The Essential In-Depth Overview Of PPC Bid Management

What bid management strategies will work to achieve your campaign goals? Columnist and former Googler Frederick Vallaeys outlines how to make the best decisions to maximize efficiency. 

 There is no such thing as a bad keyword, there are only bad bids. While this is a bit of an overstatement, there is a nugget of truth to it. Naturally, a strategy of bidding on irrelevant keywords will hurt your account quality score – and even if this produces clicks, they are not likely to convert. However, if you have bought a keyword that you believe to be relevant and it’s not producing as expected, the right strategy is more likely to change the bid than to simply get rid of the keyword. This management of bids to meet targets is one of several core activities needed to maintain a healthy PPC account, and this month I’ll review several bid management strategies available to advertisers. But first, let’s cover some basic questions that are important regardless of what strategy you use.

Bid Management Goals

There are generally four different goals advertisers try to achieve in an account:

1. Increase branding by driving lots of impressions while staying under a target CPM.
2. Increase site traffic by driving lots of clicks while staying under a target CPC.
3. Increase leads by driving conversions while staying below a maximum CPA.
4. Increase sales by driving conversions with a positive ROI.

Each of these goals requires a different bid strategy. It’s fine to mix and match goals in an account, but you can’t have multiple goals for one item – that pits different strategies against each other and prevents the individual strategies from delivering the desired outcome. Another important consideration is that, for conversion-driven strategies (numbers 3 and 4 on the list above), there are two different ways to judge performance. The first is to try and maximize the revenue, the second is to maximize profitability. For the former, you will consider the average performance of the CPA or ROAS, whereas for the latter you will need to look at the incremental cost of each additional click you buy. I’ll explain this more in the section about incremental cost-per-click. The important thing for now is to understand there are two options that require differences in how bids will be managed. Next, consider that ROAS (return on ad spend, or conversion value / cost) can be measured in many different ways because it relies on the advertiser importing the value into AdWords through conversion tracking, Google Analytics goals, or offline conversion import. Some advertisers will submit a value that reflects the profit they make on the items sold whereas others will import the total revenue produced by the sale. If you’re importing the profitability data, then an ROAS higher than 1 is acceptable. If you’re importing revenue data, a much higher ROAS is needed before you get into profitability, and what that exact threshold is depends on the margins of the business.

Choosing A Lookback Window For Bid Management

Once the goals are defined, the next big question is what lookback window to use or what date ranges to look at when calculating new bids. If you look at a date range that is too short, you may end up setting bids too aggressively based on recent changes in performance that may not signal new long-term trends. On the other hand, if your lookback window is too long, your bid changes could be too conservative and take too long to address a recent change in user behavior (perhaps driven by one of the frequent changes made by the engines to their search results pages). One way to address this concern is to use multiple date ranges for your lookback windows. For example, if a keyword has done particularly poorly for the last seven days, but it did very well over the past six months, you should probably do something different than if the keyword has been doing consistently poorly for the last six months. In the former case, it seems like something has changed recently that may deserve a further investigation. In the latter case, it’s probably safe to simply lower the bid.
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