathal Melinn is a well-known Digital Marketing Director, commercial analyst, and eommerce specialist with over 15 years’ experience.
Cathal is a respected international conference speaker, course lecturer, and digital trainer. He specializes in driving complete understanding from students across a number of digital marketing disciplines including: paid and organic search (PPC and SEO), analytics, strategy and planning, social media, reporting, and optimization. Cathal works with digital professionals in over 80 countries and teaches at all levels of experience from beginner to advanced.
Alongside his training and course work, Cathal runs his own digital marketing agency and is considered an analytics and revenue-generating guru - at enterprise level. He has extensive local and international experience working with top B2B and B2C brands across multiple industries.
Over his career, Cathal has worked client-side too, with digital marketing agencies and media owners, for brands including HSBC, Amazon, Apple, Red Bull, Dell, Vodafone, Compare the Market, Aer Lingus, and Expedia.
He can be reached on LinkedIn here.
