Bid adjustment strategies are a dime a dozen. Every account is different and every manager has their own ideas about when and why bids should be adjusted. But that doesn’t mean that we can’t learn from each other. I thought I’d share my general outline for adjusting bids in hopes that some other managers might share theirs. Then we’d have a nice little community chat going about bidding strategies. That sounds like fun to me. So here’s my strategy. It’s nothing fancy, just a nice and simple matrix that helps make my decisions easier.
(Note: This matrix doesn’t take any revenue numbers into account. Hence my saying it should only be for lead gen accounts. An ecommerce grid should bring revenue into the picture.)
Pretty simple right? Yep. And that’s the point. Let’s run through each piece individually. When adjusting bids in lead gen accounts my main focus is always CPA. That metric gets the most weight in my bid decision process. I use Average Position and Impression Share to supplement my decisions because they share two traits. First, they’re directly affected by bid changes. Second, they each give indication on opportunities for growth or retraction: raising and lowering number of clicks (Average Pos) and impressions (Impression Share).
How to Use It
You can use this grid to make decisions on an individual keyword basis or you can apply filters to find sets of keywords across your account that all would fall into the same square. The value shown in each square is the percentage increase or decrease in bids I would typically use for a keyword with those stats. Using percentages allows me to have an equal impact on all keywords affected, regardless of their previous bid. Using dollar values with a filtered list of keywords might cause you to increase bids by $1 on a keyword with a $10 bid and another with a $2 bid. The effect being you’ve raised the $10 bid by 10% and $2 bid by 50%. Your changes would most likely have a much greater impact on the $2 keyword and might get you into CPA trouble pretty quickly.
Let’s take a look at a an example for each CPA range. We’ll use $50 as our target CPA.
Looking at the matrix, this keyword would receive a 15% bid increase. Our CPA is well below goal so we can afford to take some risks by going after more impressions and higher CTR with a big bid raise. Ideal turnout: we increase impressions, CTR, and assuming ad to keyword relevancy remained stable we would expect Conversion Rate to also remain flat. In this situation we would see increased conversions at minimal to no increase in CPA.
For this set of stats, we would increase bids by 5%. Since our CPA is solid and Average Position is pretty high, we’re only really looking to expand into that extra 10% of available impressions. Since this won’t have any real impact on Average Position (CTR) or Average CPC we could expect changes in CPA to be pretty minimal although we would hope to see a slight increase in lead volume.
More than Half Over
For this keyword, pretty much every stat line is crap. CPA is too high, Average Position is too low, and we’re showing for half of the available impressions. You could lower bids to try and knock the CPA down a bit, but this set of stats is an indicator of a bigger problem. Many times in lead gen I see these lower Average Position keywords bringing in good quality leads but at low volumes. These are the people who take the time to read each ad, match up their needs with your services, and then fill out your form. Lowering a bid here won’t have a large impact because these kinds of searchers will find your ad and convert whether you’re in position 4, 5, or lower. The question is whether these leads are profitable enough to continue bringing them in at $85.
Take a look at a long term view of keyword performance, as well as stats from your lead system to determine if these keywords should stay active where they are despite the less than optimal CPA or whether they should be paused.
Like I said above, every account is different. Accounts in more competitive markets might require bigger percentage increases in bids to make the desired effect. Or they might not. This isn’t a one size fits all grid, but it shows the process I use to determine areas of strength and weakness. Keep track of your changes over time and their effects. You’ll develop a grid of your own (or any other type of bid strategy) in no time.
Got a bid adjustment matrix of your own? Share it with us in the comments! We’d love to see it!